Presented by MNSCU Vice Chancellor CFO Laura King. November 12, 2009.

1. State of Minnesota Economic Outlook: Implications for the System Presented to Northeast Higher Education District November 12, 2009

2. Fiscal year 2010 budget gaps

3. Spending cuts as percentage of actions

4. Use of ARRA funds as percentage of actions

5. Fiscal year 2011 budget gaps

6. Fiscal year 2012 budget gaps

7. State of Minnesota revenues below forecast: fiscal years 2010-2011 Source: “But…What About Tomorrow?”, presentation to LCPFP Balanced Budget Subcommittee, October 2009. $ millions Estimate Actual Variance % Individual $1,728 $1,635 $(93) (5.4) Sales 874 854 (20) (2.3) Corporate 129 182 52 41.1 Motor Vehicle 16 20 4 25.0 Other 372 376 4 1.1 Total $3,119 $3,067 $(52) (1.7)

8. State of Minnesota fiscal year 2010 Q1 revenues below fiscal year 2009 Q1 Source: “But…What About Tomorrow?”, presentation to LCPFP Balanced Budget Subcommittee, October 2009. $ millions Estimate Variance % Yr Chg % Withholding $1,398 $(27) (2.0) $(112) (7.6) Indiv. Est. 290 (55) (18.9) (99) (29.6) Gross Sales 924 (13) (1.4) (143) (13.6) Corp. Est. 127 37 29.1 (15) (8.4) Total $3,119 $(52) (1.7) $(359) (10.5)

9. Minnesota Is Facing Significant Long-Term Bud g et Problems

13. 2007-09 Recession Permanently Reduced the Base for Future Revenues Source: “But…What About Tomorrow?”, presentation to LCPFP Balanced Budget Subcommittee, October 2009.

14. Next 25 Years--State Revenue Growth Rate Projected To Slow Budget Trends Commission, 2009

15. From 2010 to 2020, Minnesota will see large increases age 50s and 60s Source: Minnesota State Demographic Center, rev 2007 Numbers are rounded

16. Budget pressures will change -- more 65+ than school age by 2020 Census counts & State Demographer projection, revised 2007

17. If state health care costs continue their current trend, state spending on other services can’t grow General Fund Spending Outlook, presentation to the Budget Trends Commission, August 2008, Dybdal, Reitan and Broat

19. Impact to the Minnesota State Colleges and Universities

20. Higher education share of state’s budget Fiscal year 2011 estimate includes unallotment. Higher education includes the Minnesota State Colleges and Universities, the University of Minnesota, and the Minnesota Office of Higher Education.

21. State appropriation per FYE student During past decade, appropriation per FYE student has decreased $765 (16 percent); adjusted for inflation decrease is $1,759 (36.5 percent)