Regents consider budget options

University of Colorado leadership last week recommended salary increase pools of 3.1 percent to 3.6 percent for the coming fiscal year as part of the proposed budget, which was outlined for the Board of Regents during its meeting Feb. 21 at the University of Colorado Colorado Springs.

The pools would be applied to merit salary increases. The amount of the 3.6 percent pool reflects the state-required increase for classified staff, while the 3.1 percent pool represents Gov. John Hickenlooper’s recommendation, and would apply to faculty and exempt staff.

The salary proposal is part of the mid-range option, or “market” option, presented to the regents, who had requested multiple budget options to review. A “mandatory costs” budget includes less compensation and would not maintain current service and quality levels; a “market plus” option adds a 3.6 percent salary pool for faculty and exempt staff.

Todd Saliman, vice president and chief financial officer for the university, presented the budget proposals after describing the systemwide budget priorities, including accounting for cost increases in utilities, allowing for some strategic initiatives at the campuses and minimizing tuition increases while also boosting need- and merit-based financial aid.

The recommended market plan includes resident undergraduate tuition increases of 6 percent at UCCS and CU Denver, and a combination of a slight rate increase and a linearity shift – from 11.25 credit hours to 12 credit hours –amounting to roughly an 8.7 percent tuition increase at CU-Boulder. Schools and colleges at the Anschutz Medical Campus still are determining tuition rates.

Campus leadership stressed that salary needs for faculty are at a critical point because of an increasingly competitive market.

“We need that pool to be competitive in faculty salary – end of story,” said CU Denver Chancellor Don Elliman.

CU-Boulder Chancellor Philip DiStefano said the number of top faculty being recruited away from the university climbed from 10 last year to 17 this year. “It costs much more to replace a senior faculty member who leaves the university,” he said.

Lilly Marks, vice president for health affairs at CU and executive vice chancellor of the Anschutz Medical Campus, said some exempt professionals are in the position of being able to leave the university and work for hospitals on the campus at higher salaries. “Internally, we’re cannibalizing each other,” she said. “We need to keep our salaries competitive.”

The board won’t take action on a budget plan until a special meeting, likely to be set for April. After hearing hours of budget presentation at the meeting, regents commented primarily on the difficult position the university is in because of years of diminished state funding. About 5.3 percent of CU’s current budget comes from the state.

“When we talk about underfunding, it is truly a strong statement and should not be falling on deaf ears,” said Regent Vice Chair Sue Sharkey, R-Windsor. “Underfunding (from the state) cannot be stated strongly enough.”

Regent Glen Gallegos, R-Grand Junction, said the board has tough decisions to make.

“I don’t think (the discussion) can end here: We have to take this above and beyond out of here,” he said. “It’s time for some leadership to emerge.”

During the Feb. 20 meeting, Saliman presented a forecast of the state’s fiscal future and the potential impact on state funding for CU. Only 5.3 percent of CU’s budget is funded by the state; Saliman said that if state budget balancing leans exclusively on higher education in the coming years, state funding for higher education would be eliminated by 2023.

When Gallegos asked whether the situation already is dire, Saliman confirmed it.

“We are absolutely at risk now and will be at risk much sooner than 2023, you’re absolutely right,” Saliman said.

“How will future policy makers balance the budget? It’s impossible to say. But higher ed is by far the largest discretionary portion of the state budget, which is why higher ed is on the front burner and always will be on the front burner.”

President Bruce D. Benson noted that the university is actively pursuing new revenue streams.

“We’re pulling out all the stops,” Benson said. “We want to better monetize our research. And we’re looking at what California did with local tax districts.”

When presenting the detailed budget proposals at the Feb. 21 meeting, Saliman again emphasized the state’s fiscal reality.

“Colorado is at a turning point in terms of what higher education and the University of Colorado is going to look like,” Saliman told the board. “It’s a huge conversation we need to have.”

Regent Steve Bosley, R-Broomfield, said the core of the discussion within CU must revolve around the question, What do we want to be?

“Internally, we need to ask ourselves, what are we committed to? Let’s get it on the table and say what our commitment is,” Bosley said. “What do we owe the state of Colorado? Because we’ve got an unsustainable (financial) model here.”