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CLA Budget 1001--Part 3: The State Appropriation

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By Brent Gustafson, Finance Director

As a public institution, the University of Minnesota relies on biennial appropriations from the Minnesota Legislature to fund a significant portion of its operations. For the College of Liberal Arts, state appropriations fund nearly $45 million of our current year's budget (19%). This week's column is intended to explain the process of how the University allocates these resources among colleges, as well as trends in the level of state resources available to the University and to CLA.

Biennial Process

Each time the State of Minnesota develops its budget, it does so for a two-year period. This "biennial budget" sets in law appropriation amounts for state agencies and the University of Minnesota, among other recipients. Typically, the state legislature makes appropriations for each two-year biennium in the spring of each odd-number year for the fiscal year that begins on July 1 of that year. The Legislature is currently in session and developing the FY 2014-15 biennial budget. Overall, the State's budget encompasses a total of $67 billion for the two-year period across all funding sources (FY 2014-15 ). However, much of the focus for the state budget each legislative session is on the $37 billion General Fund, because this is the largest and most flexible resource for state lawmakers. The General Fund is the source of the University's appropriation from the state.

While the Legislature creates an appropriation law (i.e., the budget) in the odd-numbered years, it also makes adjustments to the budget in the even-numbered years, often referred to as the supplemental budget.

University Process

Within the University, each administrative and collegiate unit undergoes an annual budget and planning process with central administrative offices. These central offices are responsible for the overall allocation of resources across the University and for presenting those plans to the Board of Regents. Academic units like CLA go through this process--known as the compact process--each spring for budget allocations for each fiscal year that begins on July 1.

As part of this annual budget process, the University will allocate what it has received from the State of Minnesota. The state appropriation is often referred to as "O&M," which stands for Operations and Maintenance. For the current fiscal year (FY 2013), the University received $545.8 million as an appropriation from the State's General Fund (the biennial amount for the U for the current biennium is $1.09 billion, or about 3% of the State's total General Fund). For the current fiscal year, CLA's allocation of state appropriations is $45 million, or about 8% of the University's allocation.

In making allocations to colleges such as CLA, central offices take into account many factors, including the availability of other resources. The budget process involves examining levels of funding and trends across all sources, so CLA's revenue from tuition and other sources is taken into account when setting allocations of state O&M funds. Other colleges receive different percentages of their budget from the state appropriation.

Trends

The amount of funding for the University--and consequently CLA--has fluctuated over time, particularly in light of state budget shortfalls. For example, the State of Minnesota faced a $5.5 billion budget shortfall for the current biennium. In setting appropriations for this two-year period, the Governor and Legislature set the amounts for the University at a level that was $126 million lower than the prior two-year period.

Copy of State approp history.png

Not surprisingly, as the state funding for the University has decreased, so has the amount of O&M that has been allocated to CLA. In 2008, state resources funded $75.6 million of CLA's operation (32% of CLA's budget). As noted above, the CLA's budget for the current year relies on $45 million of state funding (19% of CLA's budget).

Currently, the University has a budget request under consideration by the State Legislature. Anyone seeking more information about the University's biennial request can get information from the University's Office of Government and Community Relations: http://govrelations.umn.edu/biennial-budget.html.


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