Dear Colleagues,

On Friday, March 7, you received a message from UConn-AAUP that contained statements that require correction and clarification, specifically in a section titled “Departmental Budget Cuts at UConn.”

Beginning last year, all units at Storrs and regionals – academic and otherwise – were told to prepare for a combined total potential budget reduction of 15% over five fiscal years, FY25 through FY29. Departments have not been told to prepare for reductions totaling 19%, as the message states.

Units were told to prepare for a 4% reduction to Ledger 2 accounts in FY26 and 3.5% in FY27. However, the university administration has not directed department heads to prepare lists of positions to eliminate to account for that reduction, nor do we plan to.

The deans, in collaboration with the department heads, are making their own strategic decisions regarding rescissions. It’s important to note that this is not the first time the university has established a multi-year rescission plan; deans and other academic leaders have been strong advocates for such plans because they support strategic decision-making and long-range planning, rather than ad hoc, year-by-year budgeting.

Why we are planning for these reductions: As we have said often, while UConn and UConn Health continue to aggressively advocate for state appropriations that will help us produce or get closer to a balanced budget over the next two years, the long-term trend suggests we will see gradual reductions to our state support combined with rising costs. We are planning for that future through strategies to increase self-generated revenue while at the same time reducing expenses.

The AAUP message also states that “UConn had $468 million in unrestricted reserves in June 2024,” which was presented by the AAUP as an argument against the implementation of budget reductions now, since these “reserves” would theoretically make that unnecessary.

Ironically, this same misleading number and terminology are also being cited in some discussions in the State Capitol as evidence that UConn and UConn Health don’t need additional state support and should instead receive diminished appropriations in FY26 and FY27 that would result in substantial budget deficits in those years. That is an outcome that the AAUP, like the university administration, hopes to avoid.

Presenting one large impressive-looking number and labeling it “reserves” or “fund balance” gives the impression that UConn has its own “rainy day fund,” as the state does, meaning a substantial pool of cash being kept on hand for some unspecified potential future uses should needs arise. This is simply not the case at UConn and UConn Health.

What we are talking about are actually numerous budget lines and accounts spread throughout the institution that are funding the critical current and future needs of the university. Sweeping some portion of them to meet other fiscal needs elsewhere at the university is the equivalent of UConn taking money out of one pocket and putting it another; all that would accomplish from a budget perspective is changing which pocket is empty – some immediate fiscal needs would be met, but new fiscal needs will have been created in the process.

Here is how we expect the numbers being referred to as “reserves” will break down in FY25 and what they fund:

• Operating (non-capital) dollars on hand: UConn: $93.6 million, UConn Health: $70.6 million. These dollars include tuition, program fees, and indirect cost returns. They fund many of the basics of running the academic and research enterprises, including faculty startup costs for laboratory space and staff and infrastructure to support new research (including the emerging AI and Quantum initiatives prioritized for federal funding), the strategic expansion of departments to grow enrollment and the additional services needed to support that growth, and equipment replacement. In addition, the Board of Trustees recommends that the university always keep 90 days’ worth of operating dollars on hand as a sound fiscal practice. The university is falling far short of meeting that goal; at the moment, UConn has only 30 days of operating dollars on hand and UConn Health has 20.

• Capital dollars on hand: UConn: $66.2 million, UConn Health: $152.6 million. These budget lines fund capital expenses that are not funded by the state, including emergent needs and deferred maintenance. The university estimates that we face at least $1 billion in deferred maintenance needs now and in the coming years across our campuses. These capital dollars are what will allow us to continue to chip away at those expenses as well as fund capital costs to support growth, including rehabilitating residence halls and expanding the number of beds to maximize revenue generation. At UConn Health, these funds are also committed to addressing critical deferred maintenance projects, projects required to meet patient safety and regulatory requirements, and to invest in the physical infrastructure needed to support the continued growth of clinical revenues.

• Finally, UConn and UConn Health keep $42.6 million and $11.2 million on hand, respectively, to fund our debt service and maintain our credit rating.

It is possible to add all these numbers together to form one large number, but that doesn’t tell the real story.

We hope this helps to clarify our current fiscal situation and plans.

Sincerely,

Anne D’Alleva
Provost

Jeffrey Geoghegan
Chief Financial Officer