MSU Finance and Administration Division - 334 Wigley Admin - 507.389.6622 - fiscal-affairs@mnsu.eduMN507.389.662256001Mankato334 Wigley Admin Centerfiscal-affairs@mnsu.eduFinance and Administration DivisionMinnesota State University, MankatoMSU Flame

February 20, 2003
From H. Dean Trauger

Tuesday afternoon Governor Pawlenty came out with his proposal on how to
balance the state's budget for FY04-05. His budget proposal is just the
beginning of the budget process that will end sometime in May 2003 with
a legislative appropriations bill. It has been our experience over the
years that the Legislature's biennial budget appropriations bill does
differ from the budget proposal the Governor submits to them; sometimes
the difference has been significant. However, the business, political
and economic environments are very difficult this year; thus, achieving
significant improvements to higher education/Minnesota State funding will be
extremely difficult.

I have not gone through all the detail in the Governor's FY04-05 budget
proposal, but the faculty and staff should know the following

Under the Governor's plan Minnesota State would receive an operational funding
reduction of $174 million, plus $30 million would be moved to the State
Grants Program-total reduction of $204 million. Depending on what the
reduction is being compared to, you may read that the reduction for
colleges and universities is 9% or 15.7%. However, based on Minnesota State's
preliminary distribution of FY04 proposed state funding, MSU would
receive 11.7% less than our base state appropriation for FY03:

FY03 Minnesota State Appropriation Allocated to MSU: $52,875,197

FY04 Proposed Minnesota State Appropriation Allocated to MSU: $46,713,963

Difference: (-$6,161,234) - (-11.7%) Base Reduction

Other recommendations in the Governor's budget proposal are:

* Minnesota State is expected to eliminate duplication in its programs and focus
on its core priorities in order to continue meeting student needs.

* Salaries and benefits for Minnesota State employees would be frozen for two

* Minnesota State is encouraged to limit tuition increases to a maximum of 15%.

There is certain to be much debate over the Governor's budget proposal
for higher education. The state's budget crisis is bringing forth ideas
from various groups to make reforms in state government which we need to
be aware of and address. For example, The Coalition of Minnesota
Businesses is pushing three reform themes:

1. Funding people instead of public institutions (vouchers).

2. Giving private businesses more opportunities to provide public

3. Having compensation and benefits for public employees better reflect
those of their private counterparts-freezing salary increases for two
years, suspending contributions to retirement funds, and reducing health
insurance benefits.

The current state budget crisis will require MSU to make some changes to
balance its budget but also to stay competitive for the future.
President Davenport will be meeting with the Planning and Budget Sub
Meet & Confers on Monday, February 24, 2003, to continue the discussion
on how MSU will address the FY04-05 budget challenge.

Please give us your ideas on how to handle the FY04-05 budget situation
by logging on to the MSU budget Web site Thanks to those who have already
sent in ideas. You can also send us budget questions that you would
like answered.

H. Dean Trauger
Vice President for Finance & Administration
334 Wigley Administration Center
Mankato, MN 56001
Phone: 507-389-6621
Fax: 507-389-6610

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