State avoids huge shortfall

Regional universities, community colleges weigh cuts to close $91 million pandemic-driven deficit

Facing enrollment declines and a potential $91 million budget deficit, the Connecticut State Colleges and Universities system plans further budget cuts at the regional universities and community colleges it oversees.

CSCU Chief Financial Officer Ben Barnes told the Board of Regents for Higher Education Thursday that while numbers may change slightly, the colleges and universities are “on track to fall short of the budget numbers by about $43 million. Without action to reduce spending or increase revenues, this change alone would increase our losses for the current fiscal year to $91 million.”

Barnes said the budget the system adopted in June included an expected cumulative loss of $48 million, roughly half of what the numbers now project. The anticipated deficit for the state’s four regional universities grew from about $33 million to about

$56.4 million, while the expected deficit for the state’s dozen community college deficit grew from about $15 million to about $34.5 million.

“There are continued risks,” he said. “Further revenue losses from the pandemic are still there, particularly at the universities that would suffer revenue loss in the event that the dormitories need to close for public health reasons.”

Central Connecticut State University, Eastern Connecticut State University, Southern Connecticut State University and Western Connecticut State University fall under the CSCU system, along with 12 community colleges and the online Charter Oak State College.

Barnes said Charter Oak is in good financial shape and does not need cuts.

While enrollment data will be finalized in October, CSCU President Mark Ojakian said in the meeting that as of Sept. 4, the regional universities have experienced a 5.5% decline in enrollment, while the community colleges have seen an 11% reduction.

The university enrollment numbers are higher than the system expected in the budget it adopted in July, but community college enrollment is lower than expected. He noted enrollment at Charter Oak has seen a 4% increase.

“There’s probably a lot of reasons that enrollment has declined to that extent to our community colleges. But I will say, all of the campuses have worked tirelessly to make sure that they have reached out to every returning student [and] potential new student,” Ojakian said. “They’ve worked in a regional configuration ... to really make sure that they have expended every ounce of effort possible to get enrollment in a better place. That being said, we want to understand what happened during the enrollment exercise for the fall, so we’re prepared for the spring.”

Barnes said while the university enrollment decline of 5.5% is favorable compared to the previously projected 10% drop, it is not enough to offset a large reduction in revenue from meal plans and residence hall occupancy, which is 30.5% less than anticipated.

“Wewere not budgeting for full occupancy in those residence halls,” Barnes noted.

If residence halls were forced to shut down because of the pandemic, the system could lose $2.5 million for each week they remain closed.

At the community colleges, Barnes noted enrollment issues already existed, but said the added “weakness in enrollment” appears to be driven by a near 20% drop in parttime student enrollment, as full-time enrollment numbers have remained almost level with last year’s.

“We suspect that [the 20% decrease] may be partly a result of the PACT program, which encourages students to take a full time credit load to be eligible for financial assistance,” he said.

“However, I do not discount that there may be other ... reactions to the COVID pandemic that are particularly keenly felt among students who attended part-time.”

If the system did not take action, which Barnes assured the board they will, the financial situation could lead to a $40 million decline in budget reserves.

The regional universities are expected to submit plans Friday for spending adjustments, while ensuring funds to support hybrid learning and public health requirements remain available.

The community colleges are expected to submit their budget plans to the board in October. Barnes noted the colleges were already scheduled to take a 2% cut that included eliminating vacant positions, reductions to other expenses and transfers to shared services.

“It’s not easy to find reductions at this scale of the revenue drop-off that we’ve experienced,” he said, particularly as options for further cuts are limited by collective bargaining agreements and needs to meet public health standards.

However, Barnes said CSCU is looking at opportunities to save money related to Students First, the system’s effort to consolidate the 12 community colleges into one accredited institution, as well as through other methods.

“We are mindful that some of the things that we might do to achieve savings now for the current year may not be able to produce much savings right away, but we’re still looking at those ideas because we are keenly aware that the budget for next year ... may well face continuing trouble,” Barnes said.

Board members discussed a number of suggestions for improving CSCU’s financial situation, including appealing to the state, negotiating with labor unions, offering retirement incentives and putting aside wage increases.

“We’re seeing the same thing in the corporate world and other nonprofit boards. I think, from my perspective ... the core thing is really to try and understand, what is our core purpose? What are we trying to do, what are we trying to achieve?” said board member Ari Santiago.

“Make sure we’re putting our limited resources[ towards] maximizing our core value proposition to the community in Connecticut. ... Nothing is off the table. Everything should be looked at.”