1. The Minnesota State Colleges and Universities system is an Equal Opportunity employer and educator. Presented to the Board of Trustees March 2007 FY2008-2009 Minnesota State Colleges and Universities System and State Economic Outlook

2. Slide 2 State forecast fundamentals Updates state’s financial outlook (FY2007) Provides new estimate of revenues and expenses for next biennium (FY2008-2009) Updates planning estimates for following biennium (FY2010-2011) Includes most recent information about national and state economic outlook Expenses reflect current law; excludes Governor’s budget recommendation

3. Slide 3 State economic outlook assumptions GDP Growth rate 3.4% in 2006 2.9% in 2007 3.0% in 2008 3.0% in 2009 Wage and salary income growth (Minnesota) 4.8% in 2006 4.9% in 2007 4.6% in 2008 5.3% in 2009 Job growth (Minnesota) 1.4% in 2006 0.5% in 2007 1.2% in 2008 1.6% in 2009 Minnesota Budget Forecast, February 2007, Minnesota Department of Finance

4. Slide 4 State budget projections FY2008-2009 Dollars in millions FY 2008FY 2009 Revenues$16,551$17,127 Spending 16,143 16,494 Difference 408 633 Inflation (320) (700) Balance $ 88$ (67) Minnesota Budget Forecast, February 2007, Minnesota Department of Finance. Inflation assumptions of 2.0% FY 2008; 2.2% FY 2009

5. Slide 5 State budget balances FY2006-2011 Dollars in millions Change Balance from Nov FY2006-2007$1,013$ (25) FY2008-2009$2,163$ (7) (includes FY06-07 balance) FY2010-2011$2,799$ (418) (includes FY08-09 balance) Minnesota Budget Forecast, February 2007, Minnesota Department of Finance

6. Slide 6 Population driven pressures on state spending -0.8% 5.4% 6.4% 4.9% 4.4% -2.4% Juvenile Rehabilitation Ages 12-17 Percent Change 2005-2010 Corrections Males 18-39 Medical Assistance General Population TANF Females Ages 18-34 Higher Education Ages 17-29 E-12 Education Ages 5-17 Source: State Demographer 11.9% Long-Term Care Ages 85 and older

7. Slide 7 State spending on higher education as share of all general fund spending Minnesota Budget Forecast, February 2007, Minnesota Department of Finance

8. Slide 8 MnSCU state funding per FYE FY2000-2009 Assumes no new state appropriation for FY2008 and FY2009

9. Slide 9 Student FYE enrollment FY2000-2009 FY2007-2009 FYE projections as of October, 2006

10. Slide 10 Percentage change in system average annual tuition per FYE: FY1997-2009 Assumes a 4% tuition increase in FY2008 and FY2009.

11. Slide 11 MnSCU colleges have long had relatively high tuition rates Minnesota State Colleges and Universities National Ranking in Tuition Rates 1979198919992007 Colleges* 6 6 7 3 Universities 23 11 19 15 Source: Washington Higher Education Coordinating Board annual national survey * includes only community colleges in survey

12. Slide 12 MnSCU average annual undergraduate tuition per FYE Tuition Only. Base year is 2000. Assumes 4% tuition increase in FY2008 and FY2009.

13. Slide 13 FY2008-2009 biennial budget request versus Governor’s recommendation

14. Slide 14 MnSCU general operating budget outlook FY2008-2009 No increase in state appropriation; 4% tuition increase each year; inflation assumption 3.25% each year; MnSCU’s biennial budget request (strategic advancements and technology) included in expenses. Dollars in millions FY2007FY 2008FY 2009 Revenues$1,300$1,323$1,347 Expenses$1,300$1,395$1,452 Balance$ (72)$ (105)

15. Slide 15 FY2008-2009 operating budget outlook Inflation funding in MnSCU’s biennial budget request but not in Governor’s recommendation Various tuition freeze/cap bills currently introduced in Legislature Board of Trustees capped system average tuition increase at 4% each year of biennium Labor contract negotiations currently underway

16. Slide 16 Timeline November 15, 2006 – Board of Trustees approves Biennial Budget request January 24, 2007 – Governor's budget recommendations May 21, 2007 - Final appropriations bill June 6 and 12, 2007 - Public hearings on operating budget including tuition and fees June 20, 2007 – Board of Trustees approval of operating budget including tuition and fees