U.S. News & World Report\u2019s<\/em>\u00a0annual ranking.<\/p>\nThe most significant fiscal hurdle faced by the university stems from the state\u2019s unfunded pension and retiree healthcare liability that is built into employee fringe benefit rates. UConn pays a portion of these costs itself, with the state comptroller determining the rates.<\/p>\n
\u201cUConn\u2019s core functions of education, research, and clinical care are clearly healthy and stable, which this budget reflects,\u201d said Financial Affairs Committee Chair Andy Bessette. \u201cAt the same time, the serious and growing burden of the unfunded pension liability is the most significant fiscal challenge the university faces. UConn’s leadership is appropriately working with the state to try and identify ways to address these costs going forward to help keep UConn successful and competitive.\u201d<\/p>\n
In FY20, UConn will have to pay $31 million toward the legacy unfunded pension and retiree healthcare liability, which built up statewide over many years. UConn Health would have paid an additional $53 million next year, but the General Assembly and the governor allocated $33.2 million in the next state budget to help reduce that amount, as UConn Health could not have closed the budget deficit this created without assistance from the state.<\/p>\n
This funding will help UConn Health remain solvent in FY20, although spending reductions and other actions will still be needed to close the remaining deficit.<\/p>\n
UConn and UConn Health have significantly cut costs across all campuses in recent years and UConn Health has increased the revenue it generates through clinical care by 59 percent since FY13.<\/p>\n
If not for the costs associated with the unfunded pension and retiree healthcare liability, both UConn and UConn Health would have been fiscally stable in the year ahead \u2013 even running modest surpluses.<\/p>\n
The deficits of $19.6 million and $7.1 million for UConn and UConn Health, respectively, that are caused by the legacy unfunded pension and retiree health liabilities will be covered in the coming year by cost-cutting through employee attrition \u2013 leaving open positions unfilled when possible \u2013 and other possible actions such as dipping into the University\u2019s fund reserve, said Scott Jordan, UConn\u2019s executive vice president for administration and chief financial officer.<\/p>\n
The issue is not limited to the FY20 budget, which starts July 1. In FY21, the cost of the unfunded pension and retiree health liabilities paid with non-state funds is estimated to grow to $34.1 million for UConn and $58.3 million for UConn Health.<\/p>\n
UConn President Susan Herbst said the University appreciates that the governor and lawmakers \u201cgave us the tools we need this year in a really tough (financial) environment,\u201d and that UConn is working to ensure that budget difficulties this year and into the future have no impact on the University\u2019s academic enterprise, healthcare services, research and other parts of its mission.<\/p>\n
\u201cIf the enormous cost of the unfunded pension liability were not part of our budget equation, both UConn and UConn Health would be running small surpluses next year instead of closing deficits,\u201d Herbst said. \u201cBoth have implemented millions in spending reductions, and, in addition, UConn Health has done its part to work toward fiscal stability by dramatically increasing the revenue it generates from patient care.<\/p>\n
\u201cEven so, UConn Health could not have closed the deficit created by the unfunded pension costs next year without help from the state,\u201d she added. \u201cWe are incredibly grateful that the governor and the General Assembly acted to assist us in addressing those costs in the year ahead, which will go a long way toward keeping UConn Health solvent in FY20.\u201d<\/p>\n
Elsewhere, UConn is increasing its financial aid budget in FY 2020 to $194.7 million \u2013 with $139 million directly from UConn institutional funds \u2013 to help support talented students, with the best packages provided to in-state, low-income students.<\/p>\n
University-supported financial aid has increased 24 percent over the past three years, and three-quarters of all UConn undergraduates receive some form of financial aid.<\/p>\n
UConn contributes $3.4 billion annually<\/a>\u00a0to the state\u2019s economy, employing one out of every 90 jobs in the state. UConn\u2019s success provides direct, tangible returns to the state for the investment it has made in the University\u2019s academics and campuses.<\/p>\nAdministrative jobs have consistently remained between only about 2.2 and 2.5 percent of the UConn workforce for the past 25 years, despite a significant growth in the University\u2019s enrollment and academic scope.<\/p>\n
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