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February 14, 2019

CSCU could face shortfall as large as $57 million

HBJ Photo | John Stearns CSCU President Mark Ojakian.
By KATHLEEN MEGAN | CT Mirror

With the governor’s budget scheduled to be released next week, the state Board of Regents’ finance committee is grappling with various scenarios for state funding and tuition, including one that could leave the Connecticut State Colleges and Universities system with a shortfall as large as $57 million. 

That shortfall would occur even if state funding and tuition remain flat, but the gap would grow even larger if Gov. Ned Lamont reduces funding for the system.

“If the governor proposes a budget less than flat funding, [the shortfall] will increase and depending on the amount will increase dramatically,” Connecticut State Colleges and Universities President Mark Ojakian said Wednesday. Ojakian sat down for an interview with CT Mirror prior to the scheduled Thursday meeting of the Board of Regents finance committee.

With state funding on the decline in recent years and enrollment dropping, the CSCU system has been in dire financial straits and its leaders have been exploring various ways to make it more financially viable, including a controversial consolidation plan. 

CSCU staff are also expected Thursday to present various plans for tuition to the regents finance committee, including a look at the merits of offering free college because “a lot of the conversation” among legislators and others “has centered around free college,” Ojakian said.

Legislators are considering several bills this year that offer various types of free college.

Ojakian, who has questioned the idea of free tuition in the past, said Wednesday that research shows that of the 38,000 students who applied for financial aid using a federal financial aid form, 59 percent received enough aid to fully cover their tuition and fees through federal Pell grants, institutional aid and other sources.

“They are in free college already,” said Ben Barnes, the CSCU’s chief financial officer. Another 10 percent, he said, have more than 75 percent of their tuition and fees covered by Pell and other aid.

Barnes said his analysis shows that if the state were to fund free college for all, “you would be giving a lot more money…to your most affluent students. So when you think about it that way, why would we do that?” 

As part of an exercise to show how the system would be affected by various levels of funding, Barnes calculated the shortfalls or surpluses at the state’s 12 community colleges and four state universities if state funding and tuition were held flat, if state funding increased by 5 percent, and if it went up by 10 percent. He did not calculate what would happen if state funding was cut, however.

Then he calculated how the system would fare in each of those scenarios if tuition were held flat or if it went up by 2.5 percent for the community colleges and 4 percent for the state universities.

If the state funding and tuition are held flat, the shortfall would total $57 million, leaving the community colleges with a gap of $25.3 million and the state universities with a gap of $31.7 million.

Barnes noted this would be particularly difficult for the community colleges because their reserve funds have been depleted and will be down to $39.1 million by the end of the year.

If, for instance, the colleges spent about $8 million a year from reserves, Barnes said, “We are now approaching a single number digit of years that we can continue to operate as we are now before we have real insolvency within the system.”

If tuition for the community colleges went up 2.5 percent but state funding stayed flat, the colleges would still face a $21.3 million shortfall. If tuition at the state universities went up 4 percent and funding stayed flat, the shortfall would decline to $21.1 million.

A five percent increase in the state appropriation to the community colleges, combined with a 2.5 percent increase in tuition and fees would cut the shortfall to $7.7 million.

A 10 percent budget increase, which Ojakian and Barnes admitted is very unlikely to happen, would push the colleges into the black, producing a $5.9 million surplus. 

For the state universities, a 5 percent increase in state funding combined with a 4 percent increase in tuition and fees would cut the shortfall to $6.7 million, while a 10 percent increase in state funding with that same 4 percent increase in tuition would yield a surplus of $7.7 million.

Ojakian said he has been having conversations about whether the regents should have a policy on tuition that motivates students to stay in school and complete their degree, or if the system should “continue down the path of using tuition to plug a budget gap.”

On free college, Ojakian said it would be “easy for me to say let’s have free college and everyone would be happy,” but when nearly 60 percent of students are already attending community college for free and another 10 percent go for nearly free, he agreed with Barnes that “free would only be subsidizing the upper income brackets.”

Ojakian said he thinks those funds would be better directed toward hiring more advisers, more academic coaches and more resources on campus to ensure students graduate.

Ojakian noted that higher education faces the same “achievement gap” as the K-12 system, with white students performing better on state standardized tests than black and Hispanic students.

“Most of our students who are in college and don’t complete are students of color,” Ojakian said. “If we’re serious about bridging the achievement gap even in our institutions of higher education, then we have to be serious about providing them with the resources they need in and out of school to be able to complete.”

He said most of the students who don’t complete degrees do so because of financial and family reasons, not because of academic reasons.

Other tuition scenarios that will be considered Thursday will be freezing tuition and fees for individual students for three years at the community colleges and five years at the state universities; providing a free last semester to students to encourage them to complete their degree; and allowing graduates to pay back tuition based on post-graduation income.

Ojakian said he expects a robust discussion Thursday, but no action.

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