UConn has adopted a 2025-26 budget that maintains excellence in its academic, research, and health care enterprises while addressing serious fiscal challenges resulting from state funding shortfalls and steep reductions in federal research awards.

The budget increases UConn’s enrollment to bolster revenue; draws from one-time fund balances in accounts throughout the institution; and enacts stringent deficit mitigation plans at UConn Storrs, UConn Health, and the regional campuses.

UConn’s Board of Trustees adopted the budget at its meeting on Wednesday, June 25, and it goes into effect July 1.

UConn faces operating budget shortfalls in the upcoming fiscal year of $72 million for the Storrs and regional campuses and $61.8 million for UConn Health, for a combined total of $134 million.

UConn has also lost $95 million in reduced, slowed, and terminated federal research awards under new policies enacted nationwide since January, and there are no indicators that the funding will rebound in the near future.

As FY26 progresses, the state Office of Policy and Management (OPM) also could reduce UConn’s appropriations to balance the state budget if needed. With so many revenue sources in flux, UConn expects to continually pivot to adjust to new developments.

“We’re going to have to forecast and reforecast every month as these changes take place and as we continue to move forward. It’s going to be very fluid,” Jeffrey Geoghegan, UConn’s CFO and executive vice president for finance, told members of the Board of Trustees’ Financial Affairs Committee on Tuesday, June 24.

That committee reviewed and endorsed the budget proposal and passed it on to the full board for a vote.

UConn plans to mitigate about $38 million and UConn Health plans to mitigate about $62 million of the FY26 funding losses through several actions, including optimizing and reducing personnel. That will occur through a variety of approaches, including restricting most hiring and reviewing non-permanent and temporary positions as an initial step.

The University will also review overtime and compensatory time; encourage voluntary schedule reductions where feasible and appropriate; consolidate some office functions; and restrict employee travel, events, and other activities.

Wherever possible, the University will work to grow its revenue streams as well. Units have been directed to fully utilize unspent balances they hold from UConn Foundation funds. Also, the University will work to identify potential opportunities for new revenue, including continuing to grow patient care revenue at UConn Health.

“UConn Health is committed to making the difficult decisions necessary to mitigate the reduction in funding, while at the same time continuing its position as one of the highest quality, best patient experience, and fastest growing health systems in Connecticut,” says Dr. Andrew Agwunobi, UConn Health’s CEO and executive vice president of health affairs.

The overall FY26 operating budget totals $3.6 billion, split roughly equally between UConn Health and the UConn Storrs/regional campuses operations.

The state’s annual block grant to the University comprised one-quarter of the University’s revenue as recently as FY19 but has been steadily decreasing. In the coming year, that number has fallen to 12% (15% at UConn and 8% at UConn Health). The state allocation covers 23% of UConn’s personnel costs; the rest is borne by the University through revenue it generates.

At UConn Health, the largest source of income in FY26 is clinical care at 72.5%. At UConn’s Storrs and regional campuses, the largest source of income in FY26 is student tuition and fees at 57%.

UConn already had committed to leaving its tuition rates flat in FY26 before the new state allocation numbers were determined and does not intend to reverse that decision. Separately, fees that pay for housing, dining, and various student services will increase modestly to pay for those enterprises.

The cost-cutting initiatives, efforts to identify new revenue sources, increasing enrollment from higher-paying out-of-state and international students, and other measures will all be critical in the coming budget year, UConn officials say.

The University will also examine every individual account in which unspent funds have been held as part of UConn’s overall reserves and, where possible and appropriate, will consolidate them to use as one-time spending to help fill gaps.

“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,” wrote President Radenka Maric, Provost Anne D’Alleva, and Vice President for Research Pamir Alpay in a message to the community on June 23.

“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,” they wrote.

“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.”

With the FY27 projected deficits even higher than those in FY26, UConn officials say efforts to reduce costs and increase revenue will be needed moving forward while the institution continues to prioritize student success, academic strength, and research impact.

“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,” Maric, D’Alleva, and Alpay added in their message.

Overall, Maric says, UConn will continue to focus over the next three to five years on core operational priorities: continuous improvement and effectiveness, improving the enrollment outlook, increasing the academic and research profile, supporting a championship culture and competitiveness in UConn Athletics; and advancing fundraising and engagement efforts at the UConn Foundation.

“In this and everything we do, we will ask ourselves: Is this helping our graduation rate? Is this supporting student success?” Maric said Tuesday.

UConn has had a long-standing commitment to providing student financial aid as part of that work and set aside 16.5% of its tuition-generated revenue for those uses – voluntarily higher than the 15% minimum established by the state.

In the coming fiscal year, UConn will increase institutionally funded financial aid by 10.6% as part of its work to attract and retain students, of whom 85% receive at least one form of financial aid.

In addition to approving the operating budget, the Board of Trustees also adopted the capital improvement budgets for UConn Storrs / regionals and UConn Health for FY26.

Those allocations are limited to specific building and infrastructure projects and cannot be shifted to help allay the pressures on the operating fund.

At the Storrs and regional campuses, the $175 million capital budget for FY26 will fund a variety of projects that include a major renovation of Gampel Pavilion; a portion of the cost of construction of a new nursing building; improvements in various residence halls; and other critical deferred maintenance and infrastructure repair projects.

The UConn capital budget consists of $128 million in bond funds for projects under the UCONN 2000 program; $8 million of state general obligation bond proceeds; and $39 million from student fees collected to support infrastructure maintenance and residential life facility improvements.

At UConn Health, the $58.4 million capital budget for FY26 is funded through $28 million in state general obligation bond funds and $30.4 million generated by UConn Health, which has more than doubled its clinical care revenue over the past 10 years.

Like at UConn Storrs and regional campuses, the capital funds will be directed to UConn Health’s critical deferred maintenance and infrastructure repair projects as well as improvements to clinical spaces that enable revenue growth.