Tuition revenue is expected to rise by $10.8 million in the upcoming fiscal year at the University of Arkansas, Fayetteville to partially offset an increase of about 11.7% in total operating expenses, budget proposal documents state.
The budget plan from the state's largest university as well as budget proposals from other colleges and universities in the UA System are being considered today by the University of Arkansas Board of Trustees.
Schools in their proposals mostly expressed confidence in state funding, unlike last year when economic concerns had many fearing a major loss in state appropriations or steep enrollment declines.
Finances remain an ongoing struggle at some campuses, however. The University of Arkansas at Fort Smith is bracing for "a significant financial loss" in the next two fiscal years, while the University of Arkansas at Little Rock's budget includes an approximately 7.6% reduction in operating expenses for the upcoming fiscal year, down to $183.8 million.
Both UALR and UAFS -- unlike UA-Fayetteville -- experienced significant enrollment declines in fall 2020, and UALR's budget proposal notes an anticipated enrollment decline of 6.4% when classes resume this fall.
UA-Fayetteville described in its proposal total operating expenses rising to $857.61 million "driven primarily by increases in compensation and benefits, supplies and services, and scholarships and fellowships."
The state's largest university is one of two colleges or universities in the UA System to propose a tuition increase for the upcoming year, along with the University of Arkansas Community College at Hope-Texarkana, according to the UA System. If proposed increases in mandatory fees are factored in, two additional schools would see costs rise for students: the University of Arkansas at Monticello and the University of Arkansas Community College at Rich Mountain.
Five four-year universities and seven two-year colleges are part of the UA System.
Donald Bobbitt, president of the UA System, spoke to the board Wednesday to discuss tuition proposals. Bobbitt praised campus leaders for their efforts.
"I want to remind you that, in fact, in several of the previous years, once because of a request from the governor and once because of the pandemic, our schools have had very minor to zero tuition increases during those years," Bobbitt said.
A trustees committee on Wednesday approved the tuition-and-fee proposals, with final approval expected today as the 10-member board concludes its meeting.
UA-FAYETTEVILLE BUDGET
UA-Fayetteville on Wednesday received committee approval for its proposed 2% increase in tuition and mandatory fees for the upcoming year.
If approved by the full board, the tuition and mandatory fee costs at UA-Fayetteville would increase to $9,572.40 annually in 2021-22 from $9,384.90 for an in-state undergraduate student taking a 30-hour schedule over the academic year.
The budget proposal doesn't give a full enrollment projection but states that "application activity indicates" that "enrollment of new freshmen will be stronger than in recent years."
UA-Fayetteville's budget proposal notes a change in its budgeting practice for scholarships and fellowships to meet certain accounting standards. Scholarships and fellowships are proposed to be counted as an expense of $69.25 million, an increase of more than $44 million from the university's budget a year ago.
Another major factor is a projected rise in compensation and benefits to be paid out, with that number rising to $494.89 million, up nearly $36 million from the budgeted amount a year earlier.
Driving the compensation cost increases are factors including a restoration of position budgets that were reduced in the current year's budget because of concerns about state appropriations, as well as increased costs associated with a push to raise full-time employee salaries to a minimum of $30,000 annually, according to the budget proposal.
The budget proposal also notes a rise of $6.15 million in a category known as "restricted compensation and benefits expense," with foundation funds and "anticipated grant activity" to cover the increases driving this rise.
OTHER SCHOOL BUDGETS
Both UAFS and UALR are holding the line and not proposing tuition or mandatory fee increases.
Terisa Riley, UAFS chancellor, told trustees Wednesday about a reorganization that resulted in the university now having three academic colleges instead of five. UAFS also reorganized some additional units that work to help students stay on track to graduate, Riley said, adding that these units now report to the university's provost.
"We've realized a total savings, both one-time and ongoing savings, of $1.56 million. And we know that that's incredibly critical for us as we work to rebound on our enrollment losses from the pandemic, which that has already begun," Riley said.
The UAFS budget proposal notes that the university is projected to close out the current year with a $1.8 million surplus rather than what had been a projected deficit.
Voters last year rejected an extension of a 0.25% Sebastian County sales tax supporting UAFS and this will result in the loss of approximately $5.5 million in operating income, the budget proposal states. The university has projected operating expenses of about $73.6 million, the budget document states, up from the approximately $71.2 million in budgeted operating expenses a year ago.
UALR received approval from Bobbitt for a budget adjustment this current fiscal year that, according to board documents, boosts its net position by about $9.9 million.
"The expected decrease in net position of $9.9 million has been balanced through the efforts of campus managment" resulting in a balanced budget for the fiscal year ending June 30, Bobbitt stated in a letter included with the board's agenda.
UA System's eVersity, an online-only venture created with board approval in 2014, did not end up making a "debt payment" on a $5 million loan provided by other UA System campuses, according to its budget proposal.
"For FY 21, we had expected that eVersity would generate sufficient cash flow to pay the first debt payment to the campuses for the loans with them, but that did not occur. We will seek to restructure the debt over a longer repayment period so that operations can stabilize," the eVersity budget proposal states.
UA trustees in 2018 approved an extension on the timeline for eVersity to begin repaying the principal on the loan.