Lawmakers will give UConn an extra $100M
When the white smoke finally clears in the weird state budget season of 2024, UConn will collect $100 million above the total that’s now in the spending plan, under a deal soon to be announced.
No surprise; that’s a compromise between the amount the university says it needs and the amount Gov. Ned Lamont proposed. The question is, what will happen next year and beyond, when the pressure mounts.
The total would bring state funding for the University of Connecticut and UConn Health to a few ticks over $500 million for the year that starts July 1. That amount falls $50 million short of what UConn says would cover all of its current programs and services, following this year’s small squeeze of $38 million.
And so, as with last year, the state reasonably asks its flagship university to tighten things up just a bit at a time when spending limits, not tax collections, rein in state outlays. The “cut” against rising costs amounts to 1.6 percent of the $3.1 billion total at the university and the health system – two sprawling institutions.
“I would characterize it as a significant issue that we will get through in 2025,” said Jeffrey Geoghegan,
executive vice president and chief financial officer at both the university and UConn Health. “But it is not sustainable.”
Geoghegan had not been informed of the exact amount on the table as the legislative session nears a Wednesday night deadline. But knowing the rough figure, he spoke with me Thursday night about how UConn is executing tighter budgets – and how the state sooner or later must decide how it wants to fund its most famous brand.
House Speaker Matt Ritter, D-Hartford, a strong UConn supporter on and off the basketball court but also a pragmatist, said much the same thing. UConn will receive $80 million right away and probably another $20 million late in 2024, all of it federal pandemic money that’s winding down, under the deal, Ritter said.
The state college and university system is set to receive a similar allocation, Ritter said. That’s closer to its requested amount than UConn will get.
Running out of space
UConn’s likely allotment, subject to last-minute wrangling and a vote in the House and Senate, patches together a solution for this year using one-time funds. That’s how lawmakers and Lamont are filling other budget holes for the coming year because reopening the budget would create issues related to the famous spending limits, aka the guardrails.
That, of course, leaves a problem starting next year – a problem all the more acute at UConn since state funding, while stable or rising, has fallen to 19 percent of the university’s total budget from 25 percent just a few years ago and 50 percent a generation ago.
“We’ve really got to figure out a plan to get this on a sustainable path,” Ritter said, though he added that under new federal rules, we might be able to stretch pandemicaid spending another year into the future.
That is happening under the radar in lots of ways. A year ago I wrote that UConn would snag most, but not all, of the money it said it needed, then as now
a jump over Lamont’s proposal. I suggested UConn punch up its costcontrol program to do its part to reduce outrageous inflation in higher education.
UConn is doing exactly that, Geoghegan told me, with a five-year plan to reduce support spending – not faculty but stuff like IT, non-academic services and building maintenance – by 15 percent over the next five years. That’s just one of a menu of ways UConn is raising revenue and lowering costs.
Layoffs are not part of the plan but slower hiring, not filling some jobs, is on the list of tactics to save money.
The main way UConn filled the gap for this academic year was the oldfashioned lever: Bring in more paying customers. Dorm space moved from 95 percent occupancy to 98 percent, classes were a tad bigger and empty seats in the dining halls a bit more scarce.
It doesn’t take a UConntrained economist to see where that strategy goes. This coming year, UConn will land at or slightly above 100 percent occupancy, Geoghegan said, meaning it might need to lease apartments near the campus. “Every time you take another student,” he said, “at some point in time you’re going to have to add expense.”
And that time is now. Who are these customers? In-state students pay less than out-of-state (total price tag $34,300 vs. $57,030) and since UConn has risen in the rankings on and off the basketball
court, it can pretty much pick and choose.
In-state, undergraduate enrollment (24,000 total) has fallen to 70 percent from 75 percent and while that’s still OK, everyone is aware of the chief UConn mission, to train the state’s workforce (and win basketball championships of course) starting with residents who are more likely to settle here.
Long-term plan needed
Speaking of NCAA titles, the recent men’s basketball triumph is worth an unmeasured amount to UConn. “You’re basically buying this just huge amount of advertising for the university,” Geoghegan said, free of charge.
The federal delay in processing financial aid applications has gummed up the works, leading UConn, like other universities, short of the number of student enrollment deposits for 2024-25. “We’re actually trying to figure out what enrollment will be,” Geoghegan said. “It’s very stressful.”
Another lever: Raise tuition. UConn did that by 4 percent in December, putting more pressure on its $300 million annual financial aid budget.
Yet another: “managing the workload,” as Geoghegan calls it, not a popular phrase among professors. “Basically we’re going to be asking our current faculty to do more.”
He’s doing his part. Geoghegan was the CFO at UConn Health. They offered him the university job and eliminated his old post, leaving him to fill both.
UConn also has a $400
million rainy-day fund, much of it spoken for but with about $60 million available to fill gaps if necessary. Again, that’s not a sustainable strategy especially since the board’s policy calls for the fund to be at $775 million.
Close followers of all this will recall that the entire UConn request earlier this year was just under $100 million. That rose by more than $50 million in April when the state reached a deal for state employee pay raises – leading to some criticism of UConn for not anticipating and including that in its original request. All part of the friction of budget-making.
At UConn Health, the strategy to fill gaps is to increase patient revenue at John Dempsey Hospital, which is happening significantly, though the hospital still needs a $70 million state boost. UConn Health, including the hospital, research labs and the medical and dental schools, has an annual budget of $1.5 billion, compared with $1.6 billion at the university.
As taxpayers, it’s easy for us to say UConn should do what the rest of us do, pare excess spending and manage money more tightly. Doing that takes time and that’s the game. Look for a tough battle next year as UConn reminds we the taxpayers that it generates $7.8 billion a year in economic activity in the state and helps retain thousands of smart young people.
“We have to figure out the long-term plan,” Geoghegan said, “What the targets are.”