The 2019 regular legislative session officially adjourned Monday, May 20, 2019 at midnight with legislative leaders and Gov. Tim Walz having come to a global budget agreement in the final days of session, but without enough time to process the 10 appropriation bills. Aside from the higher education finance bill, no other budget bill passed during the regular session, so a special session was needed.
With joint budget targets for the individual conference committees assigned the night before the session was to adjourn, committee chairs and commissioners worked around the clock to reconcile the differences between the House and Senate versions of the different budget bills. The higher education conference committee wrapped up their work the last night of session and sent the bill to the floor.
As for the budget agreement reached, one of the biggest areas of disagreement was the Tax bill. The Senate and House tax proposals varied significantly heading into conference committee, which caused difficult negotiations between the Governor and legislative leadership. The House was proposing to increase the gas tax $.20, and continue the health care provider tax, while the Senate proposal provided tax cuts totaling $800 million. The Senate bill reduced the second-tier income tax rate by a quarter of 1 percent, as well as provided tax breaks for business owners, investors, charitable gaming organizations, farmers and senior citizens.
The final agreement did not include any increases in the gas tax that Gov. Walz and the House DFL originally proposed. The agreement does repeal the sunset of the 2% healthcare provider tax and reinstated it at 1.8% permanently. The bill also includes a reduction of 0.25% in Minnesota’s second-tier tax bracket.
Another sticking point was the E-12 education finance bill. Both the House and the Senate budgeted for an increase in education spending for the 2020-2021 biennium. The House proposed increasing the basic funding formula by $521 million which would allow for a 3% increase to the formula in the first year and an additional 2% the following year, mirroring Gov. Walz’s request. The Senate proposed increasing the formula by less, .5% in the first year and .5% in the second year.
Both the House and Senate acknowledged the importance of increasing special education aid, ensuring schools are safe, investing in early learning scholarships, recruiting and training more teachers of color, and working to close the achievement gap. The differences were in how much money was set aside to fund each priority. The House plan included some significant policy changes, specifically regarding the tiered teacher licensure program that was implemented just over a year ago, and the Senate focused on funding school safety initiatives.
The final budget agreement includes putting $540 million in new E-12 education spending and increasing the basic funding formula 2% both years of the biennium. Provisions in the bill with impact to Minnesota State are summarized below.
On May 23, Gov. Walz issued a proclamation calling for a special session of the Legislature to convene Friday, May 24 at 10:00 a.m. The special session lasted roughly 21-hours, and included passing bills that finalized a $48 billion 2020-21 budget scheduled to take effect July 1, 2019. The special session adjourned just before 7:00 a.m. Saturday.
Part of the global budget agreement was a $500 million bonding bill, but the special session adjourned without taking the bonding bill up for consideration. A bonding bill is generally reserved for the second year of a biennium; however, smaller bonding bills have traditionally passed during the odd-numbered session. Given that, the Board of Trustees put forward a $150 million HEAPR request, which illustrates the strong need for the colleges and universities to take care of the buildings they have.
Moving forward, the 2020 legislative session will focus on bonding. The Minnesota State Board of Trustees will adopt a bonding recommendation in June, and that request will be submitted to the Governor and Legislature for consideration in the 2020 session. Lawmakers will likely visit campuses this summer and fall to learn more about the different bonding projects and needs.
While lawmakers did not pass a bonding bill this year, they did pass a pension bill in the special session. After the Pension Commission passed a sizeable bill last session, there didn’t seem to be much interest in passing another pension bill so quickly. However, the Commission met a few times throughout the regular session and took up a number of issues, including many that impact Minnesota State. A pension bill emerged in the special session, and lawmakers passed it.
Included in the bill is a provision that removes the sunset date of June 30, 2019 from the early separation incentive program provision. Minnesota State’s early separation incentive program allows Minnesota State to offer incentives to induce eligible employees to retire as early as age 55. The incentives may be in the form of a cash payment not to exceed one year’s salary, and/or a contribution to the employee’s health care savings plan account. The bill removes the sunset clause for the program, making the program permanent.
Another provision included in the pension bill with significance to Minnesota State is the employee contributions to the Individual Account Retirement Plan (IRAP). The current option available to members of IRAP to elect to transfer from the IRAP to the Teachers Retirement Association (TRA) does not comply with federal Internal Revenue Code requirements and IRS guidance. The language increases the employee contribution rate to match the TRA employee contribution rate, which brings the IRAP into compliance. The current employee contribution rate of 4.5% is increased to 7.5%, effective July 1, 2019, and is tied to the TRA rate thereafter. The employee contribution rate for employees who are not eligible for an election is increased over a five-year phase in, which brings their contribution rate equal to the TRA rate by July 1, 2024.
Below is a summary of provisions included in final bills that have an impact on Minnesota State. With the closing of the special session, lawmakers have headed home to their districts. They are scheduled to return to St. Paul for the 2020 legislative session on February 11, 2020.
Higher Education Bill
Once a global budget agreement was reached the evening of May 19, a 14-hour negotiations session on the higher education bill took place between the conference committee Co-Chairs Rep. Connie Bernardy, DFL-New Brighton, and Sen. Paul Anderson, R-Plymouth, and Higher Education Commissioner Dennis Olson. The conference committee passed the agreed-upon report Monday evening, May 20, and shortly thereafter it passed out of both chambers. The bill passed the Senate by a vote of 62-3, and then the House passed the bill by a vote of 84-49. Governor Tim Walz signed the bill on May 22, 2019.
Conferees had their work cut out for them. Headed into conference committee, the House and Senate took different approaches to fund higher education for the 2020-2021 biennium. Specifically for Minnesota State, the Senate was proposing to appropriate $46.9 million. The appropriation would cover a lot of areas, including $22 million for Next Gen, the critical technology infrastructure project; $15 million for workforce development scholarships; $3 million to support the Board of Trustee’s workforce request; $4 million for campus support; $500,000 to support the Z-degree textbook program; $1 million for leveraged equipment; and $1.2 million in new funding for supplemental aid for operations and maintenance at non-metro two-year colleges. The Senate bill also froze tuition at 2% both years at the universities, and 2% and 1% at the two-year colleges.
In comparison, the House bill proposed $159 million for Minnesota State. $149 million was intended to pay for a tuition freeze, $10 million was to fund NextGen, and there was $250,000 for a mental health program at two-year colleges, as well as $200,000 to expand the work on open educational resources with a focus on textbook affordability for students.
On Sunday evening of the final weekend of the regular session, conference committees received their targets. Higher education was given a target of $150 million, and they immediately got to work assembling a bill both the House and Senate could agree on.
The final bill, Chapter 64, includes $81.5 million in new funding for Minnesota State. The funding is appropriated in the following way:
- $64.5 million for campus operating support
- $8 million for the Next Gen technology infrastructure project. The Next Gen project is a critical technology replacement of the twenty year-old outdated ISRS data system that will benefit all students, faculty and staff across the state.
- $1 million in onetime funds for workforce partnerships. Local partnerships must be comprised of campuses and local businesses, and may also include K-12 school districts, trade associations, local chambers of commerce, and economic development authorities. Funds are to be used to develop new and accelerate existing employer-led workforce exposure programs, technical education pathway programs, dual-training programs, internships, youth skills training programs, and other industry-recognized programs in high-growth, high-demand industries.
- $7 million for workforce development scholarships. This program was developed by the Legislature in the 2017 legislative session. Minnesota State then developed a scholarship program to incentivize new students to enter high-demand occupations upon graduation with scholarships in the amount of $2,500. This bill increases the amount for scholarships, as well as makes changes to the program. The changes include students returning from the workforce will now be eligible, early childhood and transportation programs were added to the list of eligible programs, students can attend not only a two-year college, but now also a university as a transfer student. Also, ten percent of the appropriation is to be withheld to be distributed to institutions that successfully leverage private matching funds from local businesses, resulting in additional scholarships by partnering with the local business community.
- $500,000 in onetime funding for textbook affordability, specifically for developing and offering courses to implement the Z-Degree textbook program. Three additional colleges are required to offer the opportunity to earn a Z-degree by the 2020-2021 academic year. In addition, Minnesota State is to develop a program to offer a Z-degree at three additional colleges by expanding the use of open educational resources, including custom and open textbooks. A report is required back to the Legislature by January 13, 2021.
- $500,000 in onetime funds for leveraged equipment acquisition. Equipment must be used for instructional purposes for programs determined would produce graduates with skills for which there is a high employer need within the state. An equipment acquisition may be made using the appropriation only if matched by cash or in-kind contributions from non-state sources.
- $250,000 in onetime funds for mental health services on college campuses. Up to five state colleges are to contract with one or more independent mental health organizations to provide mental health care, including by use of telemedicine, on campus. To be eligible to apply for the program, the college must employ one or more faculty counselors.
The bill caps tuition at 3% each year of the biennium. Under the provision, tuition rates cannot exceed the prior academic year rate by more than three percent at both the colleges and universities. Differential tuition charges are permitted in both years of the biennium where costs for course or program delivery have increased due to extraordinary circumstances beyond the control of the college or university. This does not include differential rates for online courses.
The online language that was in the Senate bill and required any online differential tuition rate to be reduced to a comparable on-campus class, was not included in the final bill. There is however, language that freezes the differential tuition rate for online courses for both years of the biennium. There is also language in the bill that requires a report to the Legislature regarding an analysis of online tuition differential, and a plan to achieve parity related to tuition rates.
In regards to the State Grant program, the final bill includes an increase to the program of $18.2 million. The changes to the State Grant include reducing the assigned family contribution (AFR) by two additional percentage points. This will benefit families with an expected financial contribution. The bill also increases the living and miscellaneous expense account (LME) to 106% of federal poverty guidelines from 101%.
There is language in the bill that establishes student loan debt counseling. The program is to be established at the Office of Higher Education to provide a grant to a Minnesota-based nonprofit qualified debt counseling organization to assist borrowers to understand their loan and repayment options, manage loan repayment, and develop a workable budget based on the borrower’s full financial situation regarding income, expenses and other debt.
The final bill includes a Hunger Free Campus Designation provision. The measure establishes a Hunger Free Campus designation for Minnesota State community and technical colleges. In order for a campus to be awarded the designation, a campus must meet minimum criteria, such as having an established on-campus food pantry or partnership with a local food bank to provide regular, on-campus food distribution. The statewide student association representing the community and technical colleges is to create an application process and a nonmonetary award, and provide final approval for the designation at each college.
The bill includes $2 million for the Minnesota Reconnect program. This is a program focused on adult learners who have previously completed a minimum of 15 credits to finish their degree, diploma or certificate at a two-year institution within Minnesota State.
Both the House and Senate bills included policy language that requires providing notice to sexual assault victims of the availability of a campus or local program providing sexual assault advocacy services and information on free legal resources and services available to them. This provision was included in the final bill.
The final bill also includes language that requires Minnesota State to provide a report to the Legislature detailing how Minnesota State defines, categorizes, and accounts for administrative costs. The report must identify measures taken to use innovation and cost efficiencies to lower administrative costs.
E-12 Education Bill
The final E-12 education bill includes multiple provisions relating to post secondary enrollment options (PSEO), including a new requirement that a post secondary institution must allow high school students to enroll in online courses consistent with the institution’s policy. There is also a provision in the bill that allows the Breckenridge School District to enter into an agreement with an out-of-state higher education institution for the purposes of the PSEO program.
The bill includes a provision that requires districts and post secondary institutions offering an “Introduction to Teaching” dual-credit course to report on certain enrollment demographics. $375,000 is appropriated each year of the biennium for grants to institutions offering “Introduction to Teaching” college in the schools courses.
The E-12 education bill establishes P-TECH schools as a public-private partnership to prepare students for high-skill jobs of the future in growth industries. The model is focused on delivering a rigorous, relevant and cost-free education in grades 9 to 14, focused on knowledge and skills students need for science, technology, engineering and math (STEM) careers. The model makes a commitment to students who complete the program to be first in line for a job with participating business partners following completion of the program. Language establishes P-TECH objectives, an application and approval process, and P-TECH support grants. The bill appropriates $500,000 each year of the 2020-2021 biennium for this program.
There is language in the bill that impacts teacher education programs, including a requirement for teacher preparation programs for elementary education teachers to include scientifically based or evidence based and structured reading instruction, and requires programs preparing elementary education, early childhood education, special education, and reading intervention teachers to include instruction on dyslexia.
Also included in the final bill is language to prepare Indian teachers. Grantees can enter into contracts with tribal, technical, and community colleges and four-year post secondary institutions to identify and provide grants to students interested in the field of education. The bill allows a grantee to contract with partner institutions to provide professional development and supplemental services to a tribal, technical, or community college or a four-year post secondary institution.
Grantee institutions and contracted partner institutions can provide scholarships to students progressing toward educational goals in any area of licensure. Language requires grantees or their contracted partner institutions to hire an American Indian work-study student or other American Indian staff to work on recruitment. $460,000 is appropriated each year of the biennium for joint grants.
Collaborative Urban and Greater Minnesota Educators of Color Grant Program language is also in the final E-12 education bill. Under the provision, competitive grants are to be awarded to increase the number of teacher candidates of color or American Indian and meet the requirements for a Tier 3 license. The Professional Educator Licensing and Standards Board (PELSB) is to partner with the Office of Higher Education to establish and administer the grant process. There is $1.099 million in 2020 and $1 million in 2021 available for the program.
Jobs, Economic Development, Energy and Commerce Bill
The jobs, economic development, energy and commerce bill passed during special session includes funding and language that impacts Minnesota State. For example, the bill appropriates $4.195 million each year of the biennium for the Minnesota job skills partnership program, a program from which Minnesota State institutions benefit.
There is also $250,000 each year of the biennium in the bill for pilot programs in the workforce service area to combine career and higher education advising. The bill also appropriates $150,000 each year from the workforce development fund for a grant to the Regional Center for Entrepreneurial Facilitation hosted by a county or higher education institution.
Another program two year colleges benefit from is the pathways to prosperity competitive grant program. The bill appropriates $4.604 million each year from the workforce development fund and $1.094 million each year from the general fund for the program.
The final bill also includes $875,000 each year from the workforce development fund for a grant to the Minnesota High Tech Association to support SciTechsperience internship opportunities for two-and four-year college students and graduate students in their field of study.
The bill also includes language that establishes Launch Minnesota, a program to encourage and support development of new private sector technologies and provide entrepreneurs and emerging technology-based companies business development assistance and financial assistance to spur growth. Higher education institutions, in partnership with other organizations, can offer classes and instructional sessions on how to start a high-tech and innovative start-up.
State Government and Veterans Bill
Heading into conference committee the House and Senate state government bills included varying provisions with an impact on state agencies, including Minnesota State. The final bill includes $200,000 each year of the biennium for the costs of administering the Minnesota GI Bill post secondary educational benefits, on-the-job training, and apprenticeship program.
There is also language regarding managerial positions. Under the provision, Minnesota Management and Budget is required to ensure that all hiring for classified positions identified as managerial is conducted through a fair and open process where all candidates who meet the minimum qualifications for the positions are considered.
Agriculture and Housing Bill
The conference committee for the agriculture and housing budget bill finished their work during the regular session, but time ran out before the House could vote on the bill. Lawmakers passed the bill in the special session. Included in that bill is $50,000 each year of the biennium in one-time funds for additional community outreach on farms and rural mental health services including the 24-hour hotline, service availability, and mental health forums. Of this appropriation $12,000 each year is to provide professional development training for Farm Business Management instructors in the Minnesota State system.
There is also $250,000 each year of the biennium for Minnesota State for the statewide mental health counseling support to farm families and business operators through the Minnesota State Agricultural Centers of Excellence. South Central College and Central Lakes College are to serve as the fiscal agents.
Environment and Natural Resources Bill
The environment and natural resources finance bill includes an appropriation for Central Lakes College for Farm-Ready Cover Crops for Protecting Water Quality. $741,000 will be appropriated to Central Lakes College to demonstrate conservation benefits of using camelina and kura clover as continuous living cover with corn-soybean rotations and to develop secondary markets to increase farmer adoption of this practice for protecting water quality in vulnerable wellhead protection areas.