Board finalizes Minnesota reciprocity agreement

July 19, 2017

The State Board of Higher Education met to discuss proposed changes to the Minnesota-North Dakota reciprocity agreement, variations of which have been in place since 1975.

Chief Financial Officer Tammy Dolan spoke to some of the history and proposed changes to the longstanding agreement between the two states. According to Dolan, currently Minnesota students pay the North Dakota resident rate plus a surcharge of 112 percent of the N.D. rate for undergraduates, and 127 percent of the N.D. rate for graduate students. North Dakota students attending Minnesota institutions pay the higher of the Minnesota resident rate or the N.D. rate, depending on the type of campus attended. The state that receives the lesser number of students then pays the state that receives the greater number of students an additional fee. Dolan explained that if the number of students was even, neither state would owe a supplemental payment. Currently, North Dakota receives more students, which results in additional funding being received by N.D. institutions – largely North Dakota State University and University of North Dakota, but also North Dakota State College of Science and the remaining state institutions.

Dolan said that more than 10,000 Minnesota students had been choosing N.D. campuses for each of the past five years, but the number of N.D. high school graduates who chose to attend Minnesota institutions had decreased by more 1,000 over that same timeframe – from 4,532 in 2011-12 to 3,532 in 2015-16. In that last academic year, Minnesota paid nearly $11.6 million in funding, which came into the NDUS.

Dolan then explained that Minnesota has a legislative appropriation cap of $11,018,000 per year. Estimated state payments are projected to exceed the appropriation, which prompted review of the agreement. The proposed changes would cap the payment at whichever is lower, the estimated calculated payment or the cap. NDUS institutions receiving Minnesota students would have two options to make up for the shortfall: absorb the difference or increase the tuition surcharge paid by Minnesota students.

Chancellor Mark Hagerott said system legal counsel had reviewed the amended contract and noted that it was more enforceable than the previous, 42-year agreement.

Board members noted that they appreciated the issue being brought before them and inquired on how the shortfall of funding would be kept from being placed on local students. Members also noted that keeping a reciprocity agreement in place helped bring students into the NDUS, which provided many positive aspects to local campuses and communities.

After discussion concluded, the Board unanimously moved to approve the updated agreement. It will go into effect for the 2017-18 academic year.