University of Nebraska proposes 4.25% budget increase for each of next two years

The University of Nebraska will request a 4.25% increase from the state for each of the next two years for its core operating budget.

The proposed budget request is on the Board of Regents agenda for its Aug. 13 meeting. NU President Jeffrey Gold said the university modeled its request on an average of two bienniums of the consumer price index, which shows inflation.

“We are looking for not just a year-to-year or biennium-to-biennium level of stability, but frankly, a very predictable way that families can understand how we're going to make decisions about tuition and how we're going to make decisions about our requests for state appropriations,” Gold said.

Gov. Jim Pillen called on all state agencies last month, including the university system, to reduce budgets by 5%. He also instituted a hiring freeze and pushed for other measures to cut spending. The university announced a combined $29 million in cuts across the four campuses following Pillen’s memo.

Gold said the process for this next state budget request has been going on for at least a year. Anne Barnes, NU chief financial officer, said they’ve walked the governor’s office and several members of the Legislature’s Appropriations Committee through the request so they understand why the university is asking for these increases.

“I think everyone understands why we are asking for those things, what they represent,” Barnes said. “There's not a lot of pushback in terms of merit. It's just going to be a question, as Dr. Gold said, of once we've made our needs known, what is the Legislature going to be able to do to respond to those requests?”

The university is requesting a roughly $61.1 million increase in total for the next two years for operations, breaking down to almost $30 million for the 2027-28 year and almost $31.2 million for the 2028-29 year.

This covers salaries and benefits, health insurance estimates and utilities. Barnes said the university’s request is nearly in line with the instructions from the state for proposing a budget, like increasing salaries by 3% and health insurance at 8%. If the university had strictly followed the state’s instructions, those increases would have been around 4.88% each.

“Using those instructions would suggest that, actually, a larger increase than what we are asking for,” Barnes said.

The difference comes from the way the university is calculating the consumer price index using a four-year rolling average, rather than a single increase year to year.

“We've tried to smooth this over a much longer period of time, and that's where we're going to be consistent year over year, and that's for both tuition as well as for state appropriations to try to take some of the lumpiness out of the year-to-year determination,” Gold said.

In total, the university is looking for a $72.6 million increase in state appropriations for the biennium, which includes that operating budget with additional investments in other programs.

The budget proposal includes asking for an additional $5 million for biomedical research. It’s an attempt to restore funding the Legislature cut during the last legislative session, but it’s only marked for the first half of the two-year request, the 2027-28 budget year.

“Those dollars are literally the seed corn for all of our biomedical research that results in hundreds of millions of dollars of funding,” Gold said.

Also included in the appropriations request is $3 million across the two years for the Presidential Scholars program. It covers the full costs of tuition and fees for Nebraska high school students who receive a perfect ACT score, along with a $5,000 stipend.

The university system is also looking to fund a new enterprise resource planning system, which covers human resources, financial and student information systems. The university is requesting $25 million for the first year and $30 million for the second year on that system. NU will be working with the state colleges to find a new system as well.

“It's absolutely indispensable, and we're at a point now that the provider of that system can no longer support the [on-premise] version, so we have no choice either to find another provider of the system, which we will look at multiple choices, but they're all cloud-based now. They're no longer [on-premise].”

The university’s 4.25% increase for each year lines up with its recent decision to raise tuition by the same percentage for the upcoming school year. This decision was made because of rising costs from inflation and a smaller-than-hoped-for state appropriation during the last budget cycle.

The NU system has also faced budget reductions for the past few years, including more than $40 million in cuts that resulted in the elimination of four departments at the University of Nebraska-Lincoln campus this past school year.

Gold said as the university looks to this next budget request cycle, it will be his job, along with other university members, to show the Legislature the full impact of the university on Nebraska. He added that the university is currently looking at dozens of ways to implement Pillen’s recent 5% reduction, and he doesn’t want to have to make more future cuts to ensure the university can keep up with inflation.

“First of all we have to balance the budget, and we will. We're not going to run red ink into the budget. Secondly, we have to pay our employees, our faculty and our staff, fairly, or we'll not be able to recruit and retain top talent,” Gold said. “If you put those two things together, what it means is, the way we tie it in the budget is by elimination of programs. There's really not much else to do.”

The Board of Regents meeting is Aug. 13 at 9 a.m. at Varner Hall.