University of Connecticut officials unveil a new interactive report showing the university’s economic impact on every town in the state.
University of Connecticut officials unveil a new interactive report showing the university’s economic impact on every town in the state.

The cost of providing retired state employees with the benefits they were promised has fallen on students and research faculty at Connecticut’s public universities. At the University of Connecticut, $700 of each student’s tuition bill now goes toward covering that liability.

And the bill is expected to rise significantly.

That’s because over the next three fiscal years, the amount the state must pay toward those promised health and pension benefits is projected to increase by 8% a year.

UConn blames these escalating costs for its looming deficits and the snail’s pace of its growth in research activity.

“The university would not face a budget shortfall [next fiscal year] without the unfunded pension and retiree health fringe benefit liabilities,” UConn Budget Chief Scott Jordan wrote the governor’s budget chief in October.

UConn has few options to close its deficits. Officials could raid the additional revenue from the scheduled tuition increases to pay for these increased costs rather than spend it on the state’s flagship university. They could cut spending.

Or officials could make their case to the legislature and governor about the impact the university has on the state’s economy and why the school should get more help covering costs.

UConn president Thomas Katsouleas  (in shadow at right) shows House Speaker Joe Aresimowicz the impact the university has on the legislator’s district of Berlin.
UConn president Thomas Katsouleas  (in shadow at right) shows House Speaker Joe Aresimowicz the impact the university has on the legislator’s district of Berlin.

Before a crowded room in downtown Hartford Tuesday afternoon at the university’s business school, UConn President Thomas Katsouleas began making that pitch with the release of research completed by its faculty that shows the school generates about $5.3 billion in annual economic activity in the state.

“We do have this great impact and I think it’s important to remind people every once in a while,” said Katsouleas.

An accompanying interactive map also lets lawmakers know just how many UConn Huskies live in their districts.

House Speaker Joe Aresimowicz attended the unveiling of the economic impact report, and was shown that his hometown of Berlin has 183 current UConn students, 135 staff members and 1,211 alumni.

Gov. Ned Lamont’s hometown of Greenwich has 311 students attending UConn, seven staff employees, and 1,360 alumni.

“Excellent,” said Lamont.

“That’s amazing,” Aresimowicz responded.

The lawmakers in attendance did not respond with promises of increased funding for UConn, however, or protection from further cuts.

More state funding is not likely headed the university’s way. Nonpartisan fiscal analysts report the state is facing deficits topping $1 billion in each of the next three fiscal years. And, state lawmakers typically target higher education for cuts as they work to close budget shortfalls.

Lamont told reporters after the press conference that he will try and “hold them steady” and doesn’t have an immediate remedy to resolve the problem of escalating retirement costs or the impact it is also having on landing research grants.

A research lab at the UConn Health center in Farmington CtMirror.org

Faculty have long said there is one main obstacle preventing research from taking off as envisioned after the state poured hundreds of millions of dollars into expanding lab space and classrooms at the public university’s main campus in Storrs and health center in Farmington: It’s gotten much more expensive to hire faculty, postdoctoral students and other employees to staff their labs.

Providing the health and retirement benefits to a professor with a $100,000 salary used to cost UConn $31,300 in 2004. Today, the cost is $60,000.

This jump is a reflection of the state’s years of failing to adequately save for pensions and other retiree benefits.

These added costs also mean faculty are being turned down for grants, said Katsouleas. They are also impacting the state’s research rankings. In 2005, the state’s flagship university ranked 64th in overall spending on research among public and private research schools by the National Science Foundation. By 2017, the school had fallen to 86th place.

Solutions?

The steep increases are expected to stop in three years, now that legislators have extended the schedule for paying off the state’s massive, $21 billion unfunded retirement liability.

Regardless, the costs will still be huge for higher education.

Katsouleas said the university is trying to come up with a “creative” solution to resolve this issue with legislators. While they work on that, he has directed $6 million in one-time revenue from UConn to serve as a “Band-Aid” this year to bring down the costs on faculty grant applications.

Officials at the state’s other public college system are also facing rising retirement costs and have pitched an idea to the administration and some state legislative leaders.

A pitch by the Board of Regents to overhaul how the state funds university retirement costs

The Board of Regents for Higher Education — the state’s largest public university system, which oversees the state’s community colleges and four Connecticut State Universities and is governed separately from UConn — wants to rework how the state funds higher education.

Ben Barnes, the regents’ budget chief who was also former Gov. Dannel P. Malloy’s budget chief, has asked this administration and some legislative leaders to consider fully funding the retirement costs for community college staff, and proportionately cut the colleges’ block grant.

This would shift the liability of increased costs from the colleges to the state budget. But, Barnes said, state lawmakers can still offset those costs with cuts to the remaining block grant if they choose.

Keith Phaneuf, who covers the state budget, contributed to this report.

Jacqueline Rabe Thomas

Jacqueline was CT Mirror’s Education and Housing Reporter, and an original member of the CT Mirror staff, joining shortly before our January 2010 launch. Her awards include the best-of-show Theodore A. Driscoll Investigative Award from the Connecticut Society of Professional Journalists in 2019 for reporting on inadequate inmate health care, first-place for investigative reporting from the New England Newspaper and Press Association in 2020 for reporting on housing segregation, and two first-place awards from the National Education Writers Association in 2012. She was selected for a prestigious, year-long Propublica Local Reporting Network grant in 2019, exploring a range of affordable and low-income housing issues. Before joining CT Mirror, Jacqueline was a reporter, online editor and website developer for The Washington Post Co.’s Maryland newspaper chains. Jacqueline received an undergraduate degree in journalism from Bowling Green State University and a master’s in public policy from Trinity College.

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24 Comments

  1. Dear Taxpayers and Voters, are you seeing a pattern here? Every state organization and agency is facing a budget crisis due to excessive staff compensation and fringe benefit costs. So, the answer is, they must be reduced. Also, do not buy the argument that unions were blindsided by this issue. The Pension Underfunding was Intentional. It was and is the result of a joint agreement by Union Representaives and State Government Officials to use an Inflated Discount Rate and inadequate funding schedule. This was done to reap other benefits, such as increased compensation and better healthcare. The Pension Shortfall is not a surprise, it was intentional and done under the watch of Union Representatives and our State Government.

    1. What is (was) the unions responsibility for disciplining their bosses? REALLY? Yes, the Roland Administration, knew they weren’t paying for it. That’s entirely on the policy makers whom we elect and expect to do better for us.

      1. Dear Mr Sewall,
        Electing Union Representatives that promote and pursue benefits for their members knowing they are unsustainable, is unethical and immoral. Additionally, it speaks to the caliber of the individuals who put them in that position of power.

  2. “This jump is a reflection of the state’s years of failing to adequately save for pensions and other retiree benefits.”

    Does anyone consider these costs to not only be underfunded but unsustainable? Gold-plated pensions and free healthcare in retirement for worker and spouse on the backs of taxpayers is absurd and is single-handedly taking down the entire state budget. It now requires fiscal shell games to be played at UConn to subsidize these costs in research grants in order to stay competitive with other institutions that haven’t used taxpayers as ATM machines.

    1. Completely unsustainable, and yet they refuse to change anything.
      How about basing the pensions on base pay only?
      How about basing pension benefits on the highest 35 years of earnings (like the private sector’s social security) instead of the highest 3?
      How about having full pension benefits begin at age 67?
      How about switching state retirees to high deductible medical plans, like we have in the private sector?
      Or they can keep things the way they are, and raise our taxes. Gee, I wonder which route they’ll choose?

      1. I believe that the state’s university and college professors are the only state employees with an alternative retirement program. I don’t know how many are in it, versus the pension plan. It’s a defined contribution plan.

    2. I’m old enough to remember the “history.”

      Yes, the benefits are generous, but they used to be a standard thing until about 40 years ago when, as a nation, we decided to emasculate the unions and give more wealth to the top 1%. Instead of whining about public employee benefits, how about restoring pensions and health care coverage to working people generally so that public employees (who have managed to hang on to theirs) wouldn’t look like a special case?

      The Roland administration KNEW when they traded current wages for future benefits in 1997 that they weren’t paying for them. They also used billions in State bonding for projects. It all looked good when that governor ran for reelection, but it was a deliberate strategy to saddle his successors with the cost. And here we are…

      1. Even in the “Good Old Days” no one in the private sector received DB pensions that were 80 percent of high 3 with a guaranteed COLA. State pay used to be low. That all changed starting in the early 80’s. The pay was above the private sector and the pensions were “Other world”.

    3. What is being left out when they say the pensions were not funded, is that the pension benefits and healthcare benefits are beyond Cadillac and the employees contributed too little during their working careers for their share. A 60 percent fringe rate on salary is insane!!! Ben Barnes planned fix is laughable. This is the same man who said “State employee pensions are much less generous than those in the private sector.” UCONN will lose tons of Federal Grants with that fringe rate.

  3. There is zero confusion that the model allowing the state to negotiate collective bargaining contracts and pass on the expense to UConn and the CSCU system is a disaster for both higher education systems. Asking the state for more money will not fix the cause of the financial problem. UConn and CSCU System should be allowed to negotiate the contracts with the respective collective bargaining units and then assume ownership and responsibility for the expense. I suspect the outcome will be a model that limits tenure and places greater emphasis on 3 and 5 year contracts and makes other necessary adjustments in hiring and annual compensation increases. The negotiation model is broken and can only be addressed if people approach the problem with their minds wide open.

    1. So, politicians made (and make) poor policy decisions (often knowingly), and the solution is to penalize the workers?

      1. The solution is to face reality in 2020. Compromise by both sides is needed not just the taxpayer. Freeze COLA’s for two years for retirees, stop OT in the pension calculations going forward. If we don’t the “Reckoning” will only be more painful.

  4. Once again, UConn and the community colleges. The four state universities are mentioned as existing, but there’s nothing else about them. Are their faculty in the same situation as UConn’s faculty? Is Ben Barnes seeking to fund the CSUs differently too?

    1. Hi Helen, please note these last three paragraphs from the article:

      “The Board of Regents for Higher Education — the state’s largest public university system, which oversees the state’s community colleges and four Connecticut State Universities and is governed separately from UConn — wants to rework how the state funds higher education.

      Ben Barnes, the regents’ budget chief who was also former Gov. Dannel P. Malloy’s budget chief, has asked this administration and some legislative leaders to consider fully funding the retirement costs for community college staff, and proportionately cut the colleges’ block grant.

      This would shift the liability of increased costs from the colleges to the state budget. But, Barnes said, state lawmakers can still offset those costs with cuts to the remaining block grant if they choose.”

      1. I only see the community colleges actually addressed in those paragraphs, unless when Barnes says “colleges” he is referring to the CSUs also. When the BOR and system office talks about its work, it’s almost always the community colleges, not the universities. He needs to be pinned down. The CSUs are not the same as the colleges.

  5. Why is so much column space dedicated to a problem that the people of this state are powerless to address? Whatever UConn faculty and staff and the state employees union demand, they get. Next.

  6. If we were to shift responsibility for pensions to the state, doesn’t that amplify the problem we already have by creating more of the same conditions where the pension costs for employees don’t factor into the hiring and ongoing compensation decisions? That’s a factor for ballooning future costs, isn’t it?

  7. One thing noticeable is that we have to get UConn Health under control and separate from the State. Each of the employees, and practitioners in all their locations are state employees. UConn Health is no longer just a teaching hospital, but it is a competitor to the private health care providers. The difference is that it’s being supported by tax dollars and these folks have pensions and benefits that no one in the private healthcare sector will get. A neighbor, (RN at UConn Health) complains because she has to pay $42 a month for health insurance to cover the whole family. Why is this not spun off and made to survive on its own? Why are these who staff the Urgent care and other UConn Health facilities outside the university realm state employees? Why isn’t the media reporting on the cost of this?

    1. This is the mindset of the state employee. She’s complaining about $42/month because it used to be zero. And in her mind, she’s given a ton of “concessions” resulting in this “huge” increase from zero.
      Her head would explode if she had to pay 10, 20, or 30 times that amount for a high deductible plan, like many in the private sector. But since they’re so out of touch they think they’ve given up so much. That’s why during contract negotiations we keep hearing about all the concessions they’ve given over the years – but they never mention how ridiculously small those concessions actually were. It’s mind boggling.

      1. Actual “concessions” would be 20% of the workforce being laid off, elimination of pensions, and implementation of high deductible health insurance plans (try $12,000 per family).

        Because that’s how the private sector is. And the private sector pays for every cent of the public center.

  8. Well, the UConn Athletic Department lost $44 million last year. Drop the football program to DII and stop pretending that it’s SEC caliber. That will likely save $10 million.

    1. If UCONN and the State were honest and forward thinking, they would drop football to D3. They would also tear down Rentsler Field in East Hartford. UConn can’t fill the stadium to 1/4 capacity and the stadium is not used for any other events. Four concerts have been held there since its opening in 2003. The Rolling Stones could sell it out but they will be deceased in 10 years. The carrying and operating costs are a huge drain.

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