As the new fiscal year approaches, university boards of directors vote on the budgets proposed by their administrations for the 2021-2022 fiscal year. And in what may surprise many – just about a year after the peak of the Covid-19 pandemic and warnings of a financial wiping out for higher education – several major universities are offering substantial increases in their new budgets. In some cases, the spending plans are the most important in institutional history.
Last week, the University of Kentucky, Florida State University, and Virginia Tech all approved record operating budgets for next year. As is usually the case with university budgets, most of the new funds have gone to staff costs, but also to student financial aid. has seen significant gains.
Last week the University of Kentucky Board of Trustees Approval a new budget of nearly $ 5.1 billion, the largest in university history and $ 700 million more than the current budget. Among the priorities highlighted for additional funds were:
- An increase in the minimum hourly wage rate to $ 15 by next January;
- A Million Dollar Boost in Student Financial Aid;
- A One-time $ 1,000 bonus for all full-time, regular and non-UK HealthCare faculty and staff, plus a 2% merit salary increase that takes effect in January;
- A reestablishment of the 2-for-1 retirement match for employees, which was temporarily reduced last year as the university managed its budget deficit linked to the pandemic.
Earlier this month, Virginie Tech adopted its largest budget – $ 1.74 billion – for fiscal year 2021-22. The education and general portion of the budget totals $ 974 million, an increase of 3.7% over the previous year.
Like the University of Kentucky, the new budget includes an increase in student financial aid and a substantial increase in compensation for faculty, staff and graduate students, with 5% increase pools. established for the different categories of employees.
On the different campuses of the Indiana University System, next year’s budget will reach $ 4 billion, an increase of about $ 300 million from last year. Included in the new expenses:
- A $ 72 million increase in student financial assistance;
- A minimum wage of $ 15 per hour 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 nearly $ 2.2 billion. That’s an increase of $ 317 million from last year, and it’s the first time the state of Florida has had a budget of over $ 2 billion.
“This budget will allow Florida State University to resume on-campus operations ahead of the pandemic in August and to continue its ascent as one of the nation’s top public universities by investing in our students,” said the president of FSU, John Thrasher.
The minimum wage of $ 15 / hour
Although President Joe Biden called for a national minimum wage of $ 15 an hour in his first speech to a joint session of Congress on April 28, his proposal has not found its place in the 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 the ones above – are following this example and that of a growing number of private employers and increasing their minimum hourly wages for staff in their new budgets. Raising wages is seen on many campuses as a policy that advances racial and social justice.
At a meeting on June 17, the University of Michigan Board of Trustees approved a minimum wage of $ 15 an hour for permanent workers at its Ann Arbor campus, as part of an overall fiscal year 22 budget of $ 2.4 billion for the institution.
the University of Colorado will also implement a minimum hourly wage of $ 15 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, a victory for the campus workers union that has long campaigned for the increase.
As reported earlier this month in Inside higher education, increases in the minimum wage are also underway at several private universities, including Johns Hopkins University, Clarke University (Iowa) and the Rochester University. Case Western Reserve University also adopted a salary floor of $ 15, effective July 1.
How are these budget increases funded? The additional money comes from several sources.
- Topping the list are federal stimulus funds, which universities have been able to use to increase student aid and recoup expenses and lost income attributable to Covid-19.
- Second, through layoffs, time off, deferred maintenance, and caps on travel and other expenses, many institutions were able to save millions of dollars last year, which are now available for future reallocation.
- Third, while most institutions that are successful with tuition fee increases keep them at or below inflationary levels, many predict enrollment increases, thereby generating more net income related to tuition and fees.
- Finally, many state budgets have rebounded from the pandemic stronger and faster than expected, in part because of the rapid recovery in the economy and in part because of the billions of dollars in federal support they received. via the American rescue plan.
As bold as they are, the new budget proposals rely heavily on one-time funds – mostly in the form of federal stimulus and “carry-over” institutional funds. Whether this turns out to be a smart or risky strategy remains to be seen, but one thing is for sure: While many universities are still filling the budget holes dug by the pandemic, the general outlook – at least among major research institutions – is turned more bullish for next year.