Committee hears request for $3 million to expand CentraCare rural residency programs; members press for fiscal detail
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Summary
Representative Perryman sought a $3 million legislative grant to support CentraCare and University of Minnesota residency expansion tied to the new St. Cloud medical campus; witnesses described rural physician shortages, startup costs and a projected structural deficit as residency slots grow.
Representative Perryman presented House File 2,229, a request for a $3,000,000 legislative named grant for FY 2026–27 to support CentraCare’s rural residency program expansion tied to the new University of Minnesota regional medical campus in St. Cloud. The committee moved and laid the bill over for possible inclusion in the higher education finance omnibus bill.
Why it matters: testifiers said the bill addresses an acute physician shortage in rural Minnesota. Perryman described demographic and workforce data showing fewer physicians practicing in rural areas and warned that an aging rural physician workforce increases the urgency for in-state training that yields physicians likely to remain in rural communities.
Medical education and hospital officials described the local training pipeline and the funding gap. Dr. Shali Prasad, professor of family medicine and associate vice president for rural health at the University of Minnesota, told committee members the first 24 students will matriculate at the St. Cloud regional medical campus this August and emphasized that residency training location is a significant predictor of where physicians ultimately practice. Mike Blair, CentraCare chief financial officer, said CentraCare has invested heavily in the project (including roughly $40 million for facilities to date) and estimated long-term institutional commitments could exceed $120 million over 10 years.
Witnesses and committee members discussed costs and prior state support. Committee members asked for a detailed accounting of how a prior $10 million one-time appropriation was used; Blair said roughly $4 million of that supported medical school startup, $2 million went to residency development, $2 million to a rural-focused research institute and the remainder to scholarships (committee members requested a formal breakdown). CentraCare estimates the average annual cost to train a resident is about $184,000; building to a full complement of 72 residency slots tied to the new campus could create a multi-year structural deficit estimated in the tens of millions (CentraCare estimated roughly $50 million in structural deficit over a longer horizon and an annual structural deficit of about $10 million once fully scaled).
Members pressed on federal funding possibilities. CentraCare said existing federal graduate medical education (GME) payments (direct GME and indirect medical education) and other federal sources cover some costs but do not fully fund new slots; some proposed slots will not be eligible for full federal reimbursement. Testifiers said CentraCare is pursuing philanthropic support (a $50 million campaign), federal grants, Medicaid/Medicare streams and internal subsidy to cover gaps.
Committee members thanked CentraCare for local investment while noting budget constraints in the current session. The motion to lay HF 2,229 over for possible inclusion in the omnibus bill prevailed by voice vote; the committee directed CentraCare and partners to provide a more detailed accounting of prior and planned spending and to return with specifics to aid legislative decision-making.
