NU chief financial officer discusses university's $1.1 billion budget

The University of Nebraska Board of Regents approved a nearly $1.1 billion budget for NU near the end of June. Chris Kabourek, chief financial officer for the university and the recent interim president, spoke with Nebraska Public Media’s Jolie Peal about the reductions and investments laid out in the budget for this fiscal year.

JOLIE PEAL: You've ended up with a budget of over $1 billion. How do you figure out that overarching number, and where that funding comes from, and then how do you spend it?

CHRIS KABOUREK: I will continue to argue that universities across the country, particularly public universities, are some of the most complex institutions, even more complex than Fortune 500 companies. If you actually look at the university's total overall budget, it's over $3 billion when we include federal research grants and contracts and auxiliary enterprises like student housing. But what we really focus a lot on is what we call the general fund or state-aided operating budget, which as you indicated, was almost $1.1 billion this year. And that budget is really the resources that the Board of Regents and the President have at their availability to run the day-to-day operations of what most people think of the university, the instructional activities, some research, public outreach like cooperative extension, the administration, those kinds of things. We are funded pretty much like every other public university primarily from two resources, the tuition that our students pay for their education and then the general support we get from Nebraska and through their taxes, through which are appropriated by the legislature and the governor. It's a big number. But it's a responsibility that we take very seriously. Just like every Nebraskan out there, you know, we make sure we prioritize those resources and use them as effectively as we can.

PEAL: How long does it take to plan a budget? Because I imagine you didn't just do this in a week.

KABOUREK: Yeah, no, you don't, you don't just wake up and start working on $1.1 billion. In some aspects, it really never ends. It's a kind of a perpetuous, continuous cycle. But I would say the primary planning around this year's budget really started over two years ago, if not more. Typically, what the process is, the leadership team at the universities of the president, the chancellor, the CFO, etc., we start forecasting not only for two years out, but for five and sometimes even 10 years. Now, the state of Nebraska is on a biannual basis, so they pass a budget for every two years, and so we align our budget process with those two cycles. So two years ago, we submitted our biannual request to the legislature in September 2022, and that really formed the baseline, the projections and the funding we are asking the state to consider. Now, as we saw in this cycle, a lot can change in two years. I mean, when we submitted our biennial budget request, we were assuming inflation was at 3%, and then we all experienced in '23, the uplifting in inflation to 7, 8, 9%, and luckily, it's now coming back down. So just like any plan, you have to make changes. You sharpen your pencil, but as you get better information and go for it, so in that aspect, it's always a continuous cycle. That process will start again at the next board meeting. We will lay out some planning parameters for what we call the 2025-27 biennium, which we will then make a request submission to the legislature here in September and move forward. So yeah, it's always, it never seems to stop.

PEAL: From the Board of Regents meeting, a lot of the talk was about the budget reduction and how it was almost historic getting it down to what was $11.8 million in reductions for this upcoming year. Can you talk a bit about what that means for someone who's not financially minded?

KABOUREK: Well, you know, the budget is really no different than a family budget. We all have limited resources that we have available to us, but we either have our needs and wants that we would like to spend money on, and so it really becomes an issue of priorities. Hopefully that's what the budget represents, the priorities that we intend to invest in. But we also have to, just a baseline of, I just say core operation that is required to run the university. I like to use the term "to keep the railroad running," you know, salaries, benefits, utilities, those types of things. So that's what the budget represents. I've been here 27 years, and I could argue every one of those 27 years, we have made some kind of budget reduction because there's just not enough resources to fulfill all the things we would really like to do at the university. And to do that sometimes, you know, it's no different than families going to the grocery store right now and the price of food, or you go to the gas station and fill up your car with gas and the price of gas has gone up. You have to make choices, and one of those choices might be you have to scale back or substitute for something else elsewhere in your spending. And that's what we do each and every day, and each and every year when we go through this budget. This was, I would say this is a good budget. It's a responsible one and for three main reasons. It keeps our tuition affordable, which we can talk about more in a little bit. It makes some investments that I think we're really excited about, and to address your primary question, number three, it makes sure it's what we call structurally balanced. So our projected revenues will equal our projected expenses. But to do that, we are going to have to reprioritize our spending, and bring it down by roughly about $11.8 million over the years and our campuses are prepared to do that. Now, I think maybe the uplifting news at the board meeting is that only one year ago, we were projecting that number to be $58 million. So through a number of steps of spending reductions done last year, we are very appreciative of the Board of Regents supporting an inflationary tuition increase to provide some additional revenues for us. And then these steps to reduce it down to $11.8 million puts us in a good, strong position for next year. And it was really important to me as we transitioned on July 1 to Dr. Gold becoming the president that that's just one less thing he has to worry about, having that structural deficit over his head. And so, don't get me wrong, finding $11.8 million of reductions on our departments in our units are going to be a challenge, but it's a much better position than maybe we thought we were in even just 12 months ago.

PEAL: Yeah, I mean, huge difference between $58 million and $11.8 million. You mentioned the tuition increase, can you talk a bit about trying to find that balance between staying affordable for students, but then also having the funds available to create an education environment for them?

KABOUREK: We take tuition increases very, very seriously. We all kind of live things through our own lenses and our own experiences. As a lifelong Nebraskan that was a first generation college student and got through college on Pell grants and scholarships and even student loans, I still remember that conversation with my parents and who had not been in college, not really understanding all the numbers and all the different financial aid packages. I understand the anxiety and the commitment that it takes to feel like, ‘Okay, this is something we think we can do.’ So, we don't take any tuition increase lightly. But after saying that, you know, we have really big goals, particularly academically at the university and to increase our excellence and our stature and our ranking across the country. To do that it's going to take investments. But we've always promised that we would not balance the budget on the back of our students. It's going to have to be a partnership between the state of Nebraska who has been longtime, great partners in the amount of resources that they give to our university. The university has to play a part in becoming more efficient and finding spending reductions and setting priorities. And lastly, you know, the tuition or the students need to play a part in tuition they pay, and hopefully they find that the value of their degree and the tuition they pay for provided a tremendous return on their investment. I think the good news is that tuition at the University of Nebraska-Lincoln, let's use them, compared to the Big Ten is, it's the second lowest in the Big Ten. On average, most of our students graduate with less debt than the average student in the Big Ten. We think we provide a high, high quality education for a tremendous value. The good thing is that roughly, you know, over 80% of our students receive some type of financial aid. Our Nebraska Promise students, which are any students from Nebraska, whose family income is less than $65,000, we guarantee that we will pay their tuition, they're not impacted. So we know our neediest students, and a lot of our students will get support through financial aid to mitigate some of the tuition increases. But those investments with the additional funds that they're going to pay are going to fund some really incredible investments that hopefully they will be proud of when they graduate with that degree.

PEAL: The Presidential Scholars Program, you have invested 1.5 million additional dollars into that, what are you hoping to do with that?

KABOUREK: It's kind of remarkable that just last February, which was five months, six months ago, which almost seems like a lifetime ago now, we were, you know, had the honor of standing with Gov. [Jim] Pillen in the Capitol announcing this program with members of the Board [of Regents] and other educational leadership. Quite candidly, we didn't really know exactly what was going to happen, we just knew we had to be more competitive for Nebraska kids, particularly on our scholarships. Too many of our homegrown talent were going to places like Alabama or Oklahoma or anywhere outside of Nebraska, simply because they were getting more scholarship money. And so as the leadership team, we just said that, that's not right. We wouldn't like it if our volleyball players or football players or basketball players would be recruited just because they were getting more funding or scholarship from another institution. So why are we letting our five-star academic, our top students leave the state just simply because we're not competitive on a scholarship. As you know, we announced that program in February, which is, it's our, I think, our most prestigious scholarship. It provides the full cost of attendance, covers tuition, room and board expenses, plus a $5,000 stipend, to any student that scores the perfect 36 on their ACT test. We've just been so pleased with the response, not just from students. We've heard a number of stories of students who maybe scored a 34, 35 and we're incentivized by the scholarship program to take the ACT again and get that 36 and become a Presidential Scholars or, you know, moms or dads so relieved that their son or daughter now is going to be right here in Nebraska studying versus going somewhere far away. The best comment I had was from a parent who just said, ‘Thank you for bringing excitement back to academics. We love seeing academics treated at the same respect that sometimes athletics is received.’ But we also know that not every school has a student that scores a perfect 36. We visited a number of high schools this spring, and what I found at every school is, it's full of not only amazing guidance counselors and teachers and principal, it's full of amazing students that we really want to keep in Nebraska that have dreams and we talk about brain drain and workforce development needs, they're the exact kind of kids we want to keep here in Nebraska. It became apparent to us that at some point, we needed to scale the program up at some point. I'm very excited about this. I'm really appreciative of the Board of Regents support that, you know, they're making a significant investment, as you indicated $1.5 million, which we can fund 50 students out of that here. It'll be in the ‘25-’26 academic year. So we're going to use this as a platform to go out and we're going to go visit every school in Nebraska and let them know that. We still want you to get the 36, we still want to incentivize that, so if you get a 36, you're going to automatically be enrolled as a President's Scholar. But we also know there's on average, around 30 kids that get a 36 and not all of them are going to attend the University of Nebraska most likely. But what this does is allows us to go out to kids that get a 30 or 31 or 32, 33 and say, ‘Hey.’ There will be an application process. Now it will be highly, highly competitive, so we still want you to go get that 36, but we still want to give every student across the state an opportunity to be a President’s Scholar, and with this investment, we're gonna be able to expand it going forward. We're really excited to see, you know, how this plays out and we think it will be really positive, but it's a good first step, but there's a lot more work to be done.

PEAL: And how many, how many students is it up to now for this upcoming school year, do you know?

KABOUREK: I believe we are fairly sure that we will have 17 perfect 36 ACT, first-time freshmen on our campuses. I believe 15 at the Lincoln campus and two at the Omaha campus. To put that in perspective, you know, I think we had nine last year, so we've almost doubled it. So we're looking for that one more kid to make sure we can say we doubled it, 100% growth. And I've had people say, ‘Well, you know, it's a lot of money for not very many kids.’ And, you know, I think that's the wrong way to look at it. You know, who knows what, what these 17 young adults might do someday. They might be the next great farmer or rancher that helps solve how we're going to feed a world of eight billion people, or they might be the next great cancer doctor or cancer research that finds a cure for cancer, or they might be the next great teacher who goes and inspires a future generation of students, or the next great journalist that provides, you know, stories and coverage for, you know, whatever the story might be, that's how we look at it. It might only take one person to make a difference in this world, and if the scholarship had a small role to play in it, then it's been a success. We've gotten to meet quite a few of them, and I could just say they are just amazing, young people, bright, smart, disciplined, committed, involved, not just in academics, but, you know, speech, debate, academics, all those things. Being a father of three teenage boys, you know, I understand that young people sometimes get a bad rap and in turn, but after you meet these Presidential Scholars, I think your viewpoint would change and, you know, Nebraska should be proud and excited about what they're going to do for our state. So now our job is to, once we get them enrolled, is to make sure that they start growing roots and developing relations. President’s Scholars is not just a scholarship, it's going to be a program where we work with them and find mentors and internships and relationship and networking with state government leaders, business leaders, community leaders, because we want them to grow their roots over the next four years so that when they do graduate, they really consider staying in Nebraska to build that business or go to medical school or teach in our in our schools. It's a very small portion, it's going to take a lot of work from a lot of us, but we think this is a really important step in addressing some of the brain drain issues that are really impacting our state.

PEAL: So kind of as a way to bring it all together. If you had 30 seconds to tell someone about the university budget this year, what would you tell them?

KABOUREK: It's a good budget. You know, it makes some key investments that we talked about in Presidential Scholars, it addresses some long term deficit that we've been trying to manage and as I said, it keeps tuition affordable for our students. Is it a perfect budget? By no means, anybody could probably nitpick things that they don't like about it, but that's kind of the budgeting process. The bottom line is, it's going to put us in a strong position to move forward with some of the big goals that we have before us. And it sets Dr. Gold up, I think with a really nice platform to move forward. All the headwinds we've been talking about facing higher education have not gone away, and we still have some tough, tough conversations we're going to have to have, but not knowing that we have to go and backfill any previous year's budget, I think it's going to put us in in a strong position, not only here in Nebraska, but compared to a lot of places across the country. We really thank the Board of Regents for their support of the proposal that we put before them.

PEAL: And one final question, because I know you're coming to the end of your interim presidency. How do you feel about what you're able to accomplish the past six, seven months?

KABOUREK: Yeah, I mean, in some ways it feels like just like yesterday that I took the chair and then in some ways it feels like it's been years. You know, the history books will judge, others will judge you know, whether the initiatives we put forward were successful or not. I think we feel very good about them, obviously. But at the end of the day, if I was able to have an impact on one kid in Nebraska that says, you know if somebody from David City, Nebraska can grow up and be a first generation college student and someday take the realm of the president of the university, then there's somebody out there right now that has a dream that they can achieve, and, you know, we want to inspire that. It's been the absolute pleasure of a lifetime. I look forward to seeing what Dr. Gold can do with the next step we take and, but an absolute blast, you know, Nebraskans have been so welcoming and it was a true privilege and I had a lot of fun.

PEAL: Well, any other last thoughts on your mind before we end the interview?

KABOUREK: No, other than, you know, I’m just super excited about the momentum that we've built over the last six, seven months and in the place where we've landed. Not just the budget, but some of the strategies that we're working with the board on. So the University of Nebraska’s best days are ahead of it. And if there's any young people out there, I really hope they give us a call because we want them to be part, be on the team and be part of this and help us keep moving forward. So no, it's been, it's been great and, and we're really, really looking forward to the future.