With tuition and fees already slated to rise next fiscal year at the University of Connecticut, the Board of Trustees will consider a new budget Wednesday that could leave the flagship university facing additional hikes a year or two down the road.
The board, which will meet at the Peter J. Werth Residence Tower on the main Storrs campus, approved a schedule back in December 2015 that gradually increases tuition by 31 percent between the fall of 2016 and the spring of 2020.
And with state aid representing a shrinking share of UConn’s budget, university officials now are projecting significant deficits in the first two years after this new budget.
“We are very much focused not just on the new budget, but on the out-years and the problems that those projected deficits present,” Thomas E. Kruger, chairman of the Board of Trustees, said Tuesday. “We know we have a lot of hard work to do and a lot of hard decisions to make and we will be focused on getting that done.”
University officials are recommending a $1.25 billion budget for the fiscal year beginning July 1 for the main campus in Storrs, as well as the regional campuses. That package does not include an additional $113.2 million research fund for the upcoming fiscal year.
Overall proposed spending is up about $35 million, or just under 3 percent, from the current fiscal year.
The growth largely is driven by a 28 percent increase in fringe benefit costs — most of which is fixed by contract. Nearly all segments of state government are struggling with this problem, which stems from more than seven decades of inadequate savings by legislatures and governors for pension and retirement healthcare programs.
Further complicating matters, university employees affected by the 2017 state employee concessions plan — which froze pay this fiscal year — are due for a flat, $2,000 increase under the new budget. This requirement adds $20 million to UConn’s expenses in the upcoming fiscal year, but the legislature authorized just $8.4 million in assistance to defray this cost.
Previously approved tuition and fee hikes offset some of these surging costs, but university officials are also recommending a wide array of spending cuts, about $14.4 million, spread across most segments of the budget.
But while these measures are enough to bring the proposed spending plan for 2018-19 into balance, UConn finances — unless adjusted — would run in the red in each of the following two fiscal years.
By 2019-20, the potential shortfall is nearly $29 million or 2.2 percent, and by 2020-21 it reaches $63 million, or 4.6 percent.
State support for UConn operations has eroded steadily in the last three decades. Though legislatures and governors over that period have increased financing for capital projects, the general policy also has been for the flagship university to replace lost state aid with tuition and fee revenues as the main campus and its branches add students.
Over the last nine years, state fiscal support for the main campus and UConn branches has grown just 3.6 percent in total, or by less than 4/10ths of 1 percent annually.
State block grants and additional payments to cover a portion of fringe benefit costs will provide 25 percent of the revenue needed to support the proposed UConn budget. Tuition and fees are the single-largest source for the main budget, providing 40 percent of the revenue. Research funding and revenue from various university enterprises generates another 26 percent.
The deficit projections for future years, according to the university administration’s budget proposal, mean an array of unpleasant deficit-mitigation options likely must be explored in the coming months. These include:
- Ordering additional tuition hikes.
- Increasing enrollment, which would bolster tuition receipts but also expand class sizes.
- Requiring more students to live on campus — and pay housing and meal plan fees — which may turn some students away.
- Freezing staff hiring, which could affect class sizes and weaken revenue from research grants.
- And restructuring departments to achieve savings, “which may lead to the loss of our best faculty and/or staff.”
In other business Wednesday, the trustees also will consider a 1.05 billion budget proposal for the upcoming fiscal year for the UConn Health Center. The Farmington-based center includes John Dempsey Hospital as well as the university’s medical and dental schools.