UConn to Lay Out $1.34B Budget Plan Wednesday

STORRS, CT — University of Connecticut officials will present a 2017-18 fiscal year budget proposal totaling $1.34 billion to the university’s board of trustees on Wednesday.

Scott Jordan, UConn’s executive vice president for administration and chief financial officer said 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."

He added, "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."

Once the state budget is adopted, UConn's budget 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.

Jordan said the FY18 budget proposal avoids raising tuition above the rate that had already been approved in a four-year plan that went into effect in fall 2016.

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, Jordan said.

The $1.34 billion proposed budget for Storrs and the regional campuses relies on tuition for 29 percent of its revenue, followed by about 26.7 percent of its revenue coming from the state’s operating fund allocation.

As recently as the year 2000, state support comprised 43 percent of UConn’s revenue.

“UConn is currently at a crossroads,” Jordan said. “The decline in state support is causing UConn to shift from expanding academic and research strength in order to increase our contributions to the state’s economy to simply attempting to maintain our current position.”

He said UConn’s FY18 budget also will be significantly affected by the state’s tentative agreement with the State Employees Bargaining Agent Coalition, if labor units within the coalition approve the provisions.

UConn included those provisions as tentative assumptions in its budget draft, and would have to change the document "significantly" if the proposal is not adopted, Jordan said.

The SEBAC agreement includes savings for the state through increases in employees’ share of health care and pension costs, three furlough days in FY18 for those covered by the deal and a three-year wage freeze, Jordan said.

Under university policy, non-contract UConn employees who are not covered by collective bargaining agreements receive raises similar to those in the unions and on the same schedule, so the wage freeze and furlough days would apply to them as well if the SEBAC agreement is approved, he added.

The pact also avoids layoffs through 2021 for current state employees in addition to the other provisions on raises, co-pay and health care costs, and related items. The provision would prevent UConn and other state agencies from achieving cost savings through personnel reductions, and the no-layoffs assumption has been included along with the other SEBAC provisions in the proposed UConn budget coming to trustees on Wednesday.

Salaries comprise about 37 percent of UConn’s budget and about 90 percent of its employees are covered by collective bargaining agreements.

UConn is also looking to save money through outsourcing services when "possible and practical," he said. Profit-sharing from new bookstore operator Barnes & Noble is an added revenue source, Jordan said.

Jordan said that "any notion that UConn doesn’t have personnel costs under control is incorrect."

He added, "The workforce hasn’t grown in any significant manner, nor have salaries, and managers are in their third year without pay raises."

More than 18 percent of overall expenses goes to fringe costs, which include retirement, health care coverage, FICA taxes for Social Security and Medicare, and UConn’s payment to help the state with its unfunded pension liabilities.

Jordan said UConn lost $9.2 million in state funding in fiscal year 2017, receiving a state allocation of $220.7 million for operating costs – and then absorbing $6.3 million more in lost money from fringe rate reimbursement payments that are calculated based on the allocation, and which therefore dipped when that allocation fell.

The University’s fringe benefit costs have increased by $100 million since FY11, largely to help the state retroactively fix its unfunded pension liabilities, he said.

In FY17, UConn will pay an estimated $57.3 million due to the unfunded pension liability – money that otherwise would have gone to other needs throughout the University, Jordan said.

The amount for FY18 is not yet known.

“We would argue that our current students, faculty, and staff did not cause this,” Jordan said of the state’s pension issues when he outlined the draft budget to the trustees’ Financial Affairs Committee recently. “As we are forced to raise tuition to pay for this, we hope this is something the state will work out soon.”

In all, he said, UConn has sustained almost $80 million since 2011 in state reductions, lost fringe, and “fund sweeps,” in which the state takes money out of accounts for projects that have not yet started.

UConn has budgeted $122.4 million in university-funded institutional financial aid to award to students, which comes in addition to state, federal, and private aid for which they may qualify, Jordan said.

This year’s proposed number is $10.7 million above the FY17 figure, with about $70 million of the $122.4 million earmarked for need-based aid.

“We are not a business, but if we were to think of ourselves in the way a business does,” says Jordan, “it’s clear we have a tremendously loyal customer base.”

Photo Credit: Chris Dehnel