Minnesota State Approves $25 Million Annual Reallocation to Struggling Universities

The Minnesota State Colleges and Universities board approved a proposal on Wednesday to redirect millions of dollars in system funding to struggling universities. The plan will reallocate up to $25 million annually for four years from the system’s 33 colleges to any of its distressed institutions.

Projected aid for key universities

Initial projections show two universities will receive significant support under the new measure. St. Cloud State University is expected to receive approximately $10 million in fiscal 2027. Bemidji State University is expected to get about $4.8 million the same year. Together, these two institutions would receive nearly $15 million.

Context of systemic financial strain

The reallocation is a response to severe systemwide financial pressure. Minnesota State faces a current deficit of $31.5 million. Multiple factors drive this crisis. The system experienced a $35 million reduction in base state funding for the current fiscal year. Inflation has been higher than expected. Enrollment declines have also taken a toll.

Institutional responses and impacts

The targeted universities have already undergone drastic cuts. St. Cloud State moved to slash nearly four dozen academic programs two and a half years ago. It cut 57 faculty and 46 staff positions at that time. The university has lost about 5,400 students over the past two decades. Its workforce has been reduced by 40% over 15 years. Since 2023, St. Cloud State has suspended admission to nearly 200 academic majors, minors, and certificates. It currently enrolls about 10,600 students.

Bemidji State cut two academic programs and 14 faculty positions a few months after St. Cloud State’s reductions. The northern Minnesota campus educates about 4,000 students. It has cut several academic programs, three dozen positions, and one third of its faculty. St. Cloud State already took a $2 million loan from the system office to manage its cash needs.

Leadership and broader implications

System Vice Chancellor for Finance and Facilities Bill Maki described the plan as "somewhat unprecedented" in the system’s three-decade history. He said the funding was necessary given that the institutions couldn’t cut costs quickly enough to shore up their cash needs. The proposal was developed with input from a think tank of leaders within the Minnesota State system, including several college presidents.

The board approved additional measures as part of the same package. It directed $1 million toward systemwide shared services for cybersecurity, procurement, and financial aid processing. It also approved a measure allowing the system to redirect half of its annual $7.3 million equipment budget toward building demolition. A separate proposal to take $24.3 million from all institutions through summer 2032 to demolish excess facilities is under consideration.

System Chancellor Scott Olson stated in September that some campuses may close, though institutions would likely align or merge. Plans are in progress to close Minnesota State Community and Technical College’s Detroit Lakes Campus. That campus educates just over 100 students near Fargo. Closing it will save $1 million per year and $18 million in future costs. Northwest Technical College is planned to relocate to the Bemidji State campus.

Edward Inch, president of Minnesota State University, Mankato, captured the widespread tension. "We are spread very thin," he said. There’s not a lot of margin left that we have to play with.

The system will determine if a college receives transitional funds based in part on its Composite Financial Index indicator. Under the projections, institutions with lower cash balances would contribute proportionally less. For fiscal year 2028, colleges and universities would contribute between $121,000 and $1.8 million annually. Two-year colleges would contribute about three times as much as four-year universities under the proposal. Eight institutions, five of which are universities, are projected to have ended fiscal year 2026 in poor financial health.

The board will annually reassess the proposal through fiscal year 2031, with reapproval required each spring.