February 12, 2001

The budget proposed last Wednesday by Gov. John G. Rowland is $12.9 million short of what is necessary to maintain the status quo for Storrs and the regional campus programs next year, say University officials.

And the proposal for the Health Center projects no additional funding for either year of the biennium.

The budget provides no funds for strategic initiatives, except $1.5 million for new programs at the Waterbury campus. The University had proposed funding to expand programs in areas where the state has critical needs, such as pharmacy, information technology, nursing, and teaching, and for research and community health as defined in the Health Center's strategic plan. None of these are funded in the governor's proposed budget.

"The budget proposal is a disappointment," President Philip E. Austin said. "It impedes our efforts to implement new programs important to the state's economy and quality of life and even limits our ability to continue current programs at existing levels. If adopted in its present form, the budget would force us to reduce significantly the number of new students we can admit to the University, reversing the progress we have made in recent years in stemming Connecticut's outflow of talented young people."

Austin noted, however, that the proposal is a starting point of debate rather than a final budget. "We look forward to working with the General Assembly to make adjustments in the budget that will allow us to continue our progress in research, teaching, and service," Austin said. "In recent years we have had a receptive hearing in the legislative chamber, and I am hopeful that will again be the case."

The governor suggests some additional funds for K-12 education, but his budget proposes diminished resources for all of higher education, except for $700 million in capital improvements at Connecticut State University.

Austin said the budget threatens the progress that the $1 billion UConn 2000 investment in the University has made. "Even taking into account the other issues facing the state and the need to develop a budget within the constraints imposed by mandatory spending caps," Austin said, "I am surprised at the administration's position. By once again fueling the 'brain drain,' it works against the state's long-term economic interests and, in a more immediate sense, it curtails our ability to help Connecticut meet the governor's excellent policy goals in areas like workforce development, health care, and elementary and secondary education."

Austin emphasized that the University cannot and will not compromise quality. "Students and their parents are counting on UConn to deliver an educational experience commensurate with the quality delivered at the nation's most highly regarded public universities. They believe the promise of UConn 2000 and expect that those who made that promise will fulfill their commitment."

The state and the municipalities invest $100,000 in educating each Connecticut child from pre-K through grade 12. "For a marginal additional investment, they can keep those youth here and supply Connecticut companies with the highly skilled workforce that will fuel our economy," he said. "This budget doesn't even provide for inflation and results in diminishing return on the state's investments."

The governor has proposed that the University use its reserves (referred to as a "surplus") to cover the current services shortfall for both years of the biennium. It appears that the governor's proposal would take the current projected fund balance of $29.8 million (the Governor's budget uses an outdated figure of $33.3 million) down to $16.9 million in FY 02 and from there to $2.2 million in FY 03.

University reserves are fund balances, which fluctuate with revenue flow and the payment of bills, said Lorraine Aronson, vice president for financial planning and management. Not all of the fund balances are unrestricted. The University's $29.8 million reserve includes $10.3 million of residential/ dining/ transportation funds, which are used for renovations, equipment purchase and replacement, and uncontrollable challenges such as soaring energy costs. The remaining fund balance, which includes research funds, is made up of inventory, encumbrances, and departmental fund balances.

At this time, she said, the fund balances reflect the University's preparation for planned expenditures in the University's portion of anticipated wage increases for the NP-2 (maintenance) arbitration, and the equipping and furnishing of 1,500 residential beds scheduled to open in August.

University reserves play a role in the rating of University special obligation bond issuances - which fund the new residential facilities - and assurances to investors that funds are available to pay for maintenance of new and existing facilities, as well as debt service, she said.

The Board of Trustees has adopted a policy that would require the University to have reserve levels equivalent to the cost of operating the University for three months. Even the present level of reserves falls far short of that policy, which for this year would require reserve levels of $140 million.

The governor's budget also proposes convening a task force to look at the governance of higher education, including revisiting the issue of budget flexibility and restructuring the Department of Higher Education.

The University's state appropriation totals $182.7 million this year. Requested for 2002 to maintain current services is $195.4 million, compared with $185.1 million recommended by the governor. UConn requested $206.5 million for 2003 to maintain current services; the governor recommended $194.7 million.

The Health Center state appropriation totals $75.5 million this year. Requested next year to maintain current services is $77.4 million, and for 2003, $79.2 million. The governor recommended $75.5 million for each of the two years. In addition, for the Health Center the governor has proposed zero dollars for strategic and research plan funding, and zero dollars in capital funds. Preliminary analysis indicates this leaves a current services shortfall of $1.9 million in FY 02 and $4.5 million in FY 03, including the effect on fringe benefits.

The entire proposal would leave a gap of $11.6 million in FY 02 and $13.6 million in FY 03 in the Health Center budget. This shortfall would require adjustments in addition to UConn's existing commitment to cut costs by $5.5 million in FY 02.

Aronson noted that the $20 million special appropriation was for deficit reduction of $12.5 million in FY 00, and $4.4 million in FY 01, with research support of $3.1 million in FY 01. This appropriation is not built into the base budget, she said.

The governor has proposed an increased reimbursement rate for Medicaid services, the positive effects of which have not yet been quantified. "That funding will affect clinical revenues but does not serve to support teaching and research activities," she said. "With regard to Health Center fund balances, it is not yet clear how last year's special appropriation relates to the $24.1 million balance referred to in the Governor's proposal."

Strategic initiatives requested for Storrs-based programs, only one of which - the Waterbury initiative - was recommended by the governor, total $16.4 million in 2002 and $7 million in 2003. They include a response to the state's need for professionals in several areas:

• Nursing, Pharmacy and Allied Health: $1.9 million
  
  
• Information Technology: $1.5 million
  
  
• Engineering: $1.5 million
  
  
• Education: $1.5 million
  
  
• Public Health Threat Management: $1 million
  
  
• Initiative for Children and Families: $1 million
  
  
• Regional Campus Initiative: $4 million
  
  
• Molecular Science Research: $1.5 million
  
  
• Undergraduate Education: $1.5 million
  
  
• Center for Information Law and Policy: $930,000
  
  

Also requested is $6.6 million in additional funds for strategic initiatives at the Health Center, including programs in genetics/immuno logy and cancer, brain and human behavior, bone biology and musculoskeletal disease, and Connecticut health.

New efforts include expanded services for pregnant women at high risk; expanded medical, dental and mental health services for clients of the Department of Mental Retardation; and expanded collaborations with the state's Department of Public Health and local health officials.

Karen A. Grava