By Kolby LaMarche

University of Vermont administrators told staff today that the institution is confronting a roughly $12 million general fund structural deficit for the coming fiscal year, the result of significant enrollment-related revenue pressure and steadily rising operating costs. 

In a memo Vice President for Finance, Administration and Human Resources Alicia Estey and Vice President for Enrollment Management Jay Jacobs detailed plans to reduce general fund expense budgets by 3.25 percent while still providing a 3.5 percent wage increase and additional one-time payments to many employees.

The message arrives at a pivotal moment for Vermont’s flagship public university. At this stage in the admissions cycle, UVM is projecting an overall undergraduate enrollment decline of approximately 7 percent, including a 15 percent year-over-year drop in deposited new undergraduate students. 

That contraction will ripple through net tuition revenue as well as housing, dining, and other auxiliary operations that depend heavily on full campus occupancy.

Tuition and fees make up more than two-thirds of UVM’s general fund, leaving the university particularly exposed when student numbers fall. At the same time, many fixed and semi-fixed costs — faculty and staff compensation, benefits, utilities, infrastructure maintenance, student services, and research support — do not shrink proportionally with enrollment. 

The combination has produced recurring expenses that outpace recurring revenues by about $12 million.

They are alone, though, as both national and regional trends long anticipated this, according to  higher education analysts. The “demographic cliff” — a decline in the number of traditional college-age high school graduates, especially pronounced in the Northeast — has been forecast for years. 

Vermont’s own K-12 enrollment has fallen sharply over the past decade and more, with statewide public school numbers dropping more than 25 percent since the early 2000s, while spending has increased massively. 

Declining international student interest and aggressive recruiting, admissions, and scholarship strategies by competitor institutions have added further pressure on UVM’s yield.

The university has responded by adapting its own enrollment strategies. Enrollment Management staff plan targeted summer work to improve yield from admitted students and bolster retention. 

Efforts include direct outreach to admitted students and their families, continued engagement with high school counselors across Vermont and beyond, and the implementation of “Ask UVM,” described as a one-stop shop for student support. 

Addressing the full structural deficit in a single year is a deliberate choice, the school says. By reducing recurring expenses now, UVM aims to stabilize its base budget and preserve one-time resources for strategic investments in student success, enrollment and retention programs, academic program growth, and research. 

Leadership will forgo annual salary increases this fiscal year as part of the shared effort, the memo said. 

The budget includes a 3.5 percent increase along with a one-time payment of $750 for non-represented colleagues. This tracks with existing commitments to represented employees. Under a recent agreement between UVMSU (UVM Staff United) and university management, both sides accepted a fact-finder’s recommendations calling for 4 percent raises in FY25, 3.75 percent in FY26, and 3.5 percent in FY27. 

Those increases are fully retroactive to July 1, 2024, for eligible employees and prorated for bargaining unit members hired since then.

To help address pay compression, the union agreement also includes annual longevity bonuses: a $500 lump sum upon five years of service, and $750 lump sums upon reaching 10 years and again at 15 years. 

The memo acknowledges the contributions of university employees during this period of constraint. “At the same time, we recognize the extraordinary effort of our valued colleagues as we face this challenge together,” Estey and Jacobs wrote.

Budget reductions will be achieved through a mix of broad and targeted measures, with administrators stressing an intent to avoid broad layoffs. 

Approaches include reviewing vacancies, new hires, management structures, and staffing models to find compensation-related savings; continuing efforts to manage healthcare costs by improving access to primary care, expanding care management, and emphasizing early intervention to reduce reliance on higher-cost services; examining support units to ensure services and structures align with current and changing university needs; asking academic units to develop multi-year plans that confront deficits while pursuing mission-aligned growth, and more.

The school claims it cannot simply reduce its way to long-term sustainability. Rather, a stable financial foundation is needed to support future growth, expand research impact, contribute to Vermont’s economy, and respond more nimbly to ongoing enrollment challenges. 

The university intends to keep advancing its new strategic plan even as it makes these adjustments.

This latest budget message fits a longer pattern of financial and enrollment pressures at UVM. 

In recent years the university has navigated multiple deficit cycles, sometimes using reserves or considering tuition adjustments to bridge gaps. 

Earlier forecasts showed sensitivity to enrollment shortfalls, with tuition dependency amplifying the effects of even modest declines in headcount. The current 7 percent projection, if realized, would represent a meaningful contraction that may test the institution’s ability to maintain program quality and service levels without deeper disruptions or more financial request to the state legislature. 

Enrollment outcomes this summer and into the fall will be closely watched. Even modest improvements in yield or retention could ease some of the projected revenue pressure. 

Yet the underlying demographic trends suggest these issues may remain a feature of UVM’s planning environment for years to come. 

The memo promises ongoing updates to the university community as budget planning progresses and more information becomes available.