Hiring frozen. Projects paused. Travel curbed. UD reacts to spiking state health care cost

Skyrocketing health care costs are forcing the state's largest university to consider "draconian measures" to balance the budget.

University of Delaware's President Dennis Assanis said as much in state budget hearings last week, as institutions like his brace for an unprecedented hikes in state employees’ health insurance premiums. That's a possible 27% increase in the next fiscal year 2025, with more to come.

These figures could change. State leaders expect the tenuous situation with state health benefits to make this proposed hike a primary focus for lawmakers this budget season, as previously reported.

But there's short-term impact. UD already invests some two-thirds of its annual budget in employee compensation and benefits. The university expects fiscal year 2024 costs, being incurred right now, to spike between $20 million and $40 million, according to the president. And he has to pivot.

Assanis alerted university faculty and staff to several immediate cost-saving measures, with the possibility of more to come, in a letter sent Feb. 6. This joins mention of a hiring freeze, shared in last week's hearing, and plans to delay as many capital projects as possible.

UD is tightening the belt for employees in a few key areas for the remainder of FY24 — limiting hiring, travel, external consulting, events and discretionary spending.

How did we get here? Why Delaware is eying a 27% premium hike on state employees' health insurance

Most hiring is frozen. Nonessential travel is frozen, capital projects largely deferred. Any events should be "managed prudently," while discretionary spending is curbed on the whole. The list goes on. However, by late Wednesday afternoon, the university clarified with Delaware Online/The News Journal that no raises for FY24 will be impacted, though earlier messaging had mentioned a hold on non-contractual compensation adjustments.

"Our UD community has always proven to be resilient, stepping up to help each other, and the institution overall, when it matters most," wrote Assanis, also asking personnel to strategize on new revenue streams.

UD told its community these measures and more exist on a "living document," as the university continues to monitor economic headwinds — and the state of Delaware's health insurance premiums.

The institution released a statement Wednesday morning on the cuts outlined so far.

“Higher education institutions across the country are having to navigate both near- and long-term financial challenges. In a message to University faculty and staff, President Assanis articulated the significance of proactive control measures that the University of Delaware is implementing in order to best contain these challenges, while supporting sustained excellence in academics and operations.

"These steps represent a strategic approach toward balancing, conserving and growing University resources as we continue to provide the high-quality education that our students expect from UD both now and into the future," the statement read.

All state agencies are feeling the pressure.

"What's happened over the last several months is just an explosion,” said state Sen. Trey Paradee, chairman of the JFC, in UD's hearing. “Hopefully, we can come to some kind of resolution of how we address this and how we rein in some of these costs.”

More: Breaking down education funding in Delaware's proposed 2025 budget

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This article originally appeared on Delaware News Journal: UD lays out budget cuts ahead of looming spike in health care costs