The University of Colorado Board of Regents received updates on the state budget and university system and campus budget scenarios on Wednesday, April 29.
In a special virtual meeting lasting 30 minutes, the board heard a presentation from CU Vice President and Chief Financial Officer Todd Saliman (PDF) on the state budget timeline, federal assistance, immediate actions taken by the campuses, fiscal year 2019–20 COVID-19 budget impacts, revenue loss scenarios and budget-balancing options.
CU President Mark Kennedy opened the meeting by thanking faculty and staff for their work to support students.
“I want to begin by thanking the faculty and staff that have done phenomenal work, expended extra effort to make sure that our students got their credit hours, that they were able to advance their education this semester,” Kennedy said. “They really deserve our appreciation.”
Saliman reported that the budget bill under consideration by the legislature is expected to be sent to the governor for action at the end of May. At that point, CU should have a better idea of what to expect from the state budget, noting that a key consideration will be whether or not federal relief funds will be available to mitigate budget cuts to various parts of the state budget, such as higher education.
Saliman said that the general assembly’s Joint Budget Committee recently posted initial recommendations, which included eliminating a 7% increase to higher education that was approved several months ago, removing funding for capital construction and controlled maintenance, and eliminating a 3% salary increase for state employees for the 2020–21 fiscal year.
Saliman briefly discussed money coming directly to the CU campuses through the Coronavirus Aid, Relief and Economic Security Act, or CARES Act. Saliman shared that approximately $37 million is being dispersed across the CU system, about half of which is required to go directly to students and the other half of which can be retained by the institutions to offset some of the budgetary impacts.
Saliman updated the board on immediate fiscal actions taken by the CU campuses, which include prorated room and board refunds for students returning home during the spring term; covering compensation for hourly and student employees through the spring semester; slowing the hiring of new employees; a 10% salary reduction through a furlough for system and campus executives; and not charging, or covering certain fees for the summer term.
Revenue loss scenarios
Saliman shared that campus budget scenario planning includes planning for three different scenarios: a 5%, 10% and 20% reduction to system and campus operating budgets. Other significant factors that will impact CU’s financial outlook include when students are able to return to campus, the degree to which the student experience requires modification and state funding levels.
“We are in for some disruptions, but the question is how deep will those reductions be,” Saliman said. “The revenue exposure statewide is pretty significant for higher education.”
Looking only at the operating side of the budget (excluding auxiliary units and restricted funds), Saliman presented scenarios that account for when students are able to return to campus along with different levels of state funding. Model-based estimates project a gap of $91 million to $402 million across the CU system.
Budget balancing options
Saliman shared that budget balancing options presented at the April 2 board meeting have not changed. Options that campuses may need to consider to balance their budgets include:
- Reduce or eliminate planned compensation increases.
- Reduce controlled maintenance.
- Reduce travel.
- Improve space utilization.
- Identify targeted operating cuts.
- Implement compensation or workforce reductions.
- Eliminate or consolidate programs.
- Reduce institutional aid.
- Reduce student services.
“The degree to which we lean on these budget balancing options will just depend on how deep the cuts are,” Saliman said. “But as I mentioned earlier, the campuses are creating scenarios for a 5%, 10% and 20% revenue reduction in their operating budgets.”
To date, CU Boulder has instituted a hiring freeze, withdrawn planned compensation increases, implemented executive pay cuts and reduced maintenance and travel expenditures. It is reviewing other cost cutting and revenue generating measures.
On Monday, Provost Russell Moore and Interim Chief Operating Officer Patrick O’Rourke provided CU Boulder guidance on this budget scenario planning exercise for the Boulder campus.
Saliman concluded by reminding the board that budget assumptions will be refined with the campuses over the next few weeks, noting the unpredictability of enrollment and state funding.
“We will be bringing to you final recommendations on tuition, fees and compensation at the May 19 board meeting,” Saliman said. “And then we will further refine the budget and bring to you the final budget at the June 18 board meeting.”
“Of course throughout the year, we will be providing updates on enrollments and revenues and keeping you posted very regularly on where we are.”