Dear Colleagues,

Tomorrow, the university will present its proposed budget for fiscal year 2026 to the Financial Affairs Committee of the Board of Trustees. Should the committee approve the budget, it will go to the full board at its meeting on Wednesday.

We will begin with a discussion of our institutional priorities over the next three to five years: continuous improvement and enterprise effectiveness, improved enrollment outlook, increased academic and research profile, athletic success, and advancing our private philanthropic efforts through the UConn Foundation. Additional details about these priorities will be included in the president’s report that will be presented on Wednesday.

FISCAL CHALLENGES

As you know, as we work to advance these priorities, UConn is simultaneously facing multiple financial challenges:

• State support over the next two years is well below what we requested, resulting in significant budget shortfalls at UConn and UConn Health.
• There have been dramatic reductions in federal support for research that have eroded recent growth. The university is $63 million lower in awards through May 2025 over the same period last year, and has lost $32 million in federal funds due to terminations and cancellations of existing research awards.
• Federal grant reimbursements to universities, in the form of Indirect Cost Recoveries (IDCs), are expected to be less for two reasons: 1) a smaller research base as a result of fewer awards, and 2) the federal administration’s push to change the methodology for determining these reimbursements.

Our approved state appropriation will lead to a combined shortfall of $134 million for UConn and UConn Health for fiscal year 2026, which begins July 1. Additionally, the cost of the reduced, slowed, and terminated federal funding for research comes at a cost of $95 million for the university.

Late on June 20, we were notified by the Office of Policy and Management (OPM) of lapses to the approved fiscal year 2026 appropriations because the state’s budget is not balanced.

We will close the FY26 budget deficits and these additional reductions of $6.6 million for UConn and $4.1 million for UConn Health, in part, by using one-time funds, which will get us to the next year but will not solve our structural budget deficit. It should be noted that as the fiscal year progresses, OPM may elect to allocate additional cuts to our appropriations to balance the state budget.

Finally, at this point, there also is no reason to feel confident that federal research funding will rebound in the near future and there may well be serious long-term consequences for UConn and all of higher education.

DEFICIT MITIGATION PLANS

The senior leadership teams at UConn and UConn Health engaged in intensive efforts to build our plans to mitigate the significant fiscal setbacks we are facing. We will be able to mitigate a portion of these shortfalls using tuition and auxiliary revenue dollars and through a shift in capital spending. In addition, we are taking the following steps:

• Personnel optimization/reduction. The university will begin by reviewing non-permanent and temporary employees as an initial step in reducing the size of our workforce; will review and potentially pause all current searches not in the offer stage; restrict most hiring; review overtime and compensatory time; encourage the use of Voluntary Schedule Reductions when feasible and appropriate; and consolidate some office functions.
• Restrict employee travel, events, and other activities. As a reminder, all employees are required to follow our Travel Policy.
• Review service contracts.
• Increase the utilization of Foundation funds by directing units to utilize all of their available spendable balances.
• Continue clinical financial improvements at UConn Health.
• Identify potential opportunities for new revenue.

The university will also sweep and utilize a portion of one-time funds often referred to as “fund balances” from throughout the institution.

These dollars are not held in a central pool, but are in hundreds of accounts and budget lines throughout the institution that are used to fund our operations, meet upcoming needs, maintain our bond rating, and invest in the future of our university.

Much of these funds are already committed for specific purposes. Using these funds to close short-term deficits will create new financial problems that didn’t exist previously and new unmet needs throughout the institution. And if these one-time funds become exhausted, they do not automatically replenish, and structural deficits will remain.

Despite the very real challenges and hardships this will cause, our current financial picture does not leave us with a reasonable alternative. NOTE: The university will establish a process whereby units may request that portions of these funds be returned for specific purposes.

A copy of the presentation that will be made to the Financial Affairs Committee by our CFO is available online as part of the committee agenda.

CHANGE TO IDC DISTRIBUTION

The university has an established practice of distributing a portion of IDC recoveries to schools/colleges, centers/institutes, departments, and our Principal Investigators (PIs). Given the fiscal challenges facing us, this distribution needs to change, at least in the short term.

FY25 Storrs IDC appropriations, which would be distributed on a retroactive basis in December 2025, are paused. The decision to distribute these funds will be assessed in early 2026 based on the federal funding climate and other factors.

Starting after July 1, 2025, PIs at UConn and UConn Health will receive a 5% real-time allocation of FY26 IDC recoveries. No FY26 IDC recovery distributions will be made to schools/colleges, centers/institutes, and departments. IDC recoveries will be used to maintain critical research operations and infrastructure, and towards emergency funding through the EMERGE program.

We understand many units have already budgeted for the use of anticipated FY25 IDC recoveries and that this decision is unexpected. The university does not take this step lightly. The dramatic shift in the federal and state landscape requires the university to take this action. The Provost’s Office and OVPR will be working with deans, directors, and other university leaders to determine the best path forward for each unit.

CENTER AND INSTITUTE FUNDING

Finally, research-related centers and institutes will move to need-based budgeting effective immediately. The Provost's Office and OVPR will work together to ensure our research-related centers and institutes are supported as needed to continue operations.

MORE DETAILED INFORMATION WILL BE SHARED

Much of what is described above is high-level and general. We know more detailed guidance is necessary. We will be sharing this guidance with unit leaders in the weeks ahead and will also schedule an informational forum where any faculty or staff member can ask questions of university leadership about these plans and changes.

A NATIONAL PROBLEM

Please know that we are not alone in having to make these difficult decisions. Every large research university across the nation is being forced to take similar steps, including but not limited to University of Maryland, University of Massachusetts-Amherst, University of Massachusetts Chan Medical School, Clemson University, University of Washington, University of Notre Dame, University of Vermont, Harvard, MIT, North Carolina State University, Duke University, University of Pittsburgh, Johns Hopkins, and the University of California system, to name only a few. A recent news story covered aspects of this.

We thank you for your patience and collaborative efforts as we work to address our fiscal challenges while also doing all we can to protect and advance our cornerstone missions of student success, research and innovation, and exceptional patient care.

Sincerely,

Radenka Maric
President

Anne D’Alleva
Provost and Executive Vice President for Academic Affairs

Pamir Alpay
Vice President for Research, Innovation, and Entrepreneurship