Connecticut Board of Regents Approves 2019-20 Operating Budget

The Connecticut Board of Regents for Higher Education (BOR) today approved a $1.28 billion operating budget that puts the Connecticut State Colleges and Universities (CSCU) – particularly the community colleges – on a path towards long-term fiscal stability. To contend with constrained state appropriations, state-level salary increases, declining enrollment, and reduced bond funds, the budget utilizes cost reductions and some reserves to bridge towards a more efficient operating model recently validated by a third-party analysis.

Because of savings achieved through the community college unification plan and other spending reductions, projections now show the finances of the community colleges stabilizing by FY2023, with colleges beginning to rebuild nearly depleted reserves thereafter. The unification is part of a broader strategy to improve the value, benefit and efficiency of services known as Students First. Without the Students First-related administrative savings, projections show the community colleges running unsustainable operating deficits, and that expenditures would also exceed unrestricted reserves – the last option to cover operating deficits - by more than $10 million by FY2021.

“Our community colleges are facing extraordinary fiscal challenges, but the Board of Regents is laser focused on facing these obstacles head-on, while continuing to provide exceptional educational opportunities for our students,” CSCU President Mark Ojakian said. “The budget passed today puts our community colleges on a path to long-term sustainability. While the impact of these identified reductions would be challenging to the colleges, their successful implementation will have a significant impact on the system’s solvency over the next few years. I am more confident than ever that if we continue with the implementation of Students First, our community college system will be on firm fiscal footing in coming years. More importantly, we can do so while preserving access for students in all corners of the state and maintaining the highest academic standards.”

Personnel costs, including salary and fringe, account for more than 77 percent of total costs at CSCU – more than $1.01B. The FY2020 budget includes 5.5 percent salary increases driven by the 2017 statewide concession agreement with SEBAC. The projected fringe benefit cost is 67 percent of total salary. The total General Fund allotment and related fringe is $603.5M. While the FY2020 appropriation included a small increase, the state’s investment in our public institutions of higher learning dropped by 12.8 percent, on a per-student basis, between 2008 and 2017. However, recent and budgeted levels of personal services spending have allowed the community colleges to maintain stable student-to-faculty ratios in recent years. 

While the approved FY2020 budget was originally expected to result in a drawdown of $7.1 million in reserves at community colleges, $7.5 million at the state universities, and a breakeven budget for Charter Oak State College, final fringe benefit rates published by the Comptroller earlier this week are lower than earlier estimates due to health benefit savings included in the recently-adopted state budget. This will result in a reduction on fringe costs for the CSCU system and constituent units. For the universities, estimates show savings of almost $5 million, nearly eliminating the projected drawdown on reserves. Estimates are still being calculated for the community colleges, but savings may be somewhat less than those at the universities.

The budget materials included analysis from the respected, independent, nonpartisan Office of Fiscal Analysis on Students First proposal and confirmed that the $23 million in annual savings outlined in the plan – which aims to unify the state’s 12 community colleges into a singly accredited institution by 2023 – are real and very much achievable. “OFA finds that generally the Students First costs and savings are supported by position-level back-up and/or calculations supplied by CSCU,” OFA wrote.

“This budget is a poignant case study in why we must invest in our valuable Community Colleges and make strategic changes in how we administer them,” BOR Chair Matt Fleury said. “Absent an unexpected infusion of funding or untenable tuition increases, our plan for a less expensive and more efficient administrative organization is the only way to prevent further erosion of academic program and other student-facing services. At the same time, we must continue to push for a sustained increase in public funding for public higher education. Investing in our students – the future workforce of our state – is the most important step we can take to improve our competitiveness.”

Before the changes in fringe benefit rates, the BOR imposed a limit on the use of community college reserves in order to stabilize the system’s finances. This was projected to lead to a reduction in spending across the community colleges by up to $12.5 million, thereby reducing the drawdown of reserves – initially projected at nearly $19.6 million – to $7.1 million, or 19.2 percent of current reserves. Because of the fringe changes, the spending reductions are expected to be less, but will still entail establishing targets for reductions to personnel and other expenses budgets at each campus and the system office through continuation of a hiring freeze and only refilling critical positions after a thorough evaluation by the system office of the impact on critical services provided to students; personnel reduction, accomplished by limiting overtime, part-time hours, release time, or overload; and other expense reductions across the board.

“As the Colleges strengthen their collaborations with the arrival of Regional Presidents on July 1, we are better positioned to leverage resources necessary to maintain critical services on which our students depend,” Norwalk Community College President and CSCU Vice President for Community Colleges David Levinson said. “This plan allows each college to fund their own priorities while still putting the system on the path to fiscal sustainability. Our community colleges continue to be the best option for Connecticut’s students to receive a high-quality, affordable, accessible education close to home.” 

The community colleges will do everything possible to minimize the effect of any budget reductions, with a goal of no impact to students.