Regents OK annual budget, hear warnings of looming financial challenges

The University of Colorado Board of Regents on Friday, June 25, approved the institution's $2.76 billion budget for fiscal year 2010-11 amid warnings that the university will continue to face financial difficulties driven by poor state funding and evaporating stimulus money.

Vice President and Chief Financial Officer Kelly Fox told the board that CU could face a shortfall of $62.8 million in fiscal year 2011-12, largely the result of federal stimulus money going away. In the fiscal year that starts Thursday, July 1, CU is slated to receive some $35 million in stimulus funds, which must be spent by Sept. 30. That money will fund instructional salaries over the first quarter of the fiscal year.

The ongoing shortfall will be addressed through a combination of strategic cuts, revenue enhancements (largely from tuition) and operational efficiencies. The approach has been used to balance some $51 million to date: $21.8 million in personnel reductions (338 FTE), $20.7 million in operational efficiencies and $8.6 million in revenue generation.

Additional pressures on the budget will continue to squeeze the university and its employees, Fox said. Employees are on their second year without salary increases, health-care costs have risen, and employees in PERA have to take a 2.5 percent salary decrease as a result of a state mandate to assist the ailing fund. The result, Fox said, is that take-home pay is less than it was two years ago.

Additionally, record enrollments on each campus increase the demand for class sections, instructors and support staff. CU also faces a considerable backlog of deferred maintenance on buildings.

Tuition and fees, at 28 percent, make up the largest portion of CU's revenues. Of that, nonresident tuition accounts for 30.5 percent of revenue while resident tuition accounts for 33.1 percent. The breakdown underscores CU's reliance on revenue from nonresident students, who comprise about one-third of CU's enrollment. When adjusted for inflation, Fox said, state funding per resident FTE has plummeted to $2,839, down from $8,633 a decade ago.