Connecticut Lawmakers Put Final COVID Funds Toward Higher Ed

Connecticut lawmakers recently passed a state budget stabilization bill that allocates a large portion of the state’s remaining COVID relief funds to higher education. It’s a last-ditch effort to plug massive budget deficits facing the state’s public institutions for the second year in a row.

While most of the $2.8 billion Connecticut received from Congress’s American Rescue Plan Act (ARPA) in 2021 has been exhausted, $370 million remains, and the unspent federal money must be distributed by Dec. 31.

The state’s Democrats, who hold a majority in both chambers of the legislature, firmly support funneling at least $160 million of what’s left to the University of Connecticut and Connecticut State Colleges and Universities (CSCU) system. But Republicans staunchly oppose the move, arguing that the continued use of the one-time federal funds to cover ongoing expenses only sets the institutions up for larger deficits in the future.

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Now, it’s up to Governor Ned Lamont, a Democrat, to decide the fate of the bill. State officials say the governor was involved in negotiating the bill and will very likely sign it by early next week.

Avoiding More ‘Painful’ Cuts

Terrence Cheng, chancellor of the CSCU system, believes it’s crucial that the governor sign the bill into law. If not, it will be nearly impossible for the system to avoid further “painful” cuts to services—particularly student success initiatives, he told Inside Higher Ed.

“It gives us a chance to stabilize and really develop a [long-term] plan with our state legislators and to demonstrate that we are a truly valuable investment case,” Cheng said.

CSCU has already made significant cuts to compensate for the anticipated $140 million deficit in its fiscal year 2025 budget, based on expected state allocations and tuition revenue. So far, hundreds of part-time staff positions have been cut and numerous departments across the system’s six institutions have reduced course offerings. The Board of Regents also approved a 5 percent tuition increase system-wide.

Cheng said CSCU needs at least $63 million on top of the $48.8 million it has already received in federal aid to avoid further reductions for the upcoming year.

“This is arithmetic,” he said. “If the money’s not there, there will be certain things that we just flat out cannot do.”

If signed into law, the stabilization bill would allot at least another $80 million to CSCU. The University of Connecticut would also receive an additional $57.7 million in federal aid; however, UConn officials expect a $70 million deficit in fiscal year 2025 on its roughly $1.6 billion budget.

Seth Freeman—president of the Congress of Connecticut Community Colleges, an advocacy group made up of faculty members—said he’s “extremely thankful” for any extra aid. The Connecticut State Community College, a CSCU institution comprised of 12 former independent two-year colleges, will receive $41.3 million, but Freeman noted that’s barely enough to squeeze by, let alone to fill the voids left by cuts already made.

“My campus [Capital Community College] had to eliminate the Director of Career Services. Yet, our mission is to get students prepared for job placement,” he said. “This is not acceptable.”

When asked whether using federal COVID aid was like putting a bandaid over a bullet hole or whether it might create a sustainable path forward, Cheng said, “Hopefully, it’s the latter.”

“I don’t know if one more year of time will be enough,” to solve the deficit and enrollment problems entirely, he added. “But anyone who says we’ve been waiting with our hands out for more funding without taking sufficient action would be overlooking the enormous amount of work we’ve done to demonstrate that we are willing to evolve.”

Legislators Split Views

Although Connecticut may be an extreme example, many other states are or shortly could be facing similar budget deficits. As federal COVID relief dollars designated for higher ed dry up and the industry continues to struggle with maintaining enrollment and tuition revenue, more states will be forced to decide whether it’s smart to apply any remaining unspecified aid to colleges and universities.

Is allocating the last of general ARPA dollars to higher ed a savvy step, or does it just kick the can of addressing major budget deficits down the road?

Representative Matt Ritter, a Democrat and speaker of the Connecticut House of Representatives, acknowledged that concern over the temporary nature of the aid is “a fair point,” but said it’s the best step for now.

“I don’t deny that we have a couple $100 million appropriated that are not going to be there next year,” Ritter said. “The question then becomes, can we find the money [going forward]? … We have to prioritize, but the answer is yes.”

According to the speaker, the state’s annual budget is “over $21 billion.” The $370 million that would be lost when the ARPA money is gone is “a very small number relative to what our overall budget is,” he added.

Ritter also noted that a bipartisan board, along with university administrators and the Office of Policy Management, are discussing ways to address enrollment declines, establish more efficient spending models for each institution and ideally create a more predictable funding flow from the state. (Unlike some states, Connecticut doesn’t have a funding model of any kind for higher ed, so the amount universities receive per year changes based purely on the interests of lawmakers.)

“There is some hard work and pencil-sharpening that’s going to have to happen from our higher education institutions—no question,” he said. “But there also can’t just be this notion that the state has no obligation and responsibility. It’s a combination of both.”

Most Republicans, meanwhile, are peeved by the bill’s passage, arguing that it’s the responsibility of college and university administrators—not the state legislature—to close higher ed budget gaps.

Representative Tammy Nuccio, ranking member of the appropriations committee, described passing the bill as a “bad decision” that was “made in a vacuum.” She noted that Connecticut’s higher education institutions already rank among those with the highest annual state funding per student, and that college leaders were clearly advised that ARPA money was a one-time deal. Still, she said, they applied much of the $145 million in ARPA aid they received previously to ongoing programs.

“There is a narrative being twisted. Instead of looking for ways to optimize, they’re just keeping their expenses the same and carrying on, expecting the state taxpayers to fill in the difference,” she said. “This does not bridge that. All it does is give them yet another Band-Aid until next year when they’re going to come back to appropriations and tell us that we’re cutting them again.”

She added that it’s time for colleges to either raise tuition or address the high cost of higher ed by making programmatic cuts or utilizing current resources more efficiently. In her view, the remaining ARPA dollars should be allocated to K-12 education.

“It’s not the taxpayers’ responsibility to provide a college education for adults. It is, however, their responsibility to provide an education for children,” she said. "We’re only giving each [public school district], on average, $5,000 per student, at a primary and secondary level. But we're giving UConn $24,000 and CSCU $18,000 [per student] … I think that disparity is a smack in the face to anybody who says that they're a friend of education.”

Is One More Year Enough?

State policy and higher education experts expressed mixed views on the matter.

Eric Syverson, a senior policy specialist at the National Conference of State Legislatures, said deploying the ARPA money to higher education is a logical solution.

“It’s hard to not find some sense in it because that money is just there,” he said. “So if higher education is a priority, it makes sense to use those dollars. But in terms of the state, I don’t know if that’s the case.” Still, he said, “It’s without a doubt that these funds help these institutions currently.”

Syverson said Democratic lawmakers likely hope that with an extra year of support, colleges would either be able to establish a longer-term plan or address some of the deficit through more organic means, particularly if the labor market cools and sends more adult learners back to school.

“I think one of the worst things that institutions like this can face is a large deficit this year, and another large deficit next year,” Syverson said.

Donna Desrochers, a senior associate with the rpk Group, a higher education consulting firm, noted that there’s nothing on the horizon to suggest Connecticut’s colleges will receive an influx of students to solve their tuition revenue problems.

From early on, Desrochers said, her firm recommended that higher ed institutions use federal aid to invest in developing a long-term transformational strategy rather than to buoy recurring expenses. But data show few have actually done so.

“Transformation can take a long time, but there’s going to come a point where you don’t have the luxury of time,” she said. “If you’re in a budget deficit, then you may need to think about what your transformation looks like a little more quickly.”