The University of Connecticut is facing an estimated $50 million budget shortfall due to the COVID-19 pandemic and is having to furlough managers and cut its athletics department to make up for the deficit.
Although the school faced a loss after having to send students home midway through the spring semester, much of the budget shortfall comes from employee raises and unfunded pension costs.
During a budget report to the UConn Board of Trustees on Wednesday, Chief Financial Officer Scott Jordan said the university had budgeted for a 5.5 percent increase in labor costs in accordance with the 2017 SEBAC agreement, for a total cost of $20 million.
The university is also on the hook for $30.9 million in unfunded pension liability costs, due to Connecticut’s long-standing pension funding problems.
Salaries and fringe benefits for university employees makes up 57 percent of UConn’s total budget, totaling nearly $875 million in the upcoming fiscal year.
The $50 million budget deficit is the largest deficit in the state university’s history, according to the presentation.
The university has cancelled the raises for non-union management employees, who will also have to take furloughs of varying lengths during the summer.
The university is cutting $10 million from its Athletics Department and ending men’s cross-country, tennis, swimming & diving and women’s rowing as university-sponsored sports.
Jordan said that “just a deferral for a year,” of the raises would put the university in a better position, but the union representing UConn professors indicated it would not budge on any give-backs.
A spokesman for the UConn chapter of the American Association of University Professors offered comments at the beginning on the call, stating that his members had already given back enough in SEBAC negotiations in 2009, 2011 and 2017.
The trouble at UConn reflects the larger state-wide battle over state employee raises scheduled for July, as Connecticut faces massive budget gaps for the foreseeable future due to the pandemic and economic downturn.
Gov. Ned Lamont said he favored suspending some of the state employee raises but union leaders refused to negotiate. The governor said there was nothing he could do.
Also weighing on UConn’s budget is Connecticut’s unfunded pension liabilities, a continual source of deficit for both UConn and UConn Health.
According to the Board of Trustees presentation, UConn will pay $326.2 million in fringe benefit costs for employees, and $137.8 million of that cost is due to Connecticut’s unfunded pension debt.
The state of Connecticut reimburses UConn for $106.9 million in unfunded pension costs, leaving the university a payment of $30.9 million.
The UConn AAUP spokesman suggested the state should increase its payment toward the unfunded pension costs for UConn to help make up the difference.
However, the state is already set to grapple with a large budget shortfall next year ranging from $2 billion, according to state estimates, to upwards of $6.5 billion, according to researchers from Arizona State and Old Dominion universities.
Jordan says there is “significant uncertainty” about the budget projections because of the COVID-19 pandemic and questions about how much help the university might get from the federal government or the state.
A worst-case scenario placed UConn’s deficit at potentially $129 million.
One bright spot in UConn’s report was that enrollment deposits for domestic students were up 17 percent, unlike many other universities across the country, and philanthropic donations to the university have increased.
“During times of crisis, there is a rush to value,” Jordan said. “We’re very fortunate. It’s reflective of a UConn education.”