Governor unallots; federal government asked for stimulus package

Governor unallots $20 million to Minnesota State Colleges and Universities

Since the state economic forecast was released a couple weeks ago projecting a $426 million deficit for the current biennium and a $4.8 billion shortfall projected for the next two fiscal years, state leaders have held press conferences and legislative hearings to devise a plan that will eliminate the short-term deficit, which is actually $271 million once the state's budget reserve is drained, as constitutionally required.

Gov. Tim Pawlenty announced this afternoon an unallotment plan to make up the $271 million shortfall. The Minnesota State Colleges and Universities system received a cut of $20 million for the current biennium. The University of Minnesota also was cut $20 million.

Other cuts include $44 million of local aids and credits to counties and $66 million of local aids and credits to cities. Health and Human Services was cut $73 million, state agencies were cut a total of $40 million, the Minnesota Housing Finance Authority was cut $4 million, the legislature's unexpended funds were cut $2.2 million, the 21st Century Mineral Fund was cut $1.5 million and the Minnesota Investment Fund was cut $700,000. You may read the full press release from the Governor's office here.

The Governor said that Minnesota State Colleges and Universities has responded well to delivering services via online. He also said that the system listened to students' concerns by keeping tuition increases low. The governor said he expects the cuts to be manageable without impacting students. The governor's press conference will be available in the press conference archives here.

In preparation for the unallotment announcement, state agency heads appeared before the House Finance Committee this week to discuss how potential cuts would be made. Chancellor Jim McCormick told committee members that the economic downturn presents the system with a dilemma, because history shows that demand for higher education goes up when the economy goes down. McCormick also said that the system is approaching the economic challenge by holding three principles central to decision-making. First, decisions will be made in a way that best serves students, second, the system will take into account how to serve the economic development needs of the state and its communities, and third, a multi-year approach will be taken. McCormick spoke of the importance of making decisions for the short term that also will position the system for the 2010-2011 biennium and beyond.

As we look ahead to the 2010-2011 biennial budget, Gov. Pawlenty said his budget recommendations, which will be released Jan. 27, would contain no tax increases. “This is not the time to add additional burdens on Minnesotans,” he said, although he might support some tax reform. Speaker of the House, Rep. Margaret Anderson Kelliher, DFL-Minneapolis, said legislators plan to tour the state to receive feedback on the governor’s budget proposal. Kelliher and Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, said everything is on the table to solve the budget crisis, including potential tax increases.

“It seems short-sighted to remove any tools from the toolbox,” Kelliher said.

State Economist Tom Stinson said the February forecast is expected to be announced Feb. 25 or 26. The February forecast fine-tunes the November’s forecast with data that becomes available early in the calendar year. This forecast will be the basis for the final 2010-2011 budget decisions.

Stimulus sought

On the federal side, Congress is expected to move on a economic stimulus package early next year and President-elect Obama is rumored to want to enact it as his first piece of legislation as President. A coalition of 13 groups, including American Association of State Colleges and Universities (AASCU), the United States Student Association, the National Association of Student Financial Aid Administrators, and the Project on Student Debt, sent a letter proposing a two-year stimulus for financial aid that would increase Pell Grant funding (boosting the maximum award to $7,000), increase the Federal Work Study Program, provide emergency access to student loans for colleges that offer need-based aid, and make PLUS loans more accessible and affordable.

A coalition of 30 groups representing higher education in Washington, also sent a proposal to Congress that included student aid investments in Pell and Supplemental Educational Opportunity Grant (SEOG), infrastructure grants to provide jobs and strengthen the capacity of colleges and universities, and suggestions for how to provide debt relief to students.

State economic forecast bleak

The economic forecast released today shows a deficit for the remainder of fiscal year 2009 of $426 million. The state constitution requires a balanced budget, so lawmakers and Governor Pawlenty will start working to resolve the FY2008-2009 shortfall. The state does have a $155 million budget reserve to be used first.

As lawmakers return to St. Paul Jan. 6 for the 2009 legislative session, they will be charged with balancing the budget for the FY2010-11 biennium. Minnesota is facing a $4.847 billion deficit for the upcoming biennium.

You may find more information on the Minnesota Management & Budget Web site:

Forecast Summary


Complete Forecast


News Conference Hand-out


As a reminder, the response from DFL leaders will be webcast live at 2:00 p.m. today at www.senate.mn/media, and Gov. Pawlenty's response to the forecast that is currently taking place, will be available on by 4:30 p.m. at the same site.

Archives of the press conferences will be available at www.senate.mn/media.

Federal updates- lame duck session, inauguration

Federal Update

Lawmakers return for lame duck session

Congress returned to Washington this week for a lame duck session to pass an auto industry bailout package. Democratic leaders, however, put the bailout package on hold yesterday while the auto industry provides more of a business plan. Congressional leaders said they will return to Washington early December to review the plan, and said Congress would return on December 8 to consider a proposal to help the auto industry. According to The Hill, efforts by the three auto companies to get help from Congress this week seemed to backfire when lawmakers learned the auto company executives had traveled to Washington on corporate jets. Democratic leaders called the chief executives “arrogant” for demanding a taxpayer-funded rescue while traveling in style.

Also this week, Democrats and Republicans in both chambers conducted leadership elections and organized in advance of the 111th Congress. Anticipated in the early stages of the 111th Congress is the passing of the fiscal year 2009 appropriation bills, including the Labor-HHS-Education bill. Currently, the federal government is being funded under a continuing resolution which runs until early March.

The 2008 Elections: Implications for State Colleges and Universities

The American Association of State Colleges and Universities has prepared a briefing entitled, “The 2008 Elections: Implications for State Colleges and Universities,” which can be found at www.aascu.org/media/pm/pdf/pmnov08.pdf. This briefing gives context to the 2008 elections and details how the outcomes may affect American higher education. The analysis discusses the impact a Congressional majority and President-Elect Barack Obama's higher education platform may have on federal post-secondary education policy and reviews the changing landscape in state legislatures.

Congressional Timeline

• November 16, 2008 - Begin orientation for incoming House freshmen
• November 17, 2008 - Congress returns for a week long “lame-duck” session and hold leadership elections
• December 8, 2008 - Congress potentially returns to take up auto industry bailout package
• January 3, 2009 - Terms of members of the 111th Congress commence (as written in the Constitution)
• January 6, 2009 - 111th Congress convenes and new Members are sworn in
  
• January 20, 2009 - Inauguration Day
• February 2, 2009 - President submits his budget to Congress (by law it is required by the first Monday in February each year).

President-Elect Obama Transition

President-Elect Barack Obama has been busy putting together his transition team and office, which will be located near Judiciary Square in downtown Washington, D.C. The new official transition website, www.change.gov, is available with information regarding the new administration appointments and the presidential agenda. There has been much speculation regarding appointments within the new administration, with Minnesota’s own Congressman Peterson, Congressman Oberstar, and Congresswoman McCollum among the many names being floated for top Department posts. For more information regarding the approximately 3,000 political positions in the new Administration, the Government Printing Office has just released the 2008 Plum Book in print and PDF which can be accessed at www.gpoaccess.gov/plumbook/2008/index.html.

Inauguration

General information on Inauguration Day events can be obtained from the website for the Joint Congressional Committee on Inaugural Ceremonies at http://inaugural.senate.gov/index.cfm. Tickets to the Inaugural Swearing-In Ceremony are free to the public but only available from members of Congress. To request tickets, you may call your Representative’s office at the numbers listed below and provide your name, home address and telephone number, and the number of tickets you would like. Due to limited quantities, it is advised to put in your request as soon as possible.

• Congressman Tim Walz, District 1 - (202) 225-2472
• Congressman John Kline, District 2 - (202) 225-2271
• Congressman-elect Eric Paulsen, District 3 - (952) 934-8999
• Congresswoman Betty McCollum, District 4 - (202) 225-6631
• Congressman Keith Ellison, District 5 - (202) 225-4755
• Congresswoman Michele Bachmann, District 6 - (202) 225-2331
• Congressman Collin Peterson, District 7 - (202) 225-2165
• Congressman Jim Oberstar, District 8 - (202) 225-6211
• Senator Amy Klobuchar - (202) 224-3244

Election results are in

Legislative Update
November 6, 2008

Election Outcomes

While the dust has not yet settled on all of Tuesday’s election outcomes, the Minnesota State Legislature races have been determined. The Minnesota House of Representatives will have 23 new members when the 86th Legislative session begins on January 6, 2009. There are 12 new Republican members and 11 new DFL members. Democrats increased their numbers by two seats and now hold 87 seats. Ninety votes are needed for a gubernatorial override. Republicans retained enough seats to ensure against a veto-override majority, and now sit at 47 seats.

Final numbers will not be certified until the State Canvassing Board meets later this month. In addition to a close review of the U.S. Senate race between incumbent Senator Norm Coleman and challenger Al Franken, the Office of the Secretary of State may determine that two House races will require a recount:
District 12B incumbent Al Doty, DFL-Royalton, leads Mike Lemieur by 76 votes
District 16A incumbent Sondra Erickson, R-Princeton, trails Gail Kulick Jackson by 99 votes

New members-elect include:

Paul Anderson, R-Starbuck
Bobby Joe Champion, DFL-Minneapolis
Greg Davids, R-Preston
Connie Doepke, R-Wayzata
Keith Downey, R-Edina
Andrew Falk, DFL-Murdock
Jeff Hayden, DFL-Minneapolis
Kory Kath, DFL-Owatonna
Tim Kelly, R-Red Wing
Mary Kiffmeyer, R-Big Lake
Gail Kulick Jackson, DFL-Milaca - pending possible recount
Jenifer Loon, R-Eden Prairie
Tara Mack, R-Apple Valley
Mark Murdock, R-Ottertail
Jerry Newton, DFL-Coon Rapids
Mike Obermueller, DFL-Eagan
John Persell, DFL-Bemidji
Roger Reinert, DFL-Duluth
Paul Rosenthal, DFL-Edina
Tim Sanders, R-Blaine
Peggy Scott, R-Andover
Phil Sterner, DFL-Rosemount
Paul Torkelson, R-St. James

The 2008 Election Directory of the 2009-2010 Minnesota Legislature is now available based on unofficial results compiled by the Office of the Secretary of State:
www.house.leg.state.mn.us/hinfo/leginfo/elecdir08.pdf

The membership roster for 2009-2019 is also available on line at:
www.house.leg.state.mn.us/hinfo/leginfo/08mem_elect.pdf
As the 2009 legislative session approaches, the 23 new members, along with the 111 incumbents, will be faced with a potential multi-billion dollar budget deficit. Majority Leader Tony Sertich, DFL-Chisholm said, “We’ll wait to see what the budget forecast is at the end of November, and see what the governor comes up with. We have to do our work and oversight and then see what comes out of the February forecast before we can really figure out what the size of the issue will be.” Sertich also said that the plan is to reach out to the minority caucus and Gov. Tim Pawlenty to construct bipartisan solutions.

Minority Leader Marty Seifert, R-Marshall, noted that the election results were not as bad as they could have been. He said many members of his caucus are relieved that Democrats fell short of their goal of achieving a 90-person supermajority, which would have allowed them to override a gubernatorial veto.

If interested, the House of Representatives television archives web page has posted post-election press conferences held Wednesday of this week. Majority Leader Tony Sertich, DFL-Chisholm, and Minority Leader Marty Seifert, R-Marshall, both held press conferences to discuss the election results. You may view them at www.house.leg.state.mn.us/htv/archivesall.asp?ls_year=85

On the federal side, the 111th Congress begins at noon January 3, 2009. Minnesota will send one new member to the U.S. House of Representatives. Congressman Jim Ramstad from District 3 retired and will be replaced by Congressman-elect Erik Paulsen. The outcome of the U.S. Senate race is yet to be finalized. With less than 500 votes dividing the two candidates, there will be an automatic recount.

Minnesota Congressional Representatives:
District 1: Tim Walz (DFL)
District 2: John Kline (R)
District 3: Erik Paulsen (NEW - R)
District 4: Betty McCollum (DFL)
District 5: Keith Ellison (DFL)
District 6: Michele Bachmann (R)
District 7: Collin Peterson (DFL)
District 8: Jim Oberstar (DFL)

What do the presidential election results mean for higher education? During President-elect Obama’s campaign, he discussed policy issues and proposals dealing with higher education. Inside Higher Ed shares some of the highlights of Obama’s higher education platform, including loan program reforms, access to higher education through a tax credit to cover the first $4,000 in college costs, grant program for community colleges, science and technology investments and affirmative action. You may read more at www.insidehighered.com/news/2008/11/05/obama

Major candidates on higher education

A look at the major party platforms for higher education
While not much has been said about higher education during the presidential campaign, now that the Democratic and Republican national conventions are over, here’s a quick look at what the two major political party candidates have been saying about the topic.

Sen. John McCain said in his acceptance address to the Republican delegates Thursday night that he will work to make better use of community colleges to train workers for new high-skill jobs. He has also promised to crack down on what he defines as pork-barrel spending, which includes earmarks, and said he would publicize the names of lawmakers who insert earmarks into spending bills. McCain also touched on public education in his speech, calling it the "civil-rights issue of this century." He said he would fight for school choice and push to attract and reward good teachers.

Sen. McCain’s existing position on higher education policy taken from his Web site says that the United States needs to be prepared for the 21st century in higher education, and America is facing increased competition from overseas like never before. His position states that higher education is as much a part of that competition as the job sector, and we must rise to the challenge and modernize our universities so that they retain their status as producers of the most skilled workforce in the world.

Sen. McCain also has said he would like to simplify higher education tax benefits, because the existing benefits are too complicated, and therefore many eligible families do not claim them. He also wants to simplify the federal financial aid program. He has said the application process is too complicated, which deters many eligible students from seeking financial aid. The number of programs also makes it more difficult for financial aid officers to help students navigate the process. McCain has said that consolidating programs will help simplify the administration of these programs and help more students have a better understanding of their eligibility for aid.

Democrat presidential candidate Sen. Barack Obama’s Web site talks about creating the American Opportunity Tax Credit. Sen. Obama has said he will make college affordable for all Americans by creating a new American Opportunity Tax Credit. This credit will ensure that the first $4,000 of a college education is completely free for most Americans and will cover two-thirds the cost of tuition at the average public college or university and make community college tuition completely free for most students. Obama also has said he will ensure that the tax credit is available to families at the time of enrollment by using prior year's tax data to deliver the credit when tuition is due.

Sen. Obama also wants to simplify the application process for financial aid by eliminating the current federal financial aid application and enabling families to apply by checking a box on their tax form, authorizing their tax information to be used and eliminating the need for a separate application.

Congress returns Monday
Congressional members will return to Washington on Monday after a month-long recess in August for district work. No progress is anticipated in the federal budget this year, and with a targeted adjournment date of Sept. 26, it is very likely we will not see a new budget until after a new president takes office in January. If that is the case, Congress will have to finance government through a series of continuing resolutions. For higher education, the Labor-Health and Human Services-Education bill, one of the 12 appropriation bills, also will be on hold. The 111th United States Congress is scheduled to begin on Jan. 3. No calendar has yet been set.

Constitution Day approaching
To commemorate the signing of the United States Constitution on September 17, 1787, all colleges and universities that receive federal financial aid are required to provide an educational program on the Constitution. The U.S. Department of Education is responsible for implementing the Constitution Day legislative mandates and can assist in program planning. The Department’s Web page provides links to federal Web sites that contain materials that can be publicly accessed for general use or for use as teaching materials in the classroom. Additional information can be found at here.

Register, learn, engage and vote in the upcoming election
The primary is quickly approaching, with folks heading to the polls next Tuesday. The Minnesota State Colleges and Universities has created a 2008 Election Resource Guide available here to assist new and returning voters in the election process and to provide campus communities with information on the upcoming election.

Four major components make up the site: register, learn, engage and vote. The register page explains how to register for the upcoming election. The learn page provides information on local candidates and facts about the Minnesota State Colleges and Universities system. On the engage page, users learn what election-related activities are happening on their campuses, and the vote page allows voters to locate their polling place and find out what hours the polls are open. Students, faculty and staff can gain new ideas about how to promote voting this fall by viewing the Election 2008 PowerPoint included on the site’s engage page, and there are guidelines on hosting on-campus election-related events.

If you have questions or would like to provide feedback or information on upcoming events, please contact Candi Walz at candi.walz@so.mnscu.edu.

Publications recently made available
The Minnesota House of Representatives Research Department recently posted new publications on its Web site. You can learn more about saving for college, the University of Minnesota Regents, and economic forecasts, budget surpluses and shortfalls by clicking on the links below.

Saving for College: 529 Plans and Income Tax Policy
www.house.leg.state.mn.us/hrd/issinfo/ss529plan.htm

Election of University of Minnesota Regents
www.house.leg.state.mn.us/hrd/issinfo/ssumreg.htm

Economic Forecasts, Budget Surpluses, and Budget Shortfalls
www.house.leg.state.mn.us/hrd/issinfo/sseconfore.htm

2008 Open Appointments
The Secretary of State's Office this week released the monthly notice of vacancies that have occurred in multimember state agencies. In accordance with the Minnesota Open Appointments Law, the Secretary of State acts as an administrator in publishing vacancies, receiving applications and recording appointments. Applications submitted by Sept. 23, 2008, will receive full consideration by the appointing authority. You can find the 2007 Open Appointments Annual Report online at www.sos.state.mn.us/home/index.asp?page=360. This publication includes a complete listing of state boards and councils that follow the Open Appointments process, descriptions of these agencies and their memberships, and statistical information about appointments and vacancies during the 2007 fiscal year.

Higher Education Act compromise reached

Federal Higher Education Act compromise reached
After working on the reauthorization since 2003 with 13 extensions, U.S. lawmakers have finally reached agreement on the reauthorization of the Higher Education Act, the bill that sets federal higher education policy every five years. The vote in conference committee last night was 18 to 3 on the Senate side, and 22 to 1 on the House side. The bill now heads to the House and Senate floors where it is expected to be taken up tomorrow.

The bill sets a ceiling on the maximum Pell Grant of $9,000, and allows students to receive Pell Grant funds year-round, instead of just during the traditional academic year. The bill also gives the U.S. Department of Education more authority to regulate private student loans and also bars the Department from issuing regulations governing higher education accreditation. The bill also addresses student downloading of movies and music.

There has been much discussion surrounding the issue of textbooks during negotiations. The final compromise mandates that textbook publishers expand the information they provide to faculty members about pricing and changes from past editions. The language also requires colleges to put information about required books in their course schedules to help students shop for books more cost effectively.

One of the most controversial provisions in the bill, that held up negotiations, but was included in the bill at the final hour, is the "maintenance of effort" amendment. The provision withholds College Access Challenge Grant funds from states that fail to raise spending on higher education each year by at least as much as they increased it, on average, over the previous five years. During debate on the amendment, Rep. John F. Tierney, D-Mass., argued that there is a "direct correlation" between state spending and college tuition rates. Opposition to the amendment include governors and state legislatures, who are concerned that states will be forced to hold down spending during good economic times to avoid being held to more generous levels when the economy worsens. Sen. Lamar Alexander, R-Tenn., argued that the federal government has no
business dictating how states spend their tax revenue.

There are also plenty of new reporting requirements in the bill, which colleges argue would increase their costs at the same time they are receiving pressure to keep tuition growth low. The bill includes language that requires the Secretary of Education to publish annual lists of the institutions with the highest and lowest tuition and fees, and net prices, by sector, as well as lists of the institutions with the largest percentage increases in net price and in tuition and fees over the previous three years. Institutions appearing on the lists would be required to report on the factors that contributed to their price increases and the steps they are taking to hold down costs.

U.S. Congress expected to adjourn early; budget work left to be done

U.S. Congress expected to adjourn early

Senate Majority Leader Harry Reid, D-Nev., has agreed to the House target of adjourning Congress by Sept. 26, giving Congress only a little more than six weeks to finish business. Congress will recess for the month of August and if they stick to the target adjournment, will finish in September. Sen. Reid said his priorities for July includes passing a gas price bill, consumer product safety legislation, a measure addressing the spread of AIDS in Africa and legislation extending energy production tax incentives.

Democratic leaders have said they will likely delay final votes on appropriations bills until after the election at the earliest, but most likely after a new president is sworn into office in January. President Bush has said he will veto any bills over his spending limit, which is about $21 billion less than what Democrats have proposed. If that is the case, Democratic leaders in Congress will finance the government through a series of continuing resolutions.

So what does this mean for higher education? The Labor-Health and Human Services- Education bill is one of the 12 appropriation bills likely to be put on hold, however, there has been some action on the spending bill. The Senate Appropriations Committee approved a bill that would increase the maximum Pell Grant by $69, to $4,800, and spending on the National Institutes of Health would grow by $1 billion. The bill would also provide an increase for the federal TRIO programs for disadvantaged students and Gear Up, which helps low-income students prepare for college. The Perkins Loan forgiveness program would receive a $5.7 million increase over the current year, for a total of $70 million.

On the House side, the House Labor-HHS-Education bill, which raises the Pell Grant by $169, to $4,900, has been delayed indefinitely, because of partisan fighting. Republicans offered a motion to strip out all of the bill’s language and replace it with unrelated provisions, including one authorizing an expansion of oil drilling in the United States. House Appropriations Chairman David Obey, D-Wisc., has now shot down the possibility of any further movement on appropriations bill mark-ups out of the Appropriations Committee.

Of the 12 appropriations bills, the House Appropriations Committee has passed five: Commerce-Justice-Science, Energy-Water, Financial Services, Homeland Security, and Military Construction-Veterans Affairs. The Senate Appropriations Committee has passed three: Commerce-Justice-Science, Homeland Security, and Labor-HHS Education. Given the understanding that the federal government will most likely operate under a continuing resolution at fiscal year 2008 funding levels, the appropriation bills that have cleared committee may sit dormant.

Congress has also yet to renew the Higher Education Act, the bill that includes program authorizations for Pell Grants, student loans, TRIO, GEAR UP, international education, and more. A reauthorization of the law is already five years overdue. While the timeline for completion of the bill is unclear, many involved in the process believe the bill will be completed before the August recess. Staff to the members who are working through differences between the House and Senate versions of the bill say they still expect that this will be the year the renewal does get done. Meanwhile, Congress has passed the 13th extension to the Higher Education Act, which will expire at the end of the month.

Veteran benefits for students included in Supplemental Appropriations Act, 2008
After compromises between Congress and the White House, both the U.S. Senate and House of Representatives passed the Emergency Supplemental Appropriations Act, 2008 that includes veteran tuition benefits allowing veterans who have served in the military for at least three years since September 11, 2001, to receive up to the full cost of a four year education at a public college, plus a monthly stipend for housing and money for books and supplies. A provision was also added that allows service members to transfer their educational benefits to their spouses and children. Service members could make such a transfer to their spouses after having completed six years of service and committing to serving in the military for at least four more years. President Bush signed the legislation, H.R. 2642, June 30.

$2 million grant for dislocated worker training
The Minnesota Department of Employment and Economic Development (DEED) was awarded a $2 million grant from the U.S. Department of Labor this week to help dislocated workers build their skills. The grant will assist dislocated workers over the age of 50 to boost entrepreneurial skills, provide information on how to build a business plan and find resources to launch a new business. The pilot project is a partnership between DEED and other organizations including the Minnesota State Colleges and Universities system.

2008 Legislative Session concludes

Legislative Recap

Note: A complete summary of all 2008 session laws that affect the Minnesota State Colleges2009 Mandates and Curiosities) will be prepared and published on the system’s Legislative Information Web site.

Bonding Bill

The Legislature passed a $925 million bonding bill early April, which included $280.9 million in projects and asset preservation for the Minnesota State Colleges and Universities system. Gov. Tim Pawlenty line-item vetoed the bonding bill for a total of $717 million in general obligation bonding, more than $100 million less the amount the governor set as a target. The system’s total after the line-item vetoes is $234 million, which is the largest bonding number the system has received. Included in the governor’s vetoes were six system projects totaling $46.7 million:

1. #8 North Hennepin Community College business and technology addition and renovation, $13.3 million
2. #14 Classroom renovations, $3.6 million at Central Lakes College, Minnesota State Community & Technical College, Minnesota West Community and Technical College, Northland Community and Technical College, Pine Technical College and Rochester Community & Technical College;
3. #15 Lake Superior College health science center addition, $11 million;
4. #16 Metropolitan State University classroom center, $5.0 million;
5. #19 Mesabi Range Community & Technical College shop space addition and renovation, $5.0 million; and
6. #28 Property acquisition, $8.8 million at Bemidji State University, Dakota County Technical College, Fond du Lac Tribal & Community College, Minnesota State University Moorhead, Vermilion Community College, Minnesota State College - Southeast Technical and Metropolitan State University.

For a complete list of the bonding projects funded, please go here.

At the final hour, lawmakers were able to pass a second bonding bill that was tied in with the global agreement between the governor and legislative leaders. Bonding Bill Phase II totaled $105.5 million and included:

• $70 million for the Central Corridor light rail
• $20 million to acquire land for Lake Vermilion State Park
• $10 million for demolition and construction of 100-bed nursing facility on the campus of the Minneapolis Veterans Homes
• $3.4 million for capital asset preservation and replacement; and
• $2 million for removal and replacement of the old Cedar Avenue bridge in Bloomington to be used by bicyclists and foot traffic.

Budget Bill

The February state economic forecast indicated that the state would be experiencing a $935 million state budget deficit for fiscal year 2009. Legislators worked hard to craft a solution to resolve this deficit. One large omnibus supplemental budget bill was created that included all areas of state government, including higher education. Everyone was part of the solution.

The omnibus supplemental budget bill conference committee report included a cut of $6.6 million to the Minnesota State Colleges and Universities system. Neither the House nor Senate voted on the conference committee report, and instead waited to send it to the governor while session-ending negotiations were taking place between legislative leaders and the governor. At the final hour, they reached an agreement, and the impact to the system changed slightly with a cut of $8.6 million. $7.6 million of the cut is base money, with an additional $1 million one-time to be taken from the central reserves in fiscal year 2008. The tails going into the next biennium, FY2010-11, are a cut of $7.7 million a year, or a biennium total of $15.4 million.

The bill includes rider language that says $5 million of the cut is to be taken from technology and the remaining amount is to come from the Office of the Chancellor budget, not affecting campuses. The bill also includes tuition language that says the system is to appropriate $9 million to buy-down tuition to 2 percent at colleges and 3 percent at universities.

There was funding in the original conference committee report for four programs; $900,000 for the Power of You, $120,000 for the Teachers of Diverse Backgrounds, $1 million to resolve a tuition revenue loss in reciprocity due to a law change in the 2007 session, and $500,000 to bring tuition down to one rate for four institutions.

In the final report, the Power of You program was cut $300,000 from $900,000 to $600,000 and will now be one-time funds instead of base money. The money will be for three institutions; St. Paul College, Minneapolis Community & Technical College and Metro State University. The Teachers of Diverse Backgrounds program remains at $120,000 but it is one-time money instead of base dollars.

The language and funding for nonresident tuition and reciprocity tuition was replaced with new language. There is no longer any new funding in the bill, but rather the system is required to fund it out of appropriation received in 2007.

"From the appropriation in Laws 2007, chapter 144, article 1, section 4 Subd.1, the Board of Trustees shall allocate funding to campuses that lost revenue as a result of the decision in this law to eliminate nonresident undergraduate tuition at specified campuses."

The governor's ACHIEVE program that was originally slated for a $7 million cut was restored and will remain whole in the new bill, and the use for the state grant surplus remained the same. $9.445 million will go to the living and miscellaneous expense with a slight amount remaining in the state grant for a cushion.

The agreement to resolve the almost $1 billion budget deficit includes $500 million to be taken from the state’s $653 million budget reserve, $355 million in cuts, $30 million to come from accounting shifts, and the omnibus tax bill includes $109 million from closing a tax loophole. The state’s $350 million cash flow account will be preserved. The House approved the budget bill by a vote of 115-19 and the Senate passed the bill 56-11. The governor is expected to sign the bill. As we start to think about the next budget cycle, the governor and legislative leaders did say that the projected 2010-11 biennial budget deficit will be somewhere between $1 billion and $2 billion.

You may view the complete omnibus supplemental budget bill here.

Higher Education Policy Bill

In addition to the budget bill, lawmakers passed a higher education policy bill with no opposition. The Senate passed it by a vote of 64-0, and the House passed it 132-0. The bill was signed by the governor and includes:

• language that adds the spouse of a veteran as a Minnesota resident in the state grant program;

• authority to share data between the Minnesota Department of Education and the Office of Higher Education;

• language that makes permanent the use of any state grant surplus to be used for living and miscellaneous expenses;

• language that provides clarification to the Achieve scholarship program;

• authority for a nonprofit organization to use 5 percent of TEACH grant funds for administration purposes;

• language that adds two-year colleges as potential users of the revenue fund;

• a study prepared by the Office of Higher Education on the enrollment patterns of students from low-income families in higher education;

• a change in the make-up of the Board of Trustees to include one labor member;

• language that requires the board to report to the Legislature programs that were granted a waiver from the 60 or 120 program credit cap; and

• language that convenes an oral health practitioner work group to develop recommendations and proposed legislation for the education and regulation of oral health practitioners.

You may view the complete bill here.

Contract Ratification Bill

Legislators passed the contract ratification bill mid-April. The bill includes the ratification of the AFSCME, MAPE, MMA, IFO and MSCF contracts and the Minnesota State Colleges and Universities administrator's plan, the commissioner's plan and managerial plan. The contracts were effective the day following the governor’s signature, April 17, 2008.

Pension Bill

Legislators also passed the omnibus retirement bill over the weekend. Included in the bill are modifications to the Minnesota State Colleges and Universities Individual Retirement Account Plan, or IRAP; handling the identification and disposition of abandoned IRAP accounts; and permitting Higher Education Supplemental Retirement Plan distributions to phased retirement program participants. The bill also provides for an actuarial study of the impact on the Teachers Retirement Association of allowing an additional alternative retirement coverage election for Minnesota State Colleges and Universities faculty after attaining tenure or its equivalent. The bill is now awaiting the governor’s signature.

Lawmakers wrap up budget bill but wait for global deal

The omnibus supplemental budget bill conference committee wrapped up its work this week, and conferees adopted the budget report. However, the committee co-chairs, Rep. Lyndon Carlson, DFL-Crystal, and Sen. Richard Cohen, DFL-St. Paul, said they would wait to sign the bill while negotiations continue between legislative leaders and the governor. Based on the February forecast, lawmakers were faced with resolving a $935 million budget shortfall. Since then, legislative action, such as the creation of a compensation fund for victims of the Interstate 35W bridge collapse that was signed by the governor this week, pushed that number to about $1 billion. Rep. Carlson said that future changes could be made to the budget bill if necessary.

Included in the bill is a cut for the Minnesota State Colleges and Universities system of $6.6 million, which is in line with the original House and Senate bills. The rider language states that $5 million of the cut is to come from technology and the remaining cut is to come from the Office of the Chancellor budget. With the cut at $6.6 million, the bill specifies that tuition increases will be 2 percent for colleges and 3 percent for universities. There is new money for four areas, which brings the actual cut to the system to $4.08 million. The bill appropriates $900,000 to the Board of Trustees for the Power of You program at Metropolitan State University, Saint Paul College and Minneapolis Community and Technical College. The new language does not include funding for the suburban and rural pilot programs as originally proposed. Also, $120,000 is appropriated for a Teachers of Diverse Backgrounds financial aid pilot program. The program is to be implemented at Winona State University in partnership with the Rochester school district and St. Cloud State University in partnership with the Robbinsdale school district. The pilot program is intended to increase the diversity of teachers in school districts with a significant concentration of minority students and attain the state’s interest in enhancing the academic achievement of diverse student populations.

In addition, $500,000 will fund the elimination of non-resident undergraduate tuition at Alexandria Technical College, Anoka Technical College, Hennepin Technical College and North Hennepin Community College, and $1 million is appropriated to any two-year college that experienced a reduction in reciprocity tuition revenue directly resulting from the elimination of non-resident tuition in the 2007 higher education bill.

In regard to the $11.3 million state grant surplus that had been recommended for multiple uses, such as reducing the student share, reducing the assigned family responsibility and increasing the four-year tuition maximum 3 percent, the decision was to use it toward the living and miscellaneous expense, or LME. That amount is increased $300 per student, from $5,900 to
$6,200 in fiscal year 2009. The bill does leave an unallocated amount of $1.9 million in the state
grant surplus to be used as a cushion or safety net.

Negotiations between legislative leaders and the governor on how to resolve the $935 million budget deficit continue. Gov. Tim Pawlenty has said he is considering his options, including a special session, if he and legislative leaders fail to reach a global agreement before legislators need to adjourn May 19. However, with more than a week remaining in the session, lawmakers continue to remain optimistic that a deal can be reached. Speaker of the House, Margaret Anderson Kelliher, DFL-Minneapolis, said that between $100 million and $150 million is what separates DFL leadership from the governor. Rep. Kelliher said if an agreement is not reached in the next 48 hours, the omnibus supplemental budget bill will need to be sent to the governor by Monday or Tuesday in order for the Legislature to have time to respond to the governor’s action on the bill.

Session end looming

With May 19 deadline nearing, lawmakers continue session-ending negotiations Gov. Tim Pawlenty and DFL legislative leaders have been trading budget offers over the last couple weeks in order to eliminate a $935 million projected budget deficit and go home. Some of the sticking points include the governor’s proposed property tax cap and the shift of $125 million from the health care access fund to balance the budget. In Gov. Pawlenty’s latest offer this week, the Central Corridor light-rail line that runs between Minneapolis and St. Paul is back in play. In exchange for the Central Corridor, Pawlenty proposed including the Minneapolis Veterans Home and a new state park on Lake Vermilion in any final budget solution.

The conference committee charged with solving the budget deficit continues to meet, and higher education was on the agenda this week. Higher education chairs Sen. Sandy Pappas, DFL- St. Paul, and Rep. Tom Rukavina, DFL-Virginia, explained what is in the higher education article of the budget bill. At the time of this writing, the cuts to the Minnesota State Colleges and Universities system, the University of Minnesota and the Office of Higher Education have not been presented or discussed. Lawmakers are waiting for an agreement between legislative leaders and the governor before they determine the final cuts. As a reminder, the House bill includes a cut of $6.17 million for the system, and the Senate bill includes a cut of $6.5 million but would reallocate $1.5 million of that amount for other purposes. Speaker of the House Margaret Anderson Kelliher, DFL-Minneapolis, said Democrats would like to reach a deal with the governor when they meet this weekend on the omnibus budget bill in an effort to get the budget bill through conference committee by Monday.

As for next week, after trying to finish conference committee bills early in the week, legislative leaders have said their big focus will be on property taxes. Speaker Kelliher has called the DFL leadership’s property tax proposal “governor friendly” in an attempt to negotiate.

Bonding bill line-items

Governor Tim Pawlenty today line-item vetoed from the bonding bill six Minnesota State Colleges and Universities projects totaling $46.7 million. This compares to $26 million in vetoes for the University of Minnesota.

The vetoed Minnesota State Colleges and Universities system projects and their priority ranking on the board's list are as follows:

#8 North Hennepin Community College business and technology addition and renovation, $13.3 million;

#14 Classroom renovations, $3.6 million, at Central Lakes College, Minnesota State Community & Technical College, Minnesota West Community and Technical College, Northland Community and Technical College, Pine Technical College and Rochester Community & Technical College;

#15 Lake Superior College health science center addition, $11 million;

#16 Metropolitan State University classroom center, $5.0 million;

#19 Mesabi Range Community & Technical College shop space addition and renovation, $5.0 million; and

#28 Property acquistion, $8.8 million at Bemidji State University, Dakota County Technical College, Fond du Lac Tribal & Community College, Minnesota State University Moorhead, Vermilion Community College, Minnesota State College - Southeast Technical and Metropolitan State University.

The conference commitee report goes to the governor

The House and Senate took up the bonding conference committee report on the floors yesterday The debate in both bodies consisted of the size of the bill, specifically the difference between the $925 million bill and the governor's recommendation at $825 million. Proponents of the bill say it would create jobs to help Minnesota’s economy. Critics call the bill veto-bait because it totals about $100 million more than the governor’s proposal, and does not adhere to the indicator traditionally used to establish a bond spending limit.

Since about 1979, 3 percent of general fund spending has been the target for general obligation bonding. The governor has said that a bill beyond that threshold would not make it past his veto pen. House and Senate democrats question the use of that indicator. Some are advocating for one used by several states that is based off a percent of personal income. They also say that the sale of bonds can be staged in such a way that spending will not exceed 3 percent in any given year. Conference committee co-chair, Alice Hausman, DFL-St. Paul, referenced the bonding bill from last session that the governor vetoed. She said those projects now cost $40 to $50 million more this year. Co-chair, Keith Langseth, DFL-Glyndon, called special attention to the bill's focus on higher education. We devoted significant dollars to our higher education systems’ bonding proposals, he said.

After more than three hours of debate, the House passed the bill by a vote of 90-42, and the Senate passed the bill 57-10 after only 30 minutes of debate. It now heads to the governor.

A link to the full bill can be found here.

The spreadsheet can be found here.

Higher Education omnibus crafted

The House higher education omnibus bill advanced another hurdle Wednesday in the House Education Finance and Economic Competitiveness Finance Division. Rep. Tom Rukavina, DFL-Virginia, presented the bill. It was approved and referred to the House Finance committee.

Please find a comparison of the House and Senate omnibus bills here. The Senate has two separate bills traveling, a policy and finance bill. The spreadsheet highlights the bill where the corresponding provision is found. The House has one omnibus bill that includes both finance and policy provisions.

Stalemate over size of bonding bill

Lawmakers originally had hoped that a bonding bill would be on its way to the governor’s desk before the Legislature breaks for spring recess. That spring recess began today with no sign of an agreement. The House and Senate have been debating over the size of the bonding bill, which has put off the start of conference committee meetings. Both bodies agreed to first versions of the bill, but the question now remains: What should be the size of the bill?

After the February forecast showed a $935 million deficit, Gov. Tim Palwenty asked for the bill size to be reduced to $825 million, which would keep principal and interest payments to no more than 3 percent of the state’s general fund. The governor is now calling on House and Senate leaders to shrink the size of the bill or has said he will pull out the veto pen.

Bonding revamped

Thursday morning, the Senate Finance Committee approved a second package of bonding projects and advanced the proposal to the full Senate.

At the request of Sen. Keith Langseth, DFL-Glyndon, the Senate bonding chariman, the committee adopted an amendment to SF2538, containing a $925 million bonding package. (This brings the original total down from $965 million). Langseth said the governor has indicated he wants a package of about $825 million. Putting a $925 million proposal out is intended to establish a Senate position on a slightly smaller bill for conference committee purposes, Langseth said. Changes to the proposal for Minnesota State Colleges and Universities do not include any cuts, there is however additional funding of $3.5 million for Ridgewater College, and $2.4 million for Hennepin Technical College (these projects were not included in the Senate's original bill). For this proposal, this puts the system total at $277 million. According to The Bemidji Pioneer yesterday, both Rep. Alice Hausman, the House Capital Investment Chair and Langseth neither knew the next step in finishing a bonding bill. “If this goes to the floor, it is to make a statement to the position we are in,” Langseth said. “It is a long, long way from passing.”

High Tech support boosts bonding proposal

The Minnesota High Tech Association and Lifetime Allies have lent support to the Minnesota State Colleges and Universities bonding projects that have emphasis on science, math, or technology. Please view their letter here.

Bonding speeds ahead-conferees named

It was an important week at the Capitol as bonding bills were passed both in the House and Senate. Under the legislation, Minnesota State Colleges and Universities received funding to make important improvements on campuses. The House bill proposed $281 million to the system whereas the Senate legislation provided $271 million. For a complete list of the projects that were funded, please view this document.

With both bills passed, conferees were named on Thursday:

Senate Conferees:
Sen. Keith Langseth, DFL-Glyndon (Chair)
Sen. David Tomassoni, DFL-Chisholm
Sen. Sandy Pappas, DFL-St. Paul
Sen. Linda Scheid, DFL-Brooklyn Park
Sen. Paul Koering, R-Fort Ripley

House Conferees:
Rep. Alice Hausman, DFL-St. Paul (Chair)
Rep. Jean Wagenius, DFL-Minneapolis
Rep. Loren Solberg, DFL- Grand Rapids
Rep. Bev Scalze, DFL- Little Canada
Rep. Kathy Tingelstad, R-Andover

Members of this committee will iron out the differences between the House and Senate bill. Once the conferees put together a bill, the legislation goes back to the House and Senate for an up or down vote. No amendments are taken.

Bonding bill pushes ahead

Bonding is a top priority at the Capitol right now. The Senate Capital Investment
Committee released its bonding bill Tuesday evening. The Minnesota State Colleges and
Universities received $271 million of projects. This bill next travels to the Senate Finance Committee Monday morning and is expected to be voted on by the full Senate early next week.

The House bill is moving a bit slower, but we will see the pace pick up early next week. House Higher Education and Workforce Development Policy and Finance Chair Tom Rukavina presented the higher education bonding recommendations to the Capital Investment Committee on Monday. Rukavina and the committee recommended the full Minnesota State Colleges and Universities bonding request. The bill will be presented Monday morning in the House Capital Investment committee and then will travel to the Finance Committee Tuesday. Stay tuned as we head into another busy week of bonding.

Trustee McElroy confirmed

Senators took up the confirmation of Dan McElroy, a member of the Board of Trustees of the Minnesota State Colleges and Universities on Thursday. He was approved by a vote of 59-3.

Chair of the Higher Education Committee, Sen. Sandy Pappas, DFL St. Paul, encouraged senators to support McElroy’s confirmation. She said McElroy adds to the board in a positive manner. Sen. Claire Robling, RJordan, said McElroy’s dual role as the Department of Employment and Economic Development commissioner and as a trustee is a perfect fit and that the state needs someone who understands both economic development and training workers.

Capital Budget Request Highlighted on TPT: A green Minute Man

The Minnesota State Colleges and Universities bonding request was highlighted on the Twin Cities Public Television’s Minute Man segment last week on Almanac.

To showcase the system’s request, the Minute Man traveled to Minnesota State University, Mankato and met up with the “green giant” to promote the system’s emphasis on green and sustainable renovation and construction projects. The 60-second segment featured a student in costume talking with President Richard Davenport in front of the Trafton Science Center. Renovation of the center is the No. 2 priority on the bonding request. Please view the clip here.

Capital request presented, again

Last week, the Minnesota State Colleges and Universities system presented the 2008 bonding request to the House Higher Education committee, this week it was the Senate's turn. Yesterday, Chancellor James McCormick, Trustee Clarence Hightower, and Al Johnson, Associate Vice Chancellor for Facilities, along with student, faculty and staff representatives, presented the $350.2 million request to members of the Senate Higher Education Budget and Policy Division. Committee members asked thoughtful questions, including wanting to know about projects that are ready to go. There is interest in projects that can move quickly in hopes of stimulating the economy.

System bonding request goes before House Higher Education Committee

Chancellor James McCormick, Trustee Clarence Hightower, and Al Johnson, Associate Vice Chancellor for Facilities, along with student, faculty and staff representatives, presented the Minnesota State Colleges and Universities bonding request to the House Higher Education and Work Force Development Policy and Finance Division Committee on Tuesday. Committee members listened as Al Johnson explained the $350 million bonding request, explaining that 16 projects were funded for design in the last bonding bill and will be ready for contract in the next 12 months and 14 projects are on the list in the design or design plus some construction phase. Johnson also explained that of the 37 projects on the list, 28 of the projects are renovation projects compared to new construction. Members asked questions about the debt service, citing concern for the burden of the debt service on students and the institutions. Up next, the committee will hear about the University of Minnesota's bonding request. The committee anticipates having a bill to the Capital Investment Committee by Feb. 26.

State Legislative Session begins Feb. 12, U.S. House passes HEA

State Update

Start of session – just days away

Next week will be an exciting week at the state Legislature. Just like students coming back to campus, legislators prepare to return to the Capitol for the second year of the biennium. The session convenes Tues., Feb. 12. On this first day, the Minnesota State Colleges and Universities will present the system’s capital budget request to the House Higher Education and Workforce Development Policy and Finance Division. The following day, Wed., Feb. 13, Gov. Tim Pawlenty will give the State of the State address in St. Cloud.

The Legislature also will make its final higher education visit to a system campus next week as the Senate Higher Education Budget Division travels Thursday to Normandale Community College. In addition to lawmaker visits, Chancellor James McCormick has been going to campuses to view the bonding projects on this year’s list. The list of 37 projects focus on updating science and nursing labs, renovating classrooms, and repairing leaking roofs and failing heating systems. You may view the projects in more detail at here.

Minnesota career and technical education plan available for public review and comment

Under the 2006 federal Carl D. Perkins Career and Technical Education Act, each state is required to submit a plan for career and technical education to the U.S. Department of Education. The Minnesota five-year state career and technical education plan is prepared jointly by the Perkins staff in the Office of the Chancellor, Minnesota State Colleges and Universities, and the Minnesota Department of Education. The plan is reviewed by a statewide taskforce, which will provide input and recommendations. A series of meetings will be held throughout Minnesota in February to receive input and provide more information about the Perkins Plan.

• Feb. 13 - South Central College, 1920 Lee Boulevard, North Mankato, Conference Center C, 5-8 p.m.

• Feb. 19 - Anoka Technical College, 1355 West Highway 10, Anoka, Auditorium B, 5-8 p.m.

• Feb. 21 - Lake Superior College, 2101 Trinity Road, Duluth, Room F-1981, 5-8 p.m.

In addition, a satellite broadcast hearing will be 5 to 7 p.m. Feb. 20. Seven feeder sites have been designated throughout Minnesota for this broadcast:

• Century College, West Campus Room 1420

• Southwest Minnesota State University, Room ST 266

• Northland Community & Technical College, Room 515

• Rochester Community & Technical College, Room ST 118

• Alexandria Technical College, Room 310

• St. Cloud Technical College, Room 1-412

• Mesabi Range Community & Technical College, Eveleth, Room F-130


Federal Update

House approves Higher Education Act; moves to conference committee

Working into the evening hours, the House approved the Higher Education Act, HR 4137, with a 354-58 vote on Thursday. This is the law that governs most federal student aid programs and sets higher education policy. The Senate passed its version of the reauthorization, S.1642, in July. Next steps include a conference committee to reconcile the differences between the House and Senate versions of the bill. It is still unclear at this point when we will see this happen.

On Friday, the government relations team and the Friends Action Network hosted Brittny McCarthy, federal relations and policy analyst for the American Association of State Colleges and Universities. McCarthy provided information about what ended up in the bill, as detailed below.

The House approved 26 amendments and rejected one, an amendment that would have made private student loans dischargeable in bankruptcy. That amendment, which was strongly supported by groups representing consumers and students, would have allowed borrowers to wipe out their debt after 5 years of repayment.

Significant amendments that did pass include the “manager’s amendment,” offered by Chairman George Miller, D-Calif. The “manager’s amendment” is a reference to the changes Chairman Miller wanted in the bill, including changes to the “college cost” provisions in the bill. Rather than a “watch list,” which is in the Senate bill, for those institutions that are increasing tuition at a faster rate than the college price index, the new language requires three “college affordability and transparency lists.” The lists would show the top 5 percent of institutions by sector in three categories: the most expensive, the least expensive, and those institutions with the largest percentage increase in tuition and fees over the previous three years. Institutions on the third list would be subject to submitting a report outlining factors contributing to the increase. In an amendment passed later in the day, additional requirements were made for those on the third list, including a requirement to develop annual benchmarks as it relates to tuition setting.

Another amendment offered by Rep. Buck McKeon, R-Calif, was to study the number and impact of regulations on higher education. Further amendments include tuition benefits for active military personnel and veterans, as well as prohibiting a state from charging members of the armed forces who are on active duty for more than 30 days and whose domicile or permanent duty station is in such state, and such members’ dependents, more than the in-state tuition for attending a public institution of higher education in that state.

Language was included to authorize a competitive grant program through the U.S. Department of Education that would allow institutions of higher education or consortia to create longitudinal data systems to efficiently and accurately manage, analyze and use individual student data. This language is similar to Senate language. Language was also included providing competitive Teach to Reach grants to eligible partnerships to provide general education teacher candidates with the knowledge and skills to effectively instruct students with disabilities in their classrooms. Eligible partnerships must include an institution of higher education, a special education department within that institution and a high-need local education agency.

Recognizing the high cost of textbooks is a problem, an amendment also was offered that creates a pilot competitive grant program (available to no more than 10 colleges) to assist institutions of higher education in setting up college textbook rental programs.

President releases fiscal year 2009 budget

President George W. Bush released a $3.1 trillion budget for fiscal year 2009 this week. Under his recommendation, 61 percent of spending under the president’s proposed budget would be for mandatory programs such as Social Security, Medicare and interest on the national debt, with annual spending for discretionary programs making up the remaining 39 percent. The administration is estimating that annual budget deficits will be $410 billion this year and $407 billion in fiscal year 2009. The growing deficit is expected partly because of stagnant federal revenues caused by the current economic slowdown, as well as the expected costs of the pending economic stimulus package. Included in the president’s budget recommendations was the elimination of the Carl D. Perkins Vocational-Technical Education Act program. This recommendation is not new, as the president has made this recommendation in previous budgets, and the program continues to be funded by Congress. Stay tuned.