The University of Connecticut’s governing board Wednesday adopted a largely flat $1.3 billion budget for the fiscal year that begins Friday, retreating from years of rapid spending increases at the public university.
Still the budget is subject to several significant risks and may quickly become out of balance, school budget officials warned the Board of Trustees.
“The budget is, honestly, precariously balanced. There are still some risks ahead,” UConn budget chief Scott Jordan said.
The budget will increase spending by $13 million, or 1 percent, over last year, but the increase is much smaller than the $104.7 million, 9 percent increase that UConn experienced in the 2015 -16 fiscal year.
One large risk is whether state funding for UConn will be further reduced mid-year. The adopted state budget closed a nearly $1 billion deficit with cuts to various state agencies, including a $16.5 million, 4.5 percent reduction to the state’s share of UConn’s overall budget. State appropriations cover about 30 percent of UConn’s budget.
Since the state budget was adopted officials have announced that tax revenue has eroded further. Also savings built into the the budget from employee layoffs and attrition have not materialized as quickly as promised.
If the state budget again goes into the red, UConn is a likely target for further cuts, as legislators and the governor have regularly turned to UConn to close deficits.
But that hasn’t stopped the Board of Trustees from also asking the state for an additional $107.7 million for the fiscal year that begins July 2017 – a 29 percent increase in the state contribution – so the university can hire more staff and admit more students to fill the new classrooms, dorms and laboratories the state has spent hundreds of millions to build through its Next Generation initiative.
Three of those new or significantly renovated buildings are opening soon, including a new residence hall for 725 students.
The building spurt was part of a plan to increase enrollment by 6,580 students and hire an additional 259 faculty over 10 years.
“The state has not been able to honor that commitment for the last two years. We are asking them to honor the commitment in fiscal 2018,” said Jordan.
But Jordan acknowledged during an interview that, given the state’s dire fiscal outlook – a budget shortfall of $1.3 billion is projected for the fiscal year beginning July 2017 – the university is not expecting state funding to increase.
Another hole in the adopted budget could arise if an employment contract with the unions is reached. For example, an agreement that provides a 3 percent increase would come with a $20 million price tag. Negotiations have largely stalled after legislators and Gov. Dannel P. Malloy blocked a proposed contract the trustees signed off on that would have provided thousands of unionized staff at UConn raises ranging from 3 to 4.5 percent next fiscal year.
The UConn budget assumes no pay increases – except when staff are promoted or change job titles – and budget officials report that union officials have agreed that their staff will not receive pay raises in the fiscal year that begins Friday.
“Yes, I think there is agreement that there will not be an increase in pay in fiscal 2017. That said, within the broader bargaining framework statewide there is always some risk that we could be forced to the table to talk about pay,” Jordan told reporters after the meeting.
Other risks include the possibility that a higher-than-expected number of staff will switch retirement plans from a 401-k type plan to the more-expensive state pension system. That pension system is so much more expensive because the state is playing catchup after decades of inadequately funding the pension system.
Additional red ink also may arise as the university grapples with new federal overtime rules that require more salaried staff to be paid for the time they work in excess of 40 hours a week.
What’s in the budget?
In crafting the 2016-17 budget, officials estimated a $40.6 million shortfall if they wanted to continue offering existing services and programs and provide staff with a 1.5 percent pay increase.
Nearly half that shortfall was wiped out by not budgeting for the pay increases, and the remainder came from reducing funding for every department by 3 percent.
While it will be up to the manager of each department to figure out where those cuts fall, officials expect them to mean a reduction in the number of faculty the university employs and potentially some layoffs.
“It means our faculty is going to have a higher teaching load and larger class sizes,” said UConn Provost Mun Choi. This will be the second consecutive year that the number of faculty at UConn will decrease.
“This is a trend that we are not happy with,” Choi said.
The amount that the university spends from its operating budget for smaller construction projects to repair things like roofs or classrooms around campus also will be cut significantly.
Financial aid for students will increase by $8.3 million, which roughly keeps up with tuition costs. A large share of students receive financial aid they do not have to repay.