The University of Vermont Budget - Frequently Asked Questions
+ Where does tuition revenue go? What is its use?
Given the University’s decentralized budget model, all revenue flows to the colleges/schools where decision-making about its use takes place. It is not retained centrally. Colleges use tuition revenue to cover the costs of instruction, research, and student services, as well as the college’s share of University-wide activities and support services such as the Library, Admissions, Sponsored Projects Administration (research/grants), and Human Resource Services.
In years in which net tuition revenue is greater than a college’s annual expenses, the college retains that funding (a “surplus”). Each college decides for itself how to spend this extra, one-time funding. Surplus funding typically is used in the following ways:
- Enhancement of academic programs
- Investments in new academic programs and priorities
- Start-up packages for new faculty
- Classroom and laboratory improvements
- Other college/school priorities
Each college also may decide to allocate some portion of surplus funding in any given year to a reserve that can be used to offset shortfalls in years in which expenses are greater than net tuition revenue. Since all of these dollars are distributed to the colleges, the central administration does not have the dollars to allocate. When fixed costs (e.g., salary, benefits, energy, or utility costs) increase, these costs are paid for by the colleges, as they receive all of the revenue.
+ How big is the University's total operating budget?
The University’s total operating budget is about $650M.
+ What are the components of the University's total operating budget?
The University’s total operating budget is comprised of: (1) Income/Expense activities (i.e., Bookstore, Residential Life) that make up about 20% of the budget; (2) Restricted Funds (i.e., grants, gifts) that make up about 25% of the budget; and (3) the General Fund (tuition, state appropriation, F&A, etc.) that makes up about 55% of the total operating budget. The General Fund is the only component of the budget over which we have any appreciable discretion.
+ How is the University's General Fund (GF) budget allocated and spent?
|CATEGORY||% OF GF BUDGET|
|Salaries, Wages, and Benefits||49%|
|Non-Personnel Operating Budgets||10%|
+ What are the major drivers of the General Fund budget?
|REVENUE DRIVERS||EXPENSE DRIVERS|
|Gross Undergraduate Tuition||65%||Salaries, Wages, and Benefits||49%|
|State Appropriation||9%||Financial Aid||26%|
|F&A Cost Recovery||5%||Non-Personnel Operating Budgets||10%|
|Net Graduate Tuition||3%||Debt Service||5%|
|Gross Summer Tuition||3%||Utilities||2%|
+ What other variables influence the University's budget?
- Heightened competition for undergraduate students, particularly in the northeastern region of the United States, requiring more financial aid
- Sensitivity to tuition costs, and our continuing commitment to financial access and affordability for students
- State budget deficits
- Inadequate State Appropriations
- Lower Indirect Cost Recovery (F&A) funding due to federal budget cuts
- Health insurance premium increases
- Investments in strategic academic priorities to ensure quality
+ How is UVM's compensation allocated?
+ What is the size of the endowment and how is it spent?
UVM’s current endowment is approximately $467 million as of June 2016. The vast majority of endowment proceeds are restricted, and must be spend in accordance with the specific intent of the donor. As the table below illustrates, virtually all endowment spending is directed to academic and financial aid categories.
+ How do budget reductions work in IBB?
Consistent with our commitment to affordability and financial accessibility, and our pledge to control Cost Center (CC) expenses when we transitioned to IBB, we will continue to expect the highest levels of efficiency from all Cost Centers. Cost Centers may be required to make budget reductions based on budget projections developed each year (in FY16, FY17, and FY18 CCs were required to make budget reductions of 2.8%, 1.1% and 0.4% respectively).
The necessity of budget reductions in Responsibility Centers (RC) will depend on the individual circumstance of each RC vis-à-vis its revenue and expense projections. This will vary from year to year, and within any single year it is possible that some Responsibility Centers will be able to develop budgets that will not require reductions, while reductions may be necessary in other RCs.
+ Given the scarcity of resources, and our commitment to access and financial sustainability, why do we move forward with the construction/renovation of residence halls and other academic/co-curricular facilities?
To be a University of choice, we need to be competitive on a national scale. Inadequate facilities diminish our ability to attract and retain high achieving students and faculty. We have some residence halls that are over 60 years old and we must periodically replace and renovate them. In addition, we want to design communities that give our first-year students an outstanding experience in order to boost retention and student graduation success. The construction of the STEM Complex was necessary to replace deficient science and engineering laboratories. Like our residence halls, our academic and co-curricular facilities require periodic replacement and renovation.
Additionally, Residential Life is a self-supporting operation that adds resources to the general fund, and there are philanthropic revenue streams behind many other capital investments.
Between 1995 and 2019 capital project investments (greater than $400K) were allocated as follows:
|Student Services and Support (includes residence halls)||40%|
|Academic Services and Support||2%|
|Other (Infrastructure, Athletics, Foundation)||16%|
+ Why can't we just raise tuition to offset rising costs?
The number of graduating high school seniors in the Northeast continues to decline, and competition within higher education continues to increase. It is already a challenge to maintain enrollment targets while maintaining academic skill level and diversity of incoming students. Significant increases in tuition would increase the challenge, considering that average published tuition and fee rates for four-year public universities have been quite modest in recent years. The perceived quality/value of a UVM education vs. our cost must be addressed in tandem if we are to succeed in this highly competitive environment.
The Strategic Action Plan calls for a focus on the relationship between tuition and scholarships and financial aid. The question is: What is the right balance to maximize prospects for student enrollment and retention and minimize student debt?
At the core, the University must achieve the right balance in decision making among: 1) promoting affordability for students, 2) advancing institutional quality and value, and 3) maintaining financial sustainability for the institution. This requires all members of the UVM community to focus on achieving a reasonable, predictable cost for a high quality educational experience for our students.
+ Can we balance the budget by cutting positions in the senior administration?
Our senior administrator staffing levels reflect a high level of efficiency. Statistical analyses indicate that UVM has fewer executive/administrative staff FTE than would be predicted given its total expenditures, student enrollment, and other institutional characteristics.
Fall 2015 IPEDS data reports UVM at 7.9 administrators per 1,000 students; our Carnegie public “Research High” peers have 13.4 administrators per 1,000 students.
+ Are senior administrators overpaid?
In 2015-16, UVM had 87 full-time administrators (IPEDS definition) and they accounted for 13.1% of the salaries devoted to non-instructional, non-medical full-time employees. Our Carnegie public “Research High” peers (76 in total), on average had 204 full-time administrators, which accounted for 23.6% of the salaries devoted to non-instructional, non-medical, full-time employees. UVM had the ninth smallest administration among its peers and only 11 other institutions had a smaller percentage of their salaries devoted to administrative salaries.
+ Are faculty underpaid?
Faculty salaries at UVM are competitive. The UVM mean T/TT Faculty salaries as a percentage of OSU means Carnegie public “Research High” are:
UVM annual salary increases for represented faculty from 2008 – 2016 have either equaled or exceeded increases for all other categories of employee (see figure below):