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U. may borrow to cover budget cuts

School might raise tuition next fall to pay debt

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The University of Utah may borrow to cover its share of current state budget cuts and raise student tuition next fall to pay the debt.

The university also will cap enrollments next fall and could begin cutting programs if the current financial situation shows no reversal by then, President Bernie Machen said this week.

"We've reached the point where it's fair to address these things," Machen told media representatives before he takes his case to the Legislature. "We've gone beyond 'what if?' " What was going to be an "outstanding financial year" for the U., with the highest infusion of money in recent history, has done a quick turn-around with a reversal in the state's tax revenue flows and left institutions of higher education floundering with more students and less money.

Gov. Mike Leavitt originally hoped to buffer higher education against budget cuts beyond the first 2.5 percent round instituted last fall. That round cost the U. $5.4 million. The university managed that cut by eliminating staff positions through attrition, cutting time for hourly staff, putting equipment and supply purchases on hold and trimming travel budgets. A hiring freeze has been implemented for the rest of this year.

Despite Leavitt's determination to spare education from further cuts, the Legislature has chosen to spread the misery of additional cuts evenly across state agencies. That means the university is required to trim another $3.2 million.

While state leaders were coming to that decision, an unprecedented number of students enrolled at the U. for spring semester, which began early this year to accommodate Olympic use of the campus during February and March.

"They're already here. Our classes are going and faculty hired. We can't stop classes that are now in session," Machen said. Higher education across the state is being hit with the economic reality that when times are tough more people choose to go to school to acquire or upgrade work skills while the job market is soft.

Projections created by the office of the Commissioner for Higher Education anticipate systemwide growth of at least 2 percent per year through 2020, and the current figures are much higher.

Making additional cuts for the second half of this fiscal year doesn't seem possible. "We've looked," Machen said. A loan, either from the U.'s own reserves (many of which are restricted) or from a commercial source, seems his best solution, he said. "We'll look at wherever we can get the best deal."

"The first 1 percent of any tuition increase will be used to pay off the loan," he said. Raising student tuitions to pay off the loan is tantamount to a tax increase for this segment of the population, he said. The increase would be in addition to an expected tuition hike of at least 3 percent as budget considerations go through the legislative process. Student leaders are lobbying higher education, the governor and legislators to hold the line at 3 percent.

A loan would get the university only through to the next fiscal year, when things are not likely to improve significantly. If the current trend continues, with no new money to cover the costs of educating new students, the deficit at the U. is projected at $13 million, Machen said. Instead, he predicted enrollment caps, possibly restricting new students to the same number that graduate and leave openings. Program cuts are likely, he said, with general education courses the most vulnerable. He acknowledged that limiting enrollment at the U. would push the problem down the line to other units in Utah's higher education system.

Salt Lake Community College President H. Lynn Cundiff also is talking about enrollment caps and the potential for "double-digit" inflation in tuitions.

Legislators were to begin budget considerations Tuesday, and university and college presidents will be among those lobbying for enough funding to forestall restrictions on who can go to college and the quality of the programs that will be available to those students.

E-mail: tvanleer@desnews.com