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ighe~r ~ducatior~.. C7 The higher education budget comprises the University of Minnesota, the Minnesota State Colleges and Universities (MnSCU), and the Higher Education Services Office (HESO). It also includes the Higher Education Facilities Authority and grants to the Mayo Foundation. Higher education is financed through a mix of state and federal funds, tuition, private and institutional funds, with the state paying the largest share. _~: ,; ` ~Highe~r. education Bill :Funding ~.: ~ _ . ~$ in millions) Percent FY 2002-03 FY 2004-05 Chanoe General Fund 2,806 2,552 (9)% The Governor's general fund budget for higher education totals $2.552 billion - a 9 percent decrease over the current biennium. Key Elements of the Budget Recommendations Recognizing the severity of the budget shortfall, the Governor's budget reduces state funding for the post- secondary institutions, while minimizing the impact on students through increased funding for financial aid and a limit on tuition increases. The Governor expects the institutions will rigorously review their operations and focus state funding on the support of core academic activities. The Govemor's budget includes the following specific recommendations: • The State Grant program increases by $60 million in the Governor's budget proposal. These funds have been reallocated from the University of Minnesota and MnSCU, in order to put more funds in the hands of students, enabling them to choose the best venue for furthering their education, and encouraging a vibrant and competitive higher education infrastructure. • The Govemor's budget recommends $1.094 billion from the General Fund for MnSCU, a 10°~ decrease from FY 02-03 funding levels. In FY 2001, MnSCU received 57 percent of their revenue from the state, so this represents a reduction of approximately 6% of their total revenue. • The Governor's budget recommends $1.085 billion from the General Fund for the University of Minnesota, a 15°~ decrease from FY 02-03. In FY 2001, the University received 32 percent of their revenue from the. state, so this represents a reduction of approximately 5% of their total revenue. • Tuition increases would be limited to a maximum of 15% for MnSCU, with a similar expectation for the University of Minnesota. The Govemor views this increase as an absolute ceiling, and challenges the systems to limit tuition adjustments to much lower levels in order to limit the impact of the budget reductions on students. In FY 2003, average tuition at MnSCU was $2,813, an increase of 11 °~ over the previous year. In FY 2003, average tuition and fees at the University of Minnesota were $6,280, an increase of 13°~ over the previous year. • The Govemor recommends eliminating the endowment for the Academic Health Center (AHC) and replacing that dedicated funding stream with the dedication of 6.5 cents of the existing cigarette tax. This would stabilize funding for the Academic Health Center at FY 2003 levels. Governor's 2004-05 Budget 10