February 16, 2017

College leaders warn proposed cuts would have big consequences

Top administrators from the state's public colleges told legislators on the state Appropriations Committee Wednesday they had deep concerns about the effect of funding cuts in Gov. Dannel P. Malloy's proposed budget.

But the president of the state's largest public college system offered a particularly dismal outlook, warning the cuts could lead his system to declare its equivalent of bankruptcy.

While University of Connecticut officials said they could swallow the cuts without raising tuition beyond levels already planned, officials from the Connecticut State Colleges & Universities system said they are facing the possibility of tuition increases this year as a discussion about broad restructuring is ongoing.

CSCU President Mark Ojakian said the CSCU system might even consider declaring financial exigency, which he said is its equivalent of declaring bankruptcy, if the final adopted budget makes an even deeper cut. The declaration would allow it to circumvent union contracts.

"There aren't many other places to go other than declaring financial exigency," Ojakian told legislators. "That is not something I'm excited about considering, but [the potential size of the state funding cut] leaves us very little choice."

Declaring financial exigency would require the system to spend the remainder of its reserves as well as sell off some assets, Ojakian said.

Even if the system does not declare financial exigency, the fiscal choices it faces are bleak, he said. "All options are on the table," including campus consolidations and additional tuition increases.

The governor's proposed budget would cut $14.3 million, or about 4.4 percent, from the state's block grant to the system, which includes the four Connecticut state regional universities, a dozen community colleges and the online Charter Oak College.

Ojakian told legislators that after factoring in increasing fringe benefit rates and other cost increases, the cuts would lead to a deficit of $33.4 million in the next fiscal year and $57.5 million in the following fiscal year.

And if the governor's negotiations with the state's major labor unions fall through, and Malloy fails to achieve the $700 million in savings his budget projects, Ojakian said, it would increase the cut to the system by another $31.8 million.

In total, Ojakian said he is preparing for a single-year cut of as much as $81 million, which he said would leave the system few options outside of declaring financial exigency. Even if the cut is not that high, he said, financial exigency remains an option.

"That, to me, is the most drastic action that could be taken, and something that would not be considered lightly," Ojakian said. "And it's not something I'm looking to consider at this point in the time, but I need people to understand that it needs to be an option."

Ojakian avoided going into specifics about what cuts might be considered, saying he wants to wait until the system's restructuring process is farther along. He said he hopes restructuring the system addresses access and affordability for students.

Over the past five years, tuition has increased by 17.8 percent at the regional state universities, 15.8 percent at the community colleges and 14 percent at the online Charter Oak College, Ojakian said.

While CSCU administrators spent much time discussing the worst-case scenario, University of Connecticut officials offered a more measured assessment. UConn is facing a $28 million reduction, about 7.2 percent less state funding than in the budget adopted last June, though midyear cuts have been made since then.

"We know that the proposed cut could have been much more severe," University of Connecticut President Susan Herbst said Wednesday, acknowledging the state's economic challenges. "We are grateful for every penny of appropriation the state is able to provide, especially during these very difficult years."

Herbst said the university would have to slow faculty hiring as well as consider cutting a number of classes, majors and programs. She also said the university would consider reducing the percentage of funds dedicated to institutional aid and possibly eliminate some Division I sports.

The result of the cuts, Herbst said, would be a drop in the quality of the education offered at the university and a drop in the institution's U.S. News and World Report ranking.

Unlike last year, the university is not threatening further closures of its regional campuses or additional tuition increases.

"We are currently in a place where we think we can live within our current tuition plan," said Scott Jordan, the university's budget chief, referring to a four-year tuition hike plan approved last year.

Jordan said the university has had three major cost drivers in recent years: employee fringe benefits, financial aid and an increase in student enrollment.

The university's share of employee fringe benefit costs has risen from $68 million in 1997 to $258 million in the current fiscal year's budget, Jordan said. The cost of institutional financial aid has risen dramatically as well, from $16 million in 1997 to $110 million this year.

The university has been able to offset some cost growth in recent years by admitting a greater percentage of out-of-state and international students, who pay higher tuition, with each incoming class. It also has seen revenue growth in its graduate business programs for the same reason. But Herbst said she does not plan to continue increasing the percentage of out-of-state students in undergraduate programs.

"I think we're about where we should be," Herbst said. "Overall, all the campuses together, we're 80 percent (in-state) and 20 percent (out-of-state), and at Storrs we're about 60 percent (in-state) and 40 percent (out-of-state). We were actually a little more than 60 (percent) in-state this past year. So we'd like to see it stay in that general vicinity in terms of percentages."

Dozens of students showed up at the Legislative Office Building to testify before the Appropriations Committee Wednesday night, all opposing the governor's proposed cuts.

Dan Byrd, president of UConn's Undergraduate Student Government, said it was not hard to convince students to come to Hartford to stand in opposition.

"When you tell the students what's going on in terms of budget cuts and how they can actually impact the process," Byrd said, "it's not really hard to convince them to take a couple of hours out of their night, especially if they can bring their homework, and support UConn."

Byrd said the cuts are "not sustainable," and the university can't afford to keep going back to the legislature each year, conceding another percentage of the block grant.

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