UT president: System headed toward $377M funding gap

MEMPHIS – The head of the University of Tennessee said Thursday that the system of schools will have to take dramatic, possibly controversial action to combat a snowballing shortfall in funding.

In a speech to the university system's board of trustees, UT President Joe DiPietro said budget experts predicted that the funding gap would grow to $377.4 million by 2025 if nothing was done. That's a sharp jump from the $155 million gap DiPietro predicted last fall.

DiPietro said chancellors at UT's schools across the state would take steps to fix their "unsustainable slash broken budget model" in the next few years. To meet that challenge, he said, the chancellors might consider boosting out-of-state enrollment, shuttering programs that aren't profitable and optional retirement buyouts for some employees.

"Some of the decisions we make are likely to be unpopular, some may upset people," DiPietro told the board during their annual winter meeting, held this year at the University of Tennessee Health Science Center. "There's no magic bullet out there. This is the reality of where we are in 2015, '16, '17, '18."

DiPietro has been outspoken in his requests for more funding from the state, and he acknowledged that the budget proposed by Gov. Bill Haslam this month contained several wins for higher education in Tennessee. The budget included millions that would reward colleges for successful student outcomes and provide for employee raises.

But it doesn't mitigate the urgency at UT.

"We're not even back to the state appropriations that we received before the recession," DiPietro said. "The reality is we have to be ready."

Although chancellors at different UT locations will get the chance to tailor their approaches, DiPietro laid out strategies that could fill the chancellors' "toolboxes" as they look for ways to cut expenses and boost revenues.

DiPietro said chancellors would be allowed to boost out-of-state enrollments up to 25 percent of the student body. Out-of-state students would bring in significantly more tuition revenue, although DiPietro said schools would continue to enroll the same number of in-state students. Out-of-state students make up about 12 percent of the system's enrollment.

As part of the cost-saving effort, UT will review the processes of giving and revoking tenure. System administrators will also examine tuition waivers and discounts that aren't funded by the state. Those discounts cost UT an estimated $7.4 million annually.

DiPietro told the trustees he hoped to avoid filling the funding gap with steep tuition increases. He said the UT system hoped to keep this year's tuition increases within a 0 to 4 percent window.

Last year, the board approved a 6 percent tuition hike for most UT schools.

Trustees were supportive of DiPietro's plan. Some of them noted that tough cuts could encourage state leaders to beef up their support for UT in the future.

"We have your back on this," said Brian Ferguson, vice chairman of the board. "This is no easy task."

Reach Adam Tamburin at 615-726-5986 and on Twitter @tamburintweets.

UT system funding

• $377.4 million: The predicted size of UT's funding gap by 2025. That's up from a prediction of $155 million in the fall.

• 0 to 4 percent: UT President Joe DiPietro said he hopes to keep the system's next tuition hike within this window.

• June 24-25: The next scheduled meeting of the full Board of Trustees, in Knoxville.