Holloway speaks to U. Senate about $125 million budget deficit

On Friday, University President Jonathan Holloway delivered his second annual budget address to the University Senate concerning the 2023 fiscal year’s finances.

The budget address follows an initiative Holloway commenced last year to discuss the institution’s revenues and spending with greater transparency. In his address, he said Rutgers expects to have a $125 million deficit by the end of the current fiscal year.

He mentioned four key factors impacting the budget: coronavirus disease (COVID-19) grants, health coverage for employees, enrollment and inflation.

He said the University’s COVID-19 relief funds, approximately $370 million received in total from state and federal governments, were used to fund various Rutgers operations during the pandemic but are now depleted.

Additionally, Holloway said part of the budget deficit could be attributed to the 24 percent hike in the cost of University employee healthcare plans, which he cites in his address as an effect of the State Health Benefits Commission raising its premiums.

Holloway said the growing costs of retirement and health coverage for its employees could negatively affect future research grants and funding. He said Rutgers needs the state’s help to mitigate these increasing costs because most of these rates are set at the state level.

The next elements discussed were the decrease in overall student enrollment at Rutgers and the impact rising inflation has had on intensifying the institution’s fiscal challenges.

While enrollment at Rutgers—New Brunswick has remained relatively high, student enrollment across all three campuses actually decreased, according to data from the University.

He said the University needs a comprehensive strategy to enroll students so that all qualified students will have a place at a Rutgers campus.

"The intentional move to a University-wide approach on enrollment will put to bed the accusations at the start of the academic year that the administration was deliberately boosting enrollment in New Brunswick at the expense of Newark’s and Camden’s numbers," Holloway said.

The University, along with the entire nation, has dealt with rising inflation, he said, but the former only has limited options to increase prices as they are only set once a year.

"We need to make sober and honest decisions about the cost of attendance. It is unrealistic … that we can keep tuition increases below 3 percent, year after year," he said.

He said the deficit problem cannot be solved with severe withdrawals from the University endowment and instead requires long-term operational and administrative improvements.

For example, the University will tighten the functional structure of the Office of Information Technology and advise Rutgers Athletics regarding cost-reduction efforts that will produce budgetary savings, according to his address.

Holloway said that he believes in cutting costs across University departments and units but not at the expense of the institutional mission and research.

"We will eliminate this deficit over the next three years by taking prudent steps to control administrative costs and increase revenues in various ways," he said.

In addition to discussing the deficit, Holloway spoke about the University's plans to use the $300 million in state funds for on-campus construction projects on all three campuses.

He said new on-campus buildings will include ​​the Innovation Hub and a new medical school in New Brunswick, Life Sciences Center in Newark and the Cooper Street Gateway planning in Camden.

Holloway said that while he understands the difficulty of the budgetary obstacles he mentioned during his speech, he is committed to lessening the consequences and balancing the shared inputs of the Rutgers community.

"I know it feels like we are just emerging from a really hard period, and now I’m sharing additional challenging information," he said. "But I wouldn’t be here if I didn’t believe so deeply in our ability to rise to those challenges and continue to serve the state of New Jersey, the nation and the world."