The Connecticut State College and University (CSCU) system, which is comprised of state universities and community colleges, is facing a projected structural deficit through 2027 of roughly $154 million per year, almost the exact amount the CSCU system received in one-time American Rescue Plan (ARPA) dollars, according to a presentation by CSCU Chancellor Terrence Cheng to the Higher Education Financial Sustainability Advisory Board.
Although the CSCU system has reduced spending by more than $100 million below 2019 levels, costs associated with contractual state employee raises approved by the General Assembly in 2022 added $63 million to CSCU’s total expenditures, according to CSCU Chief Financial Officer Lloyd Blanchard, along with an extra payroll week, which added another $25 million.
Those pay raises were negotiated between Gov. Ned Lamont’s administration and the State Employees Bargaining Agent Coalition (SEBAC) totaled nearly $1.9 billion, and included four years of 2.5 percent general wage increases retroactive to 2021, step increases that are generally valued at 2 percent, and bonuses.
“So, this spike between FY 20 and FY 24, particularly in FY 23, has everything to do with these anomalous payments that were made because of the pandemic, because of SEBAC, and the SEBAC being supported by ARPA dollars, and the 27thpayroll,” Blanchard said. “There’s no question CSCU is reducing their spending, the only reason we’re increasing spending is because of the pandemic and the reasons I’ve just raised.”
The CSCU system has also experienced a long-running decline in enrollment, which means less tuition to support the schools. Between 2018 and 2023, CSCU experienced a 22.4 percent decrease in enrollment, far outpacing the national decline in college and university enrollment, with many attributing a sharp decrease to the pandemic years, according to a report by the Office of Legislative Research.
“It is no secret that we have seen significant enrollment decline since 2010, that has a major impact on our tuition and revenue,” Cheng said.
That trend has begun to turn around, with CSCU posting a 4.2 percent increase in enrollment for the fall 2024 semester, according to a preliminary census report released by CSCU. Cheng attributed that increase, in part, to programs instituted by the General Assembly such as debt-free community college and student loan forgiveness.
Nevertheless, the loss of ARPA dollars, combined with higher employee costs means the CSCU system will face continuing deficits in years to come, forcing more spending cuts and deficit mitigation.
The reduction in spending has meant a reduction in staff, faculty, and student-facing services according to both Cheng and Blanchard. Most of that reduction has been to part-time personnel, and Blanchard said they are trying to mitigate CSCU’s future deficits without implementing large-scale layoffs.
“We have mitigated significant budget deficits in the past few years,” Cheng said. “We’ve literally done nothing but fight against the challenges that we have faced when it comes to our budget situation.”
According to the presentation, in FY 25 CSCU “mitigated” $140 million of its deficit and is projected to reduce its deficit by roughly $190 million over the next two fiscal years largely through utilizing reserve funds and will reduce expenditures by nearly $77 million during that same time frame.
Blanchard said that they will need an additional $23 million in FY 26 and nearly $22 million in FY 27 to support Eastern, Western, and Southern Connecticut State Universities and avoid layoffs.
Connecticut lawmakers will face a tough budget writing session this year, including the potential for further state employee raises since the current wage contract has expired. The state is projected to have a General Fund budget surplus of $178 million, but it is expected that the surplus will be eaten up quickly by non-fixed costs, according to budget analysts from both the Office of Policy and Management and the Office of Fiscal Analysis.
If the next wage contract follows the raises and increases in the last, it will increase state employee costs by $150.6 million in the first year alone, according to a presentation before the Appropriations Committee and the Finance, Revenue and Bonding Committee in December. The state is also facing rapidly rising costs related to both Medicaid and state retiree healthcare.
Lawmakers and Governor Lamont are also facing calls to adjust the state’s fiscal guardrails, which limits how much the state can increase its spending year over year, pays down pension debt, and limits bonding. While the guardrails have been credited with paying down $8 billion in pension debt and saving hundreds of millions, allowing the state to implement a tax cut, a growing chorus of Democrats and progressive policy organizations have called for adjusting those guardrails to increase spending.
Cheng has also personally faced an audit by the State Comptroller’s Office over his lavish spending, following a report by CT Insider that detailed the chancellor spending large amounts of taxpayer dollars on dinners, limousines, and other questionable expenditures. Comptroller Sean Scanlon’s audit found that improper spending was widespread across university leadership, and Republican leaders called for Cheng’s termination.
Connecticut’s colleges and universities have been raising the red flag over their budget numbers since ARPA funds began to wind down, citing state employee raises and declining enrollment, and calling for more state funding – although CSCU’s current request is much less than they have called for in the past.
Sen. Cathy Osten, D-Sprague, and Rep. Toni Walker, D-New Haven, the chairs of the Appropriations Committee, both said that they’d like to see Connecticut’s public university and college system more actively marketed to Connecticut high school students to increase enrollment.
Connecticut’s Board of Regents voted in December to freeze tuition rates for Connecticut state colleges and universities for the 2025-2026 school year, according to a press release from CSCU.
“Freezing tuition rates for CSCU students is part of our shared North Star for ensuring our colleges and universities remain accessible and affordable for all,” Cheng said in the press release. “This tuition freeze will only make it easier for our students to learn here, stay here, and earn their degree here.”
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Would that every overburdened taxpayer had the same opportunity to plead for greater largesse from the state and local treasuries. The teachers’ unions are the problem and the reason we are in such a serious educational fix. Teacher salaries in CT are the 5th highest in the nation and classes sizes are 12:1 versus the national average of 17:1. Yet, 350,000 (out of 500,000) K-12 students are not proficient in math, and 300,000 are not proficient in reading. But after failing students and taxpayers, the unions always come back for more, using the students for cover.