A ‘$33 million problem.’ University of Kentucky officials anticipate more budget woes
Lower-than-expected tuition revenue plus a possible mid-year reduction in state funds could lead to a more dire financial picture for the University of Kentucky in the months ahead, officials said Friday.
“We have a $33 million problem,” said Eric Monday, the executive vice president for finance and administration during one of the university’s board of trustees committee meetings.
The potential $33 million hole could be created by two developments. The latest available tuition data suggests that the university will make $11.6 million less in tuition revenue than budgeted, despite having record enrollment this year. On top of that, the state’s budget director has told all state agencies to prepare for an 8 percent reduction in state funding. For UK, that would be a loss of about $21.2 million.
The potential hole is compounded by the estimated $28 million that the university has spent readying the campus for a pandemic-plagued semester, Monday said. The university expects to spend another $10 million if pandemic conditions continue through the spring.
UK has two hopes for possible relief, Monday said. The university has about $15.3 million left in contingency funds. UK is also pinning its hopes on the passage of another federal stimulus bill that would give additional funds to the university.
The Senate Republican-filed HEALS Act would provide the university an estimated $37.9 million in aid, Monday said. Votes to pass a stimulus package through the Senate continued to stall Thursday. Democrats filibustered a vote on a smaller relief package, which required 60 votes to pass, Politico reported.
Tuition revenue is down because of several factors not necessarily tied to enrollment. After adjusting for a smaller, pandemic-reduced freshmen class, the university anticipated $241.4 million in revenue from tuition this fall. Preliminary tuition data has the university’s actual revenue at $235.4 million — a $6 million difference. UK anticipates a $5.6 million drop for the spring semester, Monday said.
The loss in tuition revenue can be attributed in part to the hard cap on tuition and fees the university instituted just before the semester began. Tuition and fees for in-state students were locked at a maximum of $6,242. Out-of-state students paid a max of $15,647. Those and other steps were part of the response to COVID-19.
But much more of the reduction came from a 14 percent drop in out-of-state tuition revenue, Monday said. The university’s tuition for online classes is the same for in-state and out-of-state students at $607 per credit hour. With so many students taking online classes — about 36 percent of classes are online-only — out-of-state students were able to generally pay less than they would have if they were in a typical, in-person class.
“That is what is driving the reduction,” Monday said.
This story was originally published September 11, 2020 at 1:39 PM.