UConn, facing $76M deficit, asks Connecticut for $28M in financial help; UConn Health seeks $76.9M to close its own budget gap
Faced with a projected budget deficit in the current fiscal year of $76 million, UConn is seeking $28 million in aid from the state and plans to make additional budget cuts to help cover losses caused by the coronavirus pandemic.
UConn President Thomas Katsouleas told the university’s board of trustees Wednesday that revenue growth related to unexpected increases in student enrollment did not outweigh losses from housing and dining as far fewer students than expected are living on campus this semester.
The university had projected in June to have about 8,000 students in on-campus housing, but now estimates to have about 4,700 students in housing with residential halls at 40% capacity. An estimated $33.4 million loss in housing and dining fees has now more than doubled to $67 million.
Scott Jordan, UConn’s executive vice president for administration and chief financial officer, called the prospect of closing campuses and sending students home early due to the pandemic the “greatest risk to our budget at this time.” Should that happen, Jordan said the projected deficit would increase from $76 million to $109 million, increasing by $2 million for each week campuses were closed before Nov. 1.
Besides early closure, other major risks to the budget include lack of government support, as well as “large and increasing fringe benefits rates,” “over which UConn has no control,” Jordan wrote in a budget presentation to the board.
Unfunded employee pension costs, a continual fiscal challenge for UConn, amount to $31 million in the current fiscal year that ends June 30, Jordan said.
The budget update also showed a need for $7.4 million in additional funds this year for need-based financial aid.
“Financial aid is the one place we see increased expenditure necessary,” Jordan told the trustees, adding that it was “totally expected and understandable” given the impacts of the pandemic on the economy and students' and families' abilities to pay tuition.
The university is using hiring and spending freezes, departmental expense savings, capital reallocation, universitywide program cuts and furloughs of nonunion management to reduce the projected deficit by $48 million. If the state does not cover the remaining $28 million, Jordan said the university has backup plans to address the gap.
“We are hopeful for federal help, state help, but the clock is ticking on the fiscal year,” he said. "We are asking all departments of the university to start preparing additional cut plans, totaling another $28 million. We know that we have already cut substantially over the last several years ... this $28 million additional round in cuts will cause pain.”
UConn is requesting a state appropriation of about $213 million for the next fiscal year that begins July 1 and about $222.7 million for the following year. The university is hoping to avoid an expected 10% reduction in its state block grant that amounts to about $4.6 million.
UConn Health
UConn Health, which includes the John Dempsey Hospital as well as the university’s medical and dental schools, is requesting $76.9 million in aid from the state, said Jeff Geoghegan, UConn Health’s chief financial officer. The organization is projecting a $114.9 million deficit in the current fiscal year, with about $61.1 million in losses related to COVID-19 and $53.8 million arising from unfunded pension costs.
A graph Geoghegan shared with the board showed how net patient revenue at the hospital nosedived from slightly less that $50 million in February to less than $25 million in April as elective surgeries were canceled and many patients postponed medical treatment. Patient revenue recovered to about $45 million in July, and is projected to increase back to about $50 million by next spring.
UConn Health plans to cut that projected deficit by $56.9 million through federal funding, deferring capital projects, furloughs and other efforts, leaving a remaining budget gap of about $58 million. That amount includes an expected $4.2 million more in pandemic-related losses through the remainder of the current fiscal year. UConn Health also asking the state for help in mitigating last fiscal year’s coronavirus-related losses of $18.9 million.
The presentation noted the legislature approved $33.2 million in funding to UConn Heath in the last fiscal year to help with pension costs, and the same amount is included in the governor’s budget for the current year.
Gov. Ned Lamont briefly attended the trustees’ virtual meeting, telling the board and university leadership, “I really appreciate what you’re doing for UConn [and] what you’re doing for the state of Connecticut, especially during these incredibly complicated times.”
“I see what’s going on at U. Wisconsin-Madison and Notre Dame and other places, and we’ve been cautious and led with public health, and I think it’s making a difference,” Lamont said, adding, “we’re by no means out of the woods ... and November is going to be a complicated month."
Amanda Blanco can be reached at ablanco@courant.com.
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