Updated at 4:17 p.m.
Facing a $10 million budget deficit, University of Vermont trustees will consider raising in-state tuition for the first time in five years.
Boosting tuition for out-of-staters — which went up 3.5 percent this year — will also be on the table at the trustees’ meeting on Friday, said Ron Lumbra, chair of UVM’s Board of Trustees.
“With the budget pressures we have, it’s inconceivable to me that we’ll be able to maintain flat tuition as we’ve been able to do in the past,” Lumbra said in an interview on Tuesday. “There will have to be increases in tuition, no question about it.”
The university is also raising an additional $4 million this year by adding $1,000 in fees for students enrolled in the College of Nursing and Health Sciences, Grossman School of Business, and College of Engineering and Mathematical Sciences.
Climbing health insurance costs are to blame for the shortfall, according to
Richard Cate, UVM’s interim vice president for finance and administration. The school spends about $100 million annually on employee health insurance, a figure that rose 15 percent last year and is expected to go up another 19 percent in the coming year. “The biggest challenge we’re being confronted with is the significant increase in the cost of health care,” Cate said in an interview on Monday. “It’s those types of things that no organization can sustain for too many years.”
UVM has made no secret of its struggle to stay financially strong in the rapidly evolving higher education market. The school is a relatively large state institution for a place as small as Vermont, which doesn’t have a large enough pool of high school students to sustain UVM’s 12,000-person undergraduate population. Administrators have been saying for several years that it must attract more out-of-state students if it’s to continue providing the same level of services. Out-of-state undergrads pay about 75 percent more in tuition and fees than in-state undergrads do.
That amounts to about $63,544 per year for out-of-state students who live on campus, compared to $36,802 for a student from Vermont.
Two years ago, Vermont lawmakers sharply increased UVM’s annual appropriation to more than $55 million. And former UVM president Suresh Garimella made research a priority, bringing in millions more in grant funding. While first-year undergraduate enrollment came in slightly below projections of 2,850, that isn’t playing a significant role in UVM’s budget deficit, Cate said. The school is aiming for first-year enrollment of 3,000.
“The picture wasn’t as positive as what we hoped for, but it wasn’t a surprise,” Cate said.
Mindful of its long-held reputation as one of the more expensive public universities, UVM has been working hard to lower the price of attendance, Lumbra said. But escalating health care costs are putting UVM in an increasingly difficult position.
“At some point the pressures force us to make some decisions we don’t like to make,” Lumbra said. Tuition and fees are on Friday’s agenda for the board’s budget, finance and investment committee. UVM’s $10 million deficit for this fiscal year will be covered by a pool of about $70 million in discretionary funds the school keeps on hand for such purposes.
“UVM is on solid financial ground,” Cate said. However, “we’re using one-time money to help cover the cost of health insurance.”
UVM pays about 82 percent of its employees’ health insurance premiums. Because employees cover the balance, they’re being hit hard by the increase, too. UVM Staff United, which represents clerical, specialized, technical and professional staff, is pushing for a 20 percent wage increase over the next three years for all 1,450 people in the bargaining unit.
Claire Whitehouse and Ellen Kaye, copresidents of UVM Staff United, acknowledged that health insurance costs are affecting the school. But they said UVM shows it’s still financially strong by investing in buildings and programs and can afford to pay its employees better.
“UVM is doing quite well, thank you very much,” Kaye said. Members of the bargaining unit make between $39,000 and $219,000, with a median salary of $55,000. “It’s doing it on the backs of the workers.”
Vermont’s private insurance premiums are among the highest in the nation. In August, the Green Mountain Care Board approved a request from Blue Cross Blue Shield of Vermont, the state’s largest insurer, to raise premiums by up to 23 percent, the third straight year of double-digit hikes. UVM is self-insured but faces similar pressures from rapid growth in hospital budgets over the past five years.
Whitehouse said the union wants to negotiate health care costs with the administration.
“And we’d love to see collaboration with them on advocating for universal health care, knowing we’re in a place where it has become an extreme burden for employers and employees,” she said.
Correction, October 22, 2024: A previous version of this story contained inaccurate salary information for UVM Staff United members. And a photo caption contained incorrect information about the building pictured.
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