UConn Facing Budget Uncertainty As State Struggles to Adopt Spending Plan

[Drew]

http://today.uconn.edu/2017/06/uconn-facing-budget-uncertainty-state-struggles-adopt-spending-plan/


UConn faces one of its most challenging financial years in recent history as it works to prepare its FY18 budget amid uncertainty about the amount of its annual state allocation, fringe benefit rates it must absorb, and the fate of a tentative statewide labor agreement.

Scott Jordan, UConn’s executive vice president for administration and chief financial officer, will be joined by other UConn finance officials Wednesday to present a 2017-18 budget proposal to the University’s Board of Trustees for its consideration.

Despite the challenges, the baseline budget is balanced and avoids deficits due to the tight rein that UConn has placed on spending over the past year, including delays in filling open positions and many other cost-cutting measures, Jordan says.

The budget proposal is a baseline plan created with the best financial information currently available, allowing the University to continue its operations uninterrupted while it awaits the new state budget. It will be updated and sent back to the trustees for another vote at a later date, once the General Assembly adopts the statewide budget for FY18, which begins Saturday.

The state’s final figures are needed before UConn can definitively budget the amount of its annual operating funds, the rates it will be charged to help cover fringe benefits, and its payment to help the state catch up with pension obligations statewide.

The FY18 budget proposal avoids raising tuition above the rate that had already been approved in the four-year plan that went into effect in fall 2016. And while enrollment growth has been a significant factor in increased tuition revenue over the last 20 years, enrollment across all campuses is expected to remain flat in FY18 and FY19.

The draft budget also assumes a $211.2 million state allocation to UConn for the coming year’s operating expenses.

Gov. Dannel P. Malloy had originally proposed that figure, but released updated information Monday that would provide $201.2 million in what he has termed a “resource allocation plan” that he proposes using through an executive order until a final budget is approved.

 

[Drew]

https://ctmirror.org/2017/06/27/wit...n-uconn-considers-fragile-1-3-billion-budget/

No employees will receive pay raises.

Spending on financial aid would increase under the new plan, but at a slower pace than increases in tuition. No decision has yet been made on how many students would benefit from discounted or free enrollment. While the number of students receiving academic or athletic scholarships increased over the last two school years by 191 students – a 10 percent increase – as financial aid spending increased the number receiving aid based on their families’ income slightly decreased by 44 students, or 0.5 percent.

This budget, however, may be the best case scenario for UConn.

“We know there could be some changes, some of them massive,” said UConn Board of Trustees Chairman Lawrence McHugh. “The uncertainty is real.”

With legislators and the governor so far unable to adopt a budget ahead of the start of the fiscal year which begins July 1, UConn officials have made several potentially risky assumptions given there are so many factors in flux.

For example, it is unclear how much UConn will need to spend on employee costs – by far the university’s largest expense. Unionized state employees must still vote next month on a concession package that includes furlough days and increased health care costs. The UConn budget assumes the concessions will be approved and that the university will save $6.8 million next year as a result of furloughs and health care costs.

And then there are costs associated with paying for the pensions for retired UConn employees. Because the state promised employees a certain level of retirement benefits but failed to properly fund them for decades, current costs have increased rapidly.

UConn is counting on the concession package approval to result in a decline in the percentage of employees’ salaries that it must set aside for these pension costs. On Monday, however, the comptroller’s office released a memorandum saying that the rates UConn and other state agencies must set aside next year will increase sizably. The comptroller’s office has not clarified how the rates would be impacted by the savings that would be realized if the union concessions are approved. UConn budget chief Scott Jordan said the higher rates would cost the university between $12 and $25 million next year – an expense the budget does not contemplate.

The budget proposal also projects that the university will receive the state funding recommended by Gov. Dannel P. Malloy, a $32 million or 8 percent cut. Much of that will be offset from tuition and fee increases that were previously approved. But legislative leaders have proposed much deeper cuts, with Democrats proposing a $46 million, 12 percent reduction, and Republicans calling for a $52 million, 13 percent hit.

With the Democratic legislative leaders so far unable to pass a budget, Malloy has said he plans to sign an executive order to operate state government. That executive order, would cut state aid for UConn by 12 percent.

Following the UConn Board of Trustees Financial Affairs Committee meeting earlier this month, UConn President Susan Herbst said she would not rule out turning to further fee increases mid-year to make up for deeper cuts in state aid.

Tuition and mandatory fees account for 41.3 percent of UConn’s budget this year and next year will make up 42.5 percent of the budget. State aid accounts for 30.5 percent.