UConn is entering fiscal year 2023 with budgets that increase institutionally funded financial aid for students and anticipate a largely normal post-pandemic academic year.
The UConn Board of Trustees unanimously adopted the FY23 operating and capital budgets Wednesday for UConn Storrs and regional campuses along with UConn Health. The new fiscal year starts Friday and runs through June 30, 2023.
The operating budgets come with nuances that make it difficult to compare many line items directly against last year’s, however. That’s because the end of most federal COVID relief funds creates the incorrect appearance of a large dip in financial aid between FY22 and FY23, and state aid to UConn appears to have jumped significantly because it includes reimbursements for negotiated wage increases for FY23.
When taking those changes into consideration, the FY23 budget plans anticipate an academic year in which the state block grant to help support its operating expenses to UConn is essentially flat; UConn is boosting its university-funded financial aid by several million dollars; and the University’s research enterprise and clinical operations continue their strong growth.
The FY23 budgets comprise $1.7 billion for UConn Storrs and regional campuses, and almost $1.6 billion for UConn Health’s clinical, research, and academic operations.
In both budgets, the figures were increased by one-time state allocations to help cover the coming year’s expenses of collective bargaining wage increases, which a coalition of Connecticut public employee unions negotiated with the state; legacy fringe costs; and the additional 27th pay period in calendar year 2022.
However, there remains uncertainty as to how much the state will grant to UConn in FY24 to help cover that year’s negotiated wage increases. University budget officials say that remains an area of potential risk they will watch closely, along with the rise of fringe benefit costs and other potential fiscal impacts in coming years.
UConn’s budget for FY23 also reflects the emergence from the worst of the COVID-19 pandemic, which forced the University to cut its on-campus population drastically and absorb the associated revenue losses. Several fee-supported degree and certificate programs also were affected when many working professionals, with whom they are traditionally popular, could not enroll because of the pandemic.
“In FY23, we expect to see a post-COVID recovery in on-campus housing capacity and entrepreneurial program enrollment. While some COVID protocols and precautions remain in place and student and employee safety remain a top priority, the budget impact will be greatly reduced,” says Lloyd Blanchard, UConn’s interim vice president for finance and chief financial officer.
UConn continues to focus on protecting academic excellence and providing strong student support, including with a financial aid budget for FY23 of about $245 million.
That includes $165 million funded specifically by the University, a 7% increase over last year in that category, which uses a portion of tuition-generated dollars. The rest comes from state and federal sources and scholarships; in fact, about two-thirds of UConn’s undergraduates receive some form of gift aid they do not have to repay.
The state requires UConn to set aside at least 15% of tuition revenue for need-based aid, but the University exceeds that with nearly 17% set aside, plus other merit-based aid it also offers. “This is a commitment that the leadership at the University will maintain and continue,” Blanchard said Wednesday.
Overall, the state’s annual block grant is expected to comprise about 26% of the Storrs/regional revenue in FY23. It will be about $485 million, of which about $63.7 million comprises the one-time allocations to help cover the negotiated collective bargaining employee wage increases, legacy fringe costs, and the 27th pay period in calendar year 2022.
However, the University will need to return to the General Assembly to request aid to cover the collective bargaining increases for FY24, since the wage changes are permanent but the FY23 allocation was only a one-time amount. Blanchard said it is not yet known whether the state will fully cover those costs: “That’s a risk we’ll keep our eyes on,” he told trustees Wednesday.
Fees and tuition will generate about 9% and 30% respectively for the FY23 year that starts Friday, with the rest of the revenue coming from grants and contracts, commercial activities such as auxiliary services and sales, and related sources.
The fee and tuition categories include fee adjustments approved in April to help cover the increasing costs of providing specific services; and the tuition rates set in the five-year tuition plan adopted in 2019 for fiscal years 2021-25.
Under the FY23 portion of that five-year plan, in-state tuition will increase by about 4.3%, or about $642. Those figures were calculated specifically to reflect the impact of state fringe benefit costs and state aid to UConn, inflation in the higher education sector nationwide, and related fiscal measures.
Like the Storrs and regional campuses, UConn Health enters FY23 with an operating budget affected by rising fringe benefit rates beyond its control, largely due to the state’s legacy pension and healthcare liabilities for state retirees.
However, UConn Health continues to ramp up patient revenue, reversing the unavoidable decline it experienced when it had to curtail many non-urgent business operations during the COVID pandemic. In FY23, it anticipates generating about $752.2 million in net patient revenue, an increase of almost $38 million over FY22.
“We do expect greater patient traffic throughout all of our entities for UConn Health,” Jeffrey Geoghegan, UConn Health’s chief financial officer, told the Board of Trustees on Wednesday.
UConn Health’s revenue forecast also includes $418.9 million estimated in state funding, of which $115.5 million of one-time funding will help cover the negotiated collective bargaining employee wage increases, legacy fringe costs, and the 27th pay period in calendar year 2022.
“We are grateful to the Governor and General Assembly for their continued support of UConn Health and recognize the ongoing fiscal constraints on the State of Connecticut,” says Dr. Bruce Liang, M.D., interim chief executive officer of UConn Health and dean of the UConn School of Medicine.
“UConn Health will continue to manage its budget closely monitoring state support, clinical volume, and fringe benefits costs,” he says. “We will also continue to focus on providing excellent patient care, protecting academic excellence, and supporting the research mission.”
Like the UConn Storrs and regional campus budget, UConn Health is watching some unknowns that could affect FY23 and coming years, including whether new COVID variants or case spikes could impact patient volume at the hospital, physician practices, and the dental clinics.
Like other medical institutions nationwide and throughout Connecticut, UConn Health is seeing more employee turnover, especially in nursing positions, and is focused on recruiting and retaining employees to address shortages.
UConn Health has also been affected by the worldwide increases in the cost of goods and decreased availability: “The way we react and move through this global supply chain shortage will be top of mind going into next year,” Geoghegan said Wednesday.
Also Wednesday, the Board of Trustees approved the capital projects budgets for UConn Storrs/regionals and UConn Health.
Those budgets are separate from operating funds because they pay for projects with long-term benefits such as building construction and renovations, infrastructure overhauls, and similar initiatives. They are primarily funded with revenue from state bond sales.
Some of the projects with funding in this year’s capital budget include the ongoing renovations at the Gant Science Complex, dredging and other improvements at Mirror Lake, several deferred maintenance projects at UConn Health, continued work on the hockey arena under construction in the Athletics District, and others.
