Minnesota State approves plan to use community college funds to help struggling universities

Minnesota State’s Board of Trustees on Wednesday approved a proposal to transfer up to $25 million each year for the next four years to schools in financial crisis. The money would largely come from peer institutions — primarily two-year community and technical colleges.

For fiscal year 2028, $10 million would go to St. Cloud State University and $4.8 million to Bemidji State University. Officials with Minnesota State say the proposal is a short-term response to immediate pressures at the two schools, which already have made steep cuts to employee positions, academic programs and other costs.

During the meeting, Michael Berndt, president of two community colleges in the Twin Cities suburbs, noted his institutions have also faced years of layoffs, bigger class sizes, frozen budgets, deferred maintenance and other hardships to maintain financial health.

“It’s frankly demoralizing to our employees to see the outcome of our work significantly reduced by seeing our allocation dollars reduced,” said Berndt, who heads Dakota County Technical College and Inver Hills Community College and represented other community college presidents at the meeting.

Among the 26 colleges and seven universities that comprise the Minnesota State system, institutions will be expected to contribute anywhere from $121,000 to $1.8 million in year one to an emergency fund to help the struggling schools.

The two institutions Berndt oversees, which jointly enroll about 6,600 students , would contribute $747,533.

Minnesota State officials revised an earlier version of the proposal, agreeing to take fewer dollars from institutions that are lowest on cash reserves and to require St. Cloud State and Bemidji State to create financial recovery plans, among other actions.

Berndt said the latest proposals are “stronger and more thoughtful.” Still, he said, he will have to explain the loss of funding to his students, employees and local lawmakers.

“More transparency about what has been done, and what is being planned, will enable me to be a better advocate,” he told trustees.

St. Cloud State University has already reduced its workforce by 40% in 15 years, suspended admission to nearly 200 academic majors, minors and certificates since 2023, and taken a $2 million loan from the system office. It will deplete a reserve funding pool by this summer, a spokesperson told MinnPost, a savings account that held nearly $19 million a decade ago.

Under the funding reallocation measure, Minnesota State University-Mankato would contribute $1.8 million — the most of any institution.

That school’s president, Edward Inch, said the proposal recognizes the system is “spread very thin” and that all institutions have had to make “difficult and painful cuts.”

The plan to shift money is the least damaging option available, he said, adding that “there is a price to be paid for the whole system” in order to stabilize St. Cloud State and Bemidji State.

“It’s not a choice that gets made between a good idea or a bad idea. It’s competing choices of things that are damaging or less damaging,” said Inch, who represented other Minnesota State university presidents at the meeting.

In voting in favor of the proposal, Trustee Roger Moe said, “We take the tough medicine, and hopefully we can get this thing corrected over the years coming ahead.”

Officials say the proposal is a bridge to help two schools undergoing immediate crises until the system can address bigger-picture financial problems. To do so, Minnesota State is considering plans to close, merge or otherwise consolidate campuses, reduce excess buildings, redesign the formula used to distribute money to its institutions, and consolidate IT, cybersecurity and other services.

Bill Maki, the system’s vice chancellor for facilities and finance, said during Wednesday’s meeting that taking money from some schools to give to others will have a “negative impact, it’s just to what extent.”

“It really indicates that we have a situation where we have significant financial challenges at a couple institutions, and we don’t have a lot of levers to deal with it.”

Acknowledging it is “not the most ideal plan,” Maki said more ideal would be “that the state would support this.”

A draft legislative budget request , also discussed Wednesday, seeks $65 million in one-time support in response to the system’s financial situation. That includes $25 million to support financially struggling institutions.

Minnesota State expects it will reach a nearly $100 million budget shortfall by summer 2028, with system officials citing years of declining enrollment, “constrained” state funding and inflation as main reasons why.

Also Wednesday, trustees approved a measure to take $24.3 million from equipment budgets of all institutions, through summer 2032, and use the funds to demolish unnecessary campus buildings that waste utility and maintenance costs. The system also plans to ask legislators for funding to help cover costs of razing buildings.

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Cleo Krejci is an investigative reporter covering community colleges as part of a collaboration between MinnPost and Open Campus .

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This story was originally published by MinnPost and distributed through a partnership with The Associated Press.