Universities in state trim budgets as virus affects funding

University of Arkansas students are shown on the lawn in front of Old Main on the campus in Fayetteville in this file photo.

Expected reductions in state funding to Arkansas colleges and universities will hit the schools while they plan next year's budgets, which for years have increasingly relied on students' tuition and fees.

The novel coronavirus outbreak has disrupted higher education and comes during a presidential campaign season during which ideas for reducing student loan debt and making college more affordable have been popular talking points for Democratic candidates.

The strain on institutions of higher learning is such that Moody's Investors Service, a bond credit rating service, has downgraded higher education's outlook from stable to negative. As recently as December, it had lifted higher education's outlook from negative to stable.

Federal coronavirus legislation includes support for colleges and universities in an amount close to $14 billion, according to the American Association of State Colleges and Universities. But unknowns include how many university workers might be unable to fulfill their duties because of the outbreak and would need to take up to two weeks of paid leave now required to be offered by certain public and private employers under federal law.

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Arkansas schools this week described efforts to plan for the final months of this fiscal year, which ends June 30. Some additionally have promised to reimburse students because of campus housing closures. Those prorated reimbursements mostly will be in the form of credits for future housing.

The state's 12 public four-year universities and 22 public two-year colleges, which collectively enrolled 156,000 students in the fall, are among the dozens of state-funded entities hit by an expected shortfall to the state's fiscal 2020 budget. The shortfall is the result of a contracted economy and delayed tax deadlines related to the pandemic.

The loss in state funding comes as colleges and universities across the nation grapple with financial repercussions from the outbreak.

In total, four-year public universities in Arkansas are facing projected losses in state student support that amount to $23,312,424, according to the state Division of Higher Education. The cuts do not include additional decreases for some units within schools, like the University of Arkansas' Agriculture Division. Two-year public colleges can expect decreases totaling a combined $8.9 million.

Universities typically work on or complete budgets for upcoming fiscal years this time of year. Tuition and fees are set at trustees meetings from April through June, and they go up most years because of stagnant or little-growing state funding.

In mid-March, University of Arkansas System President Donald Bobbitt put forth a proposal for trustees to place a 3% cap on tuition and fee increases at each institution. He pulled the proposal on the day of the meeting, citing financial concerns related to covid-19.


The Arkansas Democrat-Gazette surveyed the state's public colleges and universities on how they were accommodating or creating their budgets for next year.

Several schools have instituted hiring freezes for nonessential personnel, limited or banned travel, or cut spending on supplies.

North Arkansas College noted it would save some money through reduced operations, such as canceled events.

The University of Arkansas at Little Rock, which had a projected budget shortfall before the coronavirus concerns, has a "spending reduction" plan for the rest of the fiscal year, Chancellor Christina Drale said in an email.

"Only essential expenditures will be approved," Drale said.

Spending guidelines developed by UALR state that all units are encouraged to defer purchases to the next fiscal year.

A few specific spending categories are mentioned in the plan. For example, purchasing office supplies is "strongly discouraged," and travel expenditures "will not be authorized."

The document clarifies that certain spending is moving forward, with three categories of priority expenditures: spending for online education and online business operations; expenditures for cleaning and supplies; and spending "for recruitment and retention of students." UALR has experienced a trend of enrollment declines.

UALR is forecast to lose about $2.4 million from the $62.4 million it previously expected to receive in state revenue as part of statewide budget cuts for fiscal 2020, according to the Division of Higher Education.

Financially troubled Henderson State University is set to lose nearly $900,000. The school is currently negotiating a payback plan for a $6 million advance received from the state to cover immediate needs last fall. Discussions with lawmakers indicate the university may need several years before it can pay back the advance.

A spokeswoman did not respond to a request for comment made Wednesday afternoon.

No four-year university would lose more money or a greater percentage of its state support than the University of Arkansas, Fayetteville, the state's largest university. UA would lose about $8.3 million from its anticipated $132.5 million in state revenue support.

Mark Rushing, a UA spokesman, said the university is using its reserve funds and savings from travel and event cancellations to plug the revenue gap.

"The university is in a good financial situation with only three months left in the fiscal year," Rushing said in an email.

Sam Strasner, a spokesman for Arkansas Tech University, said faculty and staff "are being consulted for ways in which the institution might find savings in the final quarter of the fiscal year."

The university has a four-year campus in Russellville and a two-year campus in Ozark. The institution is expected to lose about $1.5 million in funding compared to a previously anticipated $32.7 million in state support this fiscal year, according to the state Division of Higher Education. Leaders continue to plan next year's budget, a process that began last fall.

Arkansas State University spokesman Bill Smith said the school's finance staff are meeting this week.

The Jonesboro campus is forecast to lose about $2.4 million in state funding this fiscal year from the anticipated $62.9 million.

Across the system, spokesman Jeff Hankins said leaders are waiting on a revised state revenue forecast in the next 10 days and are looking into how the stimulus could help the university.

"The upcoming fiscal session with a revised budget forecast and additional information regarding federal stimulus funds are a couple of key pieces of the budget puzzle for all of our institutions," he wrote in an email.

Last week, Hankins said system schools could use reserves to cover losses this year but that campus leaders have been instructed to submit plans to reduce spending this year in order to minimize the impact on reserves.

University of Central Arkansas spokeswoman Amanda Hoelzeman said the university will have a balanced budget for fiscal year 2020. She cited an ongoing UCA project, now in its third year, to boost efficiency.

"This process has put us in a stronger position to respond to the reduction in state funds due to COVID-19," Hoelzeman said.

The Conway campus faces a $2.9 million reduction from its projected $59.6 million in state support.

Since fiscal year 2009, there have been very small year-over-year percentage changes in state general revenue support for higher education, according to data from the Division of Higher Education. Public university budgets tend to rely more now than in the past on tuition and fee dollars after years of mostly flat state support.

But the state dollars still make up a significant portion of revenues.

At Arkansas State University, for example, the 2019-20 budget lists about 39% of its total $172.2 million "education and general" income as coming from state appropriations. The "education and general" income excludes what are considered auxiliary units for budget purposes, such as athletics and campus housing.

Metro on 04/02/2020