University of Minnesota committee backs FY26 operating budget that would raise tuition and shore up pay and repairs

The Finance and Operations Committee of the University of Minnesota Board of Regents reviewed the president's recommended FY26 operating budget at its June 2025 meeting, a plan that combines tuition increases, internal reallocations and targeted investments to address a projected shortfall tied to reduced federal and flat state funding.

"To ensure the university is on a path to short and long term financial sustainability, our response to this very historic time is reflected in the proposed budget through both targeted cuts and strategic investment," President Joan Cunningham said, summarizing the administration's approach to projected federal grant cuts and flat state support.

The administration's package asks the committee to approve a framework that includes $198,800,000 in incremental spending for FY26, financed primarily through $92,100,000 of internal reallocations, tuition adjustments (estimated to deliver $71,800,000), growth in other unit revenues and limited use of unit reserves, Vice President and Budget Director Julie Tonneson said.

Tonneson detailed the components of the recommendation: a $111,400,000 compensation pool (a 3% general pool plus a 1% market adjustment and labor-contract-driven increases), a recurring $10,000,000 increase to Repair and Replacement (R&R) funding, a $15,000,000 recurring workforce reinvestment pool and a proposed $60,000,000 nonrecurring strategic investment fund drawn mainly from central reserves.

"The total projected revenues of $4,800,000,000 are distributed across restricted, auxiliary, and unrestricted categories," Tonneson said, while flagging risk to sponsored research revenue and ICR if federal agency funding declines. She told the committee administration anticipates at least a 10% drop in sponsored grants and ICR in some scenarios.

On tuition, the recommended changes include a 6.5% increase in resident undergraduate tuition on the Twin Cities and Rochester campuses, a 7.5% increase in undergraduate nonresident rates on the Twin Cities campus, and smaller increases at Crookston and Duluth (4%) and Morris (5%). Tonneson noted financial aid protections: students eligible for the North Star Promise program (about 4,000—5,000 students at the university) would continue to have tuition and fees covered.

Student representative Simon Moreno told the committee students generally understand the pressures but urged clearer, more visible communications showing how tuition dollars are used. "Just those small visibility actions," Moreno said, "so students can see, like, oh, yeah. My tuition is going towards this."

Regents and committee members reflected a mix of support and concern. Several members praised the plan's emphasis on workforce compensation and predictable facility funding, while one member urged care that scope reductions and hiring oversight not unduly limit academic unit autonomy.

Administration officials emphasized that many reallocation decisions remain in development and that units will continue to refine which programs or positions are affected. "These plans are well underway, but in many cases the specific actions have not been finalized," Tonneson said, urging patience as unit-level communication continues.

The committee's review is advisory; the full Board of Regents is scheduled to meet on June 18 to act on both the operating and capital budgets. The administration said it will hold a public forum at 4:15 p.m. the same day to solicit community feedback before the special board meeting.

Next steps: the board will consider the FY26 operating budget and any amendments at its June 18 meeting, where final adoption is expected.