NU proposes inflationary tuition increases to help close budget deficit

LINCOLN — The University of Nebraska’s top financial leader expects NU to wipe out a lingering deficit from NU’s budget next year through inflation-connected tuition increases and spending cuts.

Major components of the budget proposal, which the NU Board of Regents will consider next Thursday, include tuition increases of about 3.2% to 3.4% and remaining efforts to close out a budget deficit that totaled more than $50 million in past years.

Interim NU President Chris Kabourek, also NU’s chief financial officer, said the proposal provides President-elect Jeffrey Gold a “clean slate to build off of for the future.” This was one of Kabourek’s highest goals, he said. 

Another was to help shift focus beyond cuts and tuition increases to key university priorities, like addressing brain drain and workforce demands.

Tuition increases

Proposed tuition increases would gather about $12 million more from students annually. That translates to $9 more per credit hour for resident undergraduate students at the University of Nebraska-Lincoln or $135 more annually for average 15-credit semesters.

In-state students at similar campuses in Omaha and Kearney will see increases, too, but slightly less than at UNL. Nonresident, international and graduate students, who already pay more, will face bigger increases. These vary across NU’s campuses and for specific programs.

“We think that’s a responsible, very fairly modest proposal to ask our students to participate,” Kabourek said, noting that about 85% of students receive some form of financial aid.

The NU Board of Regents voted to increase tuition for the first time in three years last year by 3.5% across the board, after holding rates flat during the COVID-19 pandemic.

Kabourek said he doesn’t take proposed increases lightly, noting he was a first-generation Pell Grant recipient from rural David City, but that to achieve NU’s goals, everyone must contribute.

“The university is going to have to become more efficient,” he said.

The budget proposal also anticipates raising about $5 million in additional tuition revenue from stabilizing or increased enrollment. This would “buck” years of declining enrollment across all campuses but the University of Nebraska Medical Center, Kabourek said, though he is “cautiously optimistic” about 2024-25 enrollment numbers based on early figures.

More permanent spending cuts

Campus chancellors have permanently cut $30 million from their budgets over the past two years and would need to find $11.8 million more in cuts. Campus leaders will also need to absorb another $3.1 million in inflationary costs and reprioritize spending “just as Nebraska families are doing,” according to the proposal.

Chancellors at UNL and the University of Nebraska at Kearney led the way in the previous cuts, which included structural reductions in Lincoln and program eliminations in Kearney.

Specific cuts will be determined in the coming months.

“We’re going to try to do everything we can to do this stuff in the back office and those kinds of things with a goal of maintaining affordable access,” Kabourek said.

NU officials had planned for higher inflation of 5% when calculating NU’s previous budget hole, Kabourek said. Inflation has now slowed to 3.4% and continues to go down, leading to more savings.

Presidential Scholars Program expansion

Kabourek celebrated a proposed $1.5 million investment in the Presidential Scholars Program, which offers a full-cost-of-attendance scholarship plus an annual $5,000 stipend for students to attend an NU campus if they obtain a perfect ACT score (on a 36-point scale), or the equivalent on the SAT (1570 or above).

The funding will help NU support annual groups of 50 presidential scholars. About 30 graduating K-12 students in Nebraska earn perfect ACT scores each year. NU intends to launch a competitive scholarship application in the next year for students who score a 32 or above.

At least 17 presidential scholars will be part of the inaugural program in the fall. This increased by one student from earlier in the week when NU celebrated top performers with Gov. Jim Pillen at the Nebraska State Capitol.

Kabourek has said the program for “all Nebraska, five-star scholars” is similar to outreach for top athletes. He’s promised that students who leave the state for college or don’t go to college right away could still join the program, similar to the athletic transfer portal.

NU expects to include professional mentorship and internship opportunities for the scholars.

“It’s not going to be solved completely by the university, it’s going to take all of us, but hopefully this will be a display of the university’s commitment on how we really want to address the brain drain issue going forward,” Kabourek said.

Rural health education

With support from Pillen and the Legislature, the NU budget puts $15 million into recruitment and operating costs for the Kristensen Rural Health Education Complex in Kearney. Kabourek said the funds will help provide a “runway” for when the building is expected to open early 2026.

The facility will train high demand medical professionals in rural areas in need of medical support, aiming to entice many to stay in Kearney or central and western parts of the state.

President Gold, the current chancellor of UNMC and the NU system’s top academic officer, will also receive $1.5 million to use on priorities of his choosing when he takes office July 1.

Regents are expected to approve the final version of Gold’s contract next week as well: a five-year term with a base salary of $1,062,573 in addition to various bonuses. 

Gold has said he plans to remain in the position for as long as the regents will have him. Should he choose to resign before June 30, 2028, he would owe NU $250,000.

Faculty and staff outside employee unions — at UNL and UNMC — are proposed a 3% merit-based salary increase pool. Increases for union employees at UNK and the University of Nebraska at Omaha will be subject to collective bargaining agreements.

‘Storm clouds’ parting, challenges still ahead

Kabourek said the budget “only solves our problem for the next 12 months” in the face of headwinds and other economic challenges.

Still, he said, it’s a “good starting point” as it looks as if some “storm clouds” are starting to part.

“We’re still going to have to have uncomfortable conversations, the courage to think differently, to push through inertia and not be satisfied with the status quo,” Kabourek said. “That’s really where our opportunity is to take the next step to achieve some of those academic aspirations that we’ve laid out there.”

The Board of Regents meets at 9 a.m. Thursday in Varner Hall in Lincoln.