NEWARK — The University of Delaware is weighing a $9 million budget shortfall after looking at preliminary fall semester data, a sign that the financial fallout may be less severe for the university in Fiscal Year 2022.
Delaware’s largest higher education institution was estimating that its operating budget would conclude between a $3 million surplus and a $30 million deficit earlier this year. UD President Dennis Assanis noted that while enrollment continues to rise, the university has to balance that success against an ambiguous future with the pandemic.
“We have a lot of challenges, hiring people, retaining people, compensating those or we’re trying to attract market rates, which are increasing dramatically,” Assanis told the UD Board of Trustees last month. “Nobody really ever knows how much you’re going to spend on a project right now. But overall, we’ve had very solid progress.”
When the COVID-19 pandemic hit, UD faced an estimated $288 million budget shortfall in FY 2021 and the Board of Trustees opted to draw down its endowment portfolio by $82 million to help cover the gap. The university also laid off thousands of employees and imposed salary freezes and salary cuts for senior administration.
The most recent figure of $9 million includes “one-quarter of data which was available at the time the projection was developed,” according to UD spokesman Peter Kerwin.
Buoying the forecast is a rebound of enrollment figures, with 23,996 students enrolled in the 2021-2022 academic year. First-year enrollment is also up 542 students, or 14.5% from last year. UD retained 3,711 first year students who enrolled in 2020, or 91.4% of the class.
UD has also lifted the hiring freeze, but departments and offices are evaluating their structures to consider technology and business process changes — and its impact on remote or hybrid work.
Housing and dining revenue is on target for expenditures, but the research facilities and administrative revenue is breaking records, Assanis said.
However, the lower enrollment last year — a smaller freshman class becoming this year’s smaller sophomore class — will continue to impact future years and hit the budget down the line, he warned.
“It is a four-year wave that’s propagating through the system, as if we start with 700 or fewer students, that really needs to make its way through,” Assanis said.
Other struggles include increased pressure for financial aid and scholarships, as well as continued expenses for COVID-19 testing and cleaning costs.
UD raised tuition by 2% this year, after last year’s tuition freeze to help students who were economically affected by the pandemic. Kerwin noted that this tuition hike was among the lowest in the past decade.
“UD continues to balance the increased cost of education, increased financial aid need, and escalating inflation of personnel and non-salary costs when weighing tuition and fee changes,” he told the Delaware Business Times.
Other major challenges that UD faces include the push to provide more students with financial aid and scholarships, hiring and retaining staff, as well as delaying some capital projects due to the workforce shortage. COVID-related expenses may also exceed budgeted levels.
Assanis pointed out that the university also set a record with enrollment for winter and summer sessions, while revenue projections for the winter 2022 semester were conservative, and he said that continuing to exceed it should be the goal.
“We’d like to repeat that, and it would help with our budget picture in terms of expenses like personnel or training. The good news is our deficit can be wiped out with solid sessions,” the university president said.
