Regents are looking for ways to rein in a proposed 2.5% increase for University of Minnesota undergraduates.

President Eric Kaler recommended a 2.5% increase for resident students in the Twin Cities and 1.5 percent for the four other campuses. But several members of the Board of Regents say that’s too high.

“It’s a big deal to students if you can save 1.5 or 1%,” Regent Steve Sviggum said during a board discussion Thursday.

The board will take comments from the public on the proposed budget Friday and then vote at a special meeting Wednesday.

Regents signaled Thursday they’d like to raise tuition no more than 2% next year on the Twin Cities campus. Doing so would create at least a $1.6 million hole in the $4.2 billion budget.

Regent Thomas Anderson suggested they could cover that amount with revenue from interest-bearing accounts.

“Our interest income is way up,” Chief Financial Officer Brian Burnett acknowledged.

But Kaler cautioned that Minnesota’s economy will someday hit a rough patch and the university can protect itself by building up its reserves.

The Legislature just raised the university’s appropriation by 3.3% over the biennium, which is two-fifths of what the university requested. Lawmakers also asked that the university deliver a report on its cost-cutting measures and raise tuition by no more than 3% each year.

Regent Darrin Rosha said imposing a minimal tuition increase next year to demonstrate the university’s commitment to affordability is worth trying as a strategy to “get the Legislature on our side.”

Since Kaler took office in 2011, resident tuition has risen an average of 1.6 percent each year for Twin Cities students and less than 1% at the coordinate campuses.

Meanwhile, non-resident tuition has soared as the university has moved to shift the burden back following a severe out-of-state discount strategy that started in 2008. That rate will go up another 10% next year.

Under Kaler’s plan, tuition at the Twin Cities campus would cost residents $13,390 and nonresidents $31,616.

On the spending side, Kaler’s 2019-20 budget calls for a 2.25% — or $75 million — increase in the employee compensation pool, with raises awarded on the basis of merit.

He also proposed setting aside $8 million in 2019-20 funding for the following year to make the job easier for his successor, Joan Gabel, who takes over next month. In her first year, Gabel would get $1 million for any initiatives she wants to pursue.

“There are some cans in the cupboard,” Kaler said.

Reach Regional Managing Editor Suzanne Rook at 507-333-3134. Follow her on Twitter @rooksuzy

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