As the new fiscal year approaches, university governing boards are voting on their administrations’ proposed budgets for fiscal year 2021-2022. And in what may come as a surprise to many - only about a year past the peak of the Covid-19 pandemic and warnings of a financial wipeout for higher education - several major universities are proposing substantial increases in their new budgets. In some cases, the spending plans are the largest in institutional history.
This past week saw the University of Kentucky, Florida State University and Virginia Tech all approve record-breaking operating budgets for next year, As is typically the case in university budgets, most of the new money went toward personnel expenses, but student financial aid also saw significant gains.
Last week, the University of Kentucky Board of Trustees approved a new budget of nearly $5.1 billion, the largest in the university’s history and $700 million more than the current budget. Among the highlighted priorities for the additional funds were:
- An increase in the minimum hourly wage rate to $15 by next January;
- A boost of millions of dollars to student financial aid;
- A $1,000 one-time bonus for all full-time, regular, non-UK HealthCare faculty and staff in addition to a 2% merit pay pool increase that takes effect in January;
- A reinstatement of the 2-to-1 retirement match for employees, which had been temporarily reduced last year as the university managed its pandemic-related budget shortfall.
Earlier this month, Virginia Tech adopted its largest ever budget - $1.74 billion - for the 2021-2022 fiscal year. The education and general portion of the budget totals $974 million, a 3.7% increase from the prior year.
Like the University of Kentucky, the new budget includes a boost in student financial aid and a substantial increase in faculty, staff, and graduate student compensation, with 5% raise pools established for the different categories of employees.
At the various campuses of the Indiana University system, next year’s budget will hit $4 billion, an increase of about $300 million over last year. Included in the new expenditure are:
- A $72 million increase in student financial aid;
- A $15-an-hour minimum wage for staff;
- Removal of salary and hiring freezes that had been put in place during the pandemic.
Also last week, Florida State University approved an operating budget for the new fiscal year of almost $2.2 billion. That’s an increase of $317 million over last year, and the first time Florida State has had a budget in excess of $2 billion.
“This budget will allow Florida State University to return to pre-pandemic campus operations in August and continue our upward climb as one of the best public universities in the nation by investing in our students,” said FSU President John Thrasher.
The $15/hour Minimum Wage
Although President Joe Biden called for a national minimum wage of $15 an hour during his first address to a joint session of Congress on April 28, his proposal has not found its way into legislation. Instead, Biden signed an executive order raising the minimum hourly rate for federal contractors to $15 by 2022.
Now, several other universities - in addition to those above - are following that lead as well as that of an increasing number of private employers and increasing their minimum hourly pay for staff in their new budgets. The wage hike is viewed on many campuses as policy that advances racial and social justice.
During a meeting on June 17, the University of Michigan’s board approved a $15-an-hour minimum wage for permanent workers on its Ann Arbor campus, part of a $2.4 billion general fund FY 22 budget for the institution.
The University of Colorado will also implement a minimum $15 hourly wage for employees, out of its overall system budget of $5.2 billion, including $2.01 billion for the flagship Boulder campus..
Earlier this year, the University of Memphis raised its minimum wage to $15 an hour, representing a victory for the campus workers’ union that had long campaigned for the increase.
As reported earlier this month in Inside Higher Educaion, minimum wage increases are also being undertaken at several private universities, including Johns Hopkins University, Clarke University (Iowa) and the University of Rochester. Case Western Reserve University has also adopted a $15 wage floor, effective July 1.
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How are these budget increases being funded? The additional money comes from several sources.
- Leading the list is federal stimulus funding, which universities have been able to use to boost student financial aid and rccover expenses and revenue losses attributable to Covid-19.
- Second, through layoffs, furloughs, deferred maintenance, and caps on travel and other expenses, many institutions were able to save millions of dollars this past year, which are now available for reallocation moving forward.
- Third, while most institutions that are passing tuition increases are keeping them at inflationary levels or less, several are planning for an uptick in enrollment, thereby yielding more net tuition and fee revenue.
- Finally, many state budgets have bounced back from the pandemic more strongly and quickly than anticipated, in part because of the rapidly recovering economy and in part because of the billions in federal support they’ve received through the American Rescue Plan.
Bold as they are, the new budget proposals rely considerably on one-time funds - primarily in the form of federal stimulus and institutional “carry-forward” dollars. Whether that proves to be a savvy or a risky strategy remains to be seen, but one thing is certain: While many universities are still plugging budget holes carved out by the pandemic, the general outlook - at least among major research institutions - has turned more bullish for next year.
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June 20, 2021 at 05:00PM
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More Universities Approve Record New Budgets, $15-An-Hour Minimum Wage For FY 2022 - Forbes
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