The Board of Trustees was able to approve balanced budgets for the University of Connecticut and UConn Health for the 2022 fiscal year because of a generous amount of federal and state aid and an anticipated return to near-pre-pandemic levels of student residential life.
“It’s actually kind of a low-drama result from a high-drama year,” Scott Jordan, the university’s Executive Vice President for Administration & Chief Financial Officer, said at a Board of Trustees meeting on Wednesday.
In 2021, the university faced a $75.5 million deficit mainly from a loss in revenue from housing and dining during the coronavirus pandemic. They managed to scrape together $45 million through mitigation strategies including hiring freezes, management furloughs, elimination of academic programs, a reduction in the athletics budget and reductions in departmental expenses. An additional $31 million in federal funding brought the deficit to $0.
The university will use $409 million from the state to pay salaries and fringe benefits for 47 percent of its employees. Tuition and fees will account for 29.4 percent of UConn’s budget in 2022, and will be used for instructional costs. The rest will come from a combination of grants and contracts, coronavirus relief funds and revenues from sales and commercial activities.
Jordan said that they anticipate the housing capacity will reach about 85 percent of pre-pandemic levels. He said they don’t anticipate any increases in salaries through collective bargaining.
“As we think about risk going into ‘22, it’s all about reopening at as full capacity as we can,” said Jordan. “We have every reason to be optimistic that we will hit that number.”
Jordan said that this year, the university’s $28 million structural deficit, mainly due to fringe benefit costs from unfunded legacy costs, will be zeroed out with the help of federal coronavirus funds and a two percent reduction to departments across the board.
Tuition for UConn students will increase $625 next year, part of a five-year plan to increase tuition rates that was agreed upon in 2019. However, the university will be providing an additional $14.3 million in university-sponsored student aid compared to the previous year. The total amount of federal, state and university student aid for 2022 is $225.6 million. According to UConn spokesperson Stephanie Reitz, 77 percent of UConn undergraduates received some type of financial aid in 2020.
Jordan said they had originally planned to reduce tuition by $7 million, but decided instead to increase financial aid by $14 million. Fee increases include a $4 fee per semester to fund the UPass program, which allows UConn students to ride public transportation using their UConn IDs, $1 per semester for yearbook fees and $28 per semester to fund seven new positions for student mental health services, a recommendation from the president’s Mental Health and Wellness Task Force.
The capital budget of $275.1 million includes $215 million in state bonds, which will go toward investments in science, technology, engineering and math, or STEM, including the completion of the Gant Science Building, and other deferred and residential maintenance projects. The university will fund additional facility repairs and construction to the new hockey arena using $56 million in faculty innovation grants, philanthropy and additional university funds.
The Board of Trustees also voted to approve several capital project budgets, including a $763,000 resurfacing of the track at Sherman Field, $1 million in improvements to the north and south parking garages over two years, and a $1.76 million replacement of the roof top unit at the Musculoskeletal Institute Building. Approximately $830,000 of this funding will come from Eversource rebates.
Additionally, the university is allocating $1.268 million to outfitting the kitchen and dining area in the Werth Family UConn Basketball Champions Center. Jordan said this would allow student athletes to get their meals through UConn dining rather than having to bring food into the center.
“This is a good business deal for the University,” Jordan said during a meeting of the Financial Affairs Committee on Wednesday.
The funding is coming from philanthropic donations, and Jordan said they hope to have it ready for the next basketball season. He predicted it would “pay for itself” in less than four years.
The UConn Health system received $50 million from the state legislature to offset a deficit of $114.9 million in 2021 — a combination of costs from COVID and unfunded legacy costs, or benefits and pension costs that have been passed down overtime. The system was able to save an additional $61 million through mitigation strategies, including a financial improvement plan saving $48.8 million and $10 million from federal coronavirus relief funds.
For the 2022 budget, the system was able to use coronavirus relief funds, which amounted to $73 million, to offset a deficit of $61.1 million. An additional $18.9 million was used to compensate for losses in FY 2020, leaving the system with an overall net of $100,000.
The budget assumes no increases in salaries, and also reflects a 3.5 percent increase in tuition and fees for students in the School of Medicine and the School of Dental Medicine. It assumes an increase in revenue from the clinic as people return to normal schedules in the wake of the pandemic.
UConn Health Chief Financial Officer Jeffrey Geoghegan said during the meeting that they went “from physician to physician” to look back on patient levels from 2019 to develop predictions around the expected ramp-up for clinical revenues. He also said that they are establishing a retail and specialty pharmacy, which will bring in more activity at UConn Health.
However, Geoghegan warned that the unfunded legacy costs would continue to negatively impact the university in the future. He said UConn Health expects a structural deficit of $40 million in 2023.