Connecticut’s flagship university has approved a $1.7 billion budget, although UConn officials expressed concerns about how the system would prevent a shortfall in 2024 when one-time state funding dries up.
The recently approved budget includes $1.7 billion for the four regional campuses and the main campus in Storrs and $1.6 billion for UConn Health.
The system made up for a $75.5 million deficit for fiscal year 2021, caused by pandemic-related revenue loss, through a combination of hiring and spending freezes and by using federal and state COVID relief funds, among other measures. The expiration of those relief funds and the addition of new state aid to UConn makes it difficult to compare this year’s budget to last year’s, according to a story in UConn Today.
Recent one-time state funding of $63.7 million covered collective bargaining increases, legacy fringe benefit costs and an extra pay period in calendar year 2022, said Lloyd Blanchard, UConn’s interim vice president for administration and chief financial officer. The increases included bonuses and raises.
“Salaries and wages tend to be permanent expenditures,” Blanchard told the Board of Trustees last week. “They happen every year.”
The state typically covers costs for certain employees but not for others, leaving the university system with a possible loss of $47 million if the state doesn’t provide additional funding again for fiscal year 2024, he said.
The administrative cost of providing higher education has been rising nationwide for years, one of a few contributors to the overall inflated cost of higher education.
The university is also dealing with the rising costs of fringe benefits, decreasing capital bond funds and an in-state population that’s increasingly sensitive to tuition rate changes, according to a presentation at the Board of Trustees meeting last week. Capital bond funds are provided by the state to pay for certain development projects such as those related to research.
This means an increase in fringe benefit expenses, because there are fewer employees to bear the burden of increasing health care costs, Blanchard said in an emailed response to questions.
Like several other state agencies, UConn saw an increased number of retirements this year, driving up retiree pension and health care costs for the university.
Over the past few years of Gov. Ned Lamont’s “debt diet,” the university’s capital bond funds have dropped, leaving the system with insufficient funds to cover development projects, Blanchard told trustees.
The presentation referenced insufficient funds to cover “high priority projects.”
“That does not refer to current projects, but rather those that might be a high priority for the next president,” Blanchard wrote. “Projects that support the nexus between research and economic development in the state are the kind of projects that come to mind.”
The presentation to trustees observed that UConn’s in-state student population had become more sensitive to rising tuition and that rate changes may have more effect on “overall quality as well as diversity than those in years prior.” Because of the competitive nature of higher education, some Connecticut students may opt to attend school elsewhere if fees get too high, so the university wants to try to keep them down, university spokeswoman Stephanie Reitz said.
The university announced earlier this year that certain fees for students will increase, in some cases by more than $600.
The impact of increased costs on marginalized communities is one of the major concerns of student government, said Mason Holland, UConn’s Undergraduate Student Government president.
“Tuition is always something that we try to pay attention to,” he said. “And for us, we know that increases in tuition affects textbook affordability, the ability for someone to put food on the table or just get groceries for themselves.”
Blanchard told trustees the school might need to consider other funding sources in the future.
“We rely very strongly both on state support and on tuition. It’s time for us to think about leaning less strongly on tuition and state support and more strongly on other revenue sources as we go forward,” Blanchard said.
Other revenue sources may include philanthropic giving, research grants or contracts, Reitz said.