Message Archive
February 11, 2008
Strengthening UConn’s Value to Connecticut through Additional State Investment 2008 Legislative Priorities
UConn has a significant positive impact on the lives of
increasing numbers of high achieving students, and as a result,
on Connecticut’s economy. First and foremost, the University is
reversing Connecticut’s brain drain. We are producing a talented
workforce, graduating a range of professionals including
doctors, dentists, nurses, engineers, teachers, lawyers,
pharmacists and scientists, who contribute daily to
Connecticut’s economy. Nationally renowned research activities,
including stem cell, fuel cell and nanotechnology research, the
technology incubator programs and the University’s work in
training the next generation of entrepreneurs is growing and
strengthening industry in the region. Through UConn, including
the UConn Health Center, our strong research activities
translate into attracting and retaining bright and highly
skilled researchers who work and live in communities across the
state.
A major component of the UConn contribution to the state’s
economy is the UConn Health Center (UCHC). Founded in 1961, the
UCHC is a unique entity within state government. It is the only
public academic medical center in the state, one of 9 in New
England and one of 125 across the country. The UCHC’s primary
mission is education and research and is comprised of the School
of Medicine, School of Dental Medicine and Graduate School in
bio medical sciences. Researchers conduct more than $90 million
per year of innovative basic science, clinical, epidemiological
and biobehavioral sciences that are translated into advances in
patient care, including ovarian cancer vaccines, hormone
therapies for osteoporosis and stem cell research. The UCHC is
host to more than 600 residents in training every year who
practice and train in local hospitals. The UCHC includes the
state’s only public hospital, John Dempsey Hospital (JDH), and
its faculty practice, the UConn Medical Group. Because of its
unique mission of education and research and translating that
research to quality clinical care, the UCHC is a unique state
asset, providing services that are distinct from any community
hospital in the state.
The tremendous state investment of the UCONN 2000 and the
21st Century programs has helped propel the University of
Connecticut to become the top-ranked public university in New
England and a source of pride to the citizens of Connecticut who
made it possible. UConn has constructed or significantly
renovated scores of facilities, creating a statewide campus
whose architecture has won numerous awards and whose physical
improvement is keeping high achieving Connecticut students
in-state for college. The UCHC has also begun to reap the
benefits of the state’s critical investment in infrastructure.
While the construction program has not been without its
challenges, the University has a new construction management
team in place that is implementing a corrective action plan and
embracing the new accountability and oversight measures adopted
into law earlier this year.
The results of UCONN 2000 are not just physical. Since the
program began in 1995, not only has the size of our student body
increased, so has the quality and diversity of our student body.
From 1996 to fall 2007, average SAT scores for Storrs freshmen
increased from 1113 to 1192. From fall 1995 to fall 2007,
minority freshman enrollment increased by 100%. And this fall’s
Storrs freshman class included 143 valedictorians and
salutatorians bringing the total since 1995 to 928 at all
campuses. Further, there has been a near-tripling in private
support, and a near-doubling of externally funded research.
Dramatically improved infrastructure is not enough, however,
for UConn to remain on its trajectory toward national
leadership. The state must invest significantly in the operating
budgets of the Storrs-based programs and the Health Center so
that attracting outstanding students and recruiting and
retaining excellent faculty can continue. U.S. News and World
Report now ranks UConn 24th among all public universities in the
country, yet our goal is to be in the top 20. Additional
resources are needed to make that goal a reality. Funding is
also vital to ensuring that UConn can expand its critical role
in helping Connecticut as it builds a knowledge economy that
will keep and attract industry to the region during the next
century. A report issued by the Connecticut Economic Resource
Center in 2005 indicated that Connecticut has had no net job
growth in the last 15 years and no discernable business growth
in the last 10 years. Increasing support for the technology
transfer and commercialization of University research could
reverse these trends.
To get UConn in the top 20 and keep Connecticut thriving,
investment and attention is needed in the following key areas
which will be explained in greater detail below:
- Maintaining Current Services funding for the Storrs-based
programs and the Health Center.
- Obtaining Deficiency Funding as may be necessary at the
Health Center’s John Dempsey Hospital
- Securing Funding to Address the Disparity in Fringe Benefit
Costs at the John Dempsey Hospital
- Considering the results of the legislatively mandated study
on the UCHC Clinical Facilities Plan as prepared by the
Connecticut Academy of Science and Engineering (CASE) to address
the long term problem at the John Dempsey Hospital
- Funding for additional faculty.
- Maintain and increase funding for eminent faculty
researchers to spark economic growth.
- Maintain funding for the Center for Entrepreneurship
- Restoration of the Endowment Matching Grant Program by to
reinstituting incentives for private giving that have made
UConn’s fundraising efforts so successful and have lead to
increased scholarships, endowed chairs and academic quality at
the University.
- Secure funding to expand UConn’s Nanotechnology
infrastructure.
Current Services Funding for the University and the Health
Center
First and foremost, State support for the Storrs-based
programs and the Health Center must be at a level that maintains
current services. Since 1991, the state share of the
University’s total operating budget has diminished from 50% to
35% for the Storrs and regional campuses. At the Health Center,
state support went from 20% in 1991 to 16.2% in 2006 to 18.2% in
2008. In order to maintain and improve the academic experience
for students at UConn, continued current services funding is
essential.
Maintaining Current Services Funding at the University of
Connecticut Health Center (UCHC)
During the 2007 Legislative Session, we shared with you the
many financial challenges facing the UCHC. To remind you, the
fiscal year ending 2006 was the most financially challenging for
the UCHC since 2000, when the state legislature supported a
one-time appropriation to address the John Dempsey Hospital
(JDH) deficit and additional funding to support biomedical
research activities at the UCHC. With that financial assistance
we were asked to focus programs and pursue operational
efficiencies. Since 2000, we achieved $78 million in cost
reductions and revenue enhancements. During that time, the
hospital turned around financially and became the only profit
center at the UCHC. However the revenues generated by the
hospital were needed to subsidize the education and research
programs. As a result, JDH had to forego fully funding
depreciation and pursing capital reinvestment opportunities.
Also, during the 2002 to 2007 time period, state funding for the
teaching and research missions at the UCHC remained flat (state
support, the mainstay of the academic enterprise, saw a total
annual rate of increase of only 0.8%). As a result, from 2002 to
2006, it was the positive profit margin at the JDH that
subsidized the teaching and research arms of the UCHC enterprise
to the tune of $19.3 million in total. The hospital, at
capacity, and suffering from the same low reimbursement
structure that plagues hospitals statewide, in 2007 was no
longer in a position to subsidize the “academic gap” (the
difference between the costs associated with the research and
education enterprise and the revenues received for that
purpose).
The General Assembly recognized this challenge and responded
by providing the necessary funding to fill the Academic Gap in
both FY 08 and FY 09. This recognition and support of funds is
critical to the financial stability of the Schools of Medicine
and Dental Medicine and our research operation, because our
hospital is no longer able to provide support for the academic
program. This funding must be maintained.
Obtaining Deficiency Funding as may be necessary at the UCHC
The UCHC budget for FY 08 is $713 million. The State of
Connecticut remains a significant resource, providing
approximately 18.2% of our total budget. State support has
traditionally been used exclusively to fund education and
research, not clinical activity. The remaining 81.8% in revenues
is generated from non-state sources (clinical revenue, research
grants, tuition and fees, philanthropy and outside contracts).
As we discussed last year with the General Assembly, the
hospital faces a long term structural problem. It is very small,
has a disproportionately low number of medical/surgical beds,
suffers from the same low reimbursement rates as other hospitals
statewide, has a unique cost structure by virtue of its status
as a state entity and, as part if its public-service mission,
provides a number of valuable medical services, including
neonatal intensive care, inpatient psychiatry and dental clinics
that unfortunately are reimbursed at a fraction of actual cost.
The General Assembly recognized that there is a long-term
problem at JDH that demands a long-term solution, and
commissioned a study by CASE (The Connecticut Academy of Science
and Engineering), which is nearing completion. The legislatively
mandated study will analyze the UCHC clinical facilities plan,
needs of the Medical and Dental Schools, as well as the impact
on area hospitals and the region’s economy.
We knew that, given the structural financial problem at the
hospital, FY 08, FY 09 and beyond would not be easy. This
assumption has proven correct. The UCHC is facing another
deficit. As of December 2007, the UCHC was facing a deficit of
$10.3 million year-to-date. The key driver of the deficit is the
hospital, and with only 108 medical/surgical beds it is
impossible to break even in the current healthcare environment,
particularly with state fringe benefits. Although the General
Assembly appropriated significant increases in Medicaid, the
distribution formula adopted by DSS provides virtually no relief
to UConn. While the statewide hospital average of Medicaid
increases is at 20%, JDH will only receive a 2% rate increase.
Our present year end forecast estimates a deficiency at
approximately $22 million.
We are doing everything we can to save money without
sacrificing revenue streams. We have secured the assistance of
PriceWaterhouseCoopers in this regard, but even they
acknowledged that the low hanging fruit is gone with the cost
containment revenue enhancement efforts of the last eight years.
We ask the General Assembly to fund the likely deficiency and
maintain the integrity of the Schools and clinical operations
that support its education and research missions, while the CASE
recommendations provide the blueprint for the structural change
necessary to achieve a stable future.
Securing Funding to Address Disparity in Fringe Benefit Costs
at the John Dempsey Hospital
It is important to note that while there has traditionally
been no state support in the hospital, JDH pays state fringe
benefit rates and participates in collective bargaining and
statewide labor contracts by virtue of its public status. As a
state entity, JDH has fringe rates significantly higher than
other hospitals. For FY 06, the state fringe rate was 37.11 %,
the CHA member average was 28.93%, and the dollar value
difference between our fringe benefit rate and the CHA member
average for the year was $6.3 million. The ’07 and ’08 state
fringe benefit rate exceeds 40%. JDH has to support the cost of
fringe benefits for its employees from clinical revenues.
Last session, the General Assembly for the first time,
recognized the burden placed on the hospital and budgeted for
the State Comptroller to pay from her fringe benefit account, up
to $3.6 million of the fringe benefit costs for JDH employees
who are members of a state-wide bargaining unit. We ask that
this funding be maintained and increased by $7.4 million to
cover the full disparity in fringe benefit costs at the JDH,
estimated at $11 million for FY 09.
Clinical Facilities Plan at the UCHC
The John Dempsey Hospital (JDH) opened in 1975 and is the
state’s only public university acute care hospital. It has had
no major renovations or upgrades in its physical plant since it
opened over 30 years ago. At 224 fully staffed and licensed
beds, 116 are very specialized (Neo-Natal, Prison, Psychiatry,
Maternity), leaving only 108 medical/surgical (flexible) beds.
The second smallest academic health center hospital in the
United States, JDH is undersized, outdated and inadequate to
accommodate today’s evolving standards of care, technologies and
patient/provider expectations throughout the institution,
including operating rooms, inpatient rooms, neo-natal intensive
care unit, outpatient diagnostic and treatment areas and support
spaces. Demand for our services continues to grow: admissions,
bed occupancy rates, and outpatient visits as well as emergency
room, radiology and rehab visits, have been on a steady incline.
With necessary and significant state support in 2000 and 2001
and a University promise to improve operating results, the John
Dempsey Hospital saw profits from 2002-2006 because of increases
in patient volumes, expense management and revenue enhancements.
Financial stability is now stymied by physical constraints. We
must move on a long-term solution, because today’s financial
losses will only worsen. The University’s new President, Michael
J. Hogan, is considering a host of options with the region’s
hospitals to find a solution, provided it contributes to
building the quality of the Schools of Medicine and Dental
Medicine. The strength of these schools, both in academics and
research, is critical to the University’s growing national
stature and to Connecticut’s economic development and healthcare
delivery system. The State University hospital exists because of
the schools and the research enterprise, but the status quo on
hospital space is not sufficient to maintain the financial and
service status quo. Equally compelling is our importance to the
area’s citizens, who count on UCHC for care, and to the region’s
other hospitals, who depend on us for the interns and residents
who staff their facilities as well as our ability to help
attract and retain high quality physicians and other health
professionals to the region and state. A long-term solution is
needed.
We believe the framework for a solution will come from the
CASE study. We look forward to its recommendations and the
opportunity for a complete dialogue regarding the future of the
UCHC clinical facilities and the structural challenges facing
the Health Center.
Funding for Additional Faculty to Meet Increased Enrollment
The University is requesting an additional $5.2 million in FY
09 in above current services funding to hire additional faculty
to meet the academic needs of an ever-increasing student body.
Undergraduate enrollment has increased by roughly 6,000 students
since 1995 – from 14,667 students in 1995 to 20,846 today.
During this same period, total enrollment in all programs
increased from 22,973 to 28,677.
The University’s planned enrollment increase has
understandably been a challenge. Our student to faculty ratio
(based on the U.S. News &World Report formula) increased from
14:1 in 1995 to a high of 18:1 in 2003 following the state’s
Early Retirement Incentive Program (ERIP). The ratio is
currently 17:1. However, our goal is to achieve a student to
faculty ratio of 15:1, similar to the ratios that exist at our
peer institutions. To reach this goal, UConn would need to hire
an additional 175 positions over the next five years. The hires
would be made in areas that respond to student demand, offer
greatest research opportunity and tie to the state’s economic
development. The initial positions would be in the fields that
conformed to the state’s workforce needs, namely science,
technology and financial services. All new hires would be active
in both instruction and research.
We need to continue to enrich the educational experience of
our students and, equally important, strengthen our research and
scholarly activity. The University’s plan to increase full-time
faculty is designed to achieve four goals: enhance the quality
of the student experience, further the state’s economic growth
through research and workforce development, solidify the
University’s growing national reputation, and maximize the
investment of parents and all taxpayers by ensuring that
undergraduate students can graduate in four years.
The University of Connecticut’s role as the State’s public
research university imposes a special responsibility. Our
faculty not only convey knowledge in the classroom or lab; they
also generate new knowledge, contributing to the quality of life
and economic development of the state and the intellectual
vitality of our own institution. Strategic choices in faculty
hiring will also generate more grant income which will, in turn,
enable the University to invest more in the research enterprise.
New facilities, private endowments and excellent new hires have
led to a growth in Storrs-based research awards from $53.4
million in FY ’95 to $91.7 million in FY ’06. Though impressive,
this amount of funded research falls short when compared to our
peers. The level of research funding is important for two
reasons. First, it stands as a proxy for the degree of advanced
scholarly activity on campus. Second, and more concretely,
research funding provides the non-State resources that also
serve to enhance the academic program.
Equally important, our proposed increase in instructional
capacity will help ensure that our undergraduate students
graduate in four years as a matter of course. While our
undergraduate students at Storrs on average graduate in 4.3
years compared to our 58 Public Research Peers’ average of 4.5,
and our 6 year graduation rate is very high among the nation’s
public universities, the goal for almost all of our
undergraduate students should be completing a degree in four
years. Facilitating timely degree attainment will make better
use of state operating and capital resources, enable more
students to take advantage of a UConn education—and, not
insignificantly, save parents and students the costs associated
with the need for an extra semester or more. This should make
UConn’s already competitive price an even bigger value for
Connecticut parents.
Maintain and Increase Funding to Attract Eminent Faculty
Researchers & Spark Economic Growth
In today’s increasingly competitive global marketplace,
Connecticut will only continue to prosper if it continues to
support university research, innovation, and technology
transfer. Following in the footsteps of other states like South
Carolina and Georgia, which have made significant state
investments in these economic development activities,
Connecticut began the Eminent Faculty program in 2006 after the
passage of the 21st Century Jobs legislation.
The Eminent Faculty program was established to attract
faculty skilled in commercialization and technology transfer to
UConn to promote economic development. $2 million was
appropriated in both FY 07 and FY 09 to support the first
Eminent Faculty research team. After an internal competition,
the University made the very prudent, but difficult decision to
commit all available funding to a sustainable energy, including
fuel cell research team given the strength of the University’s
Global Fuel Cell Center and the industry interest in the state.
Due to generous corporate support from UTC-Power, the Northeast
Utilities Foundation and Fuel Cell Energy, a $2 million industry
match has been raised. Combined with the state funding, the
industry support will allow UConn to recruit world-class
researchers and additional faculty members with expertise in the
area of sustainable energy, especially fuel cells.
However, one Eminent Faculty research team is not sufficient
to promote long-term economic growth across a variety of
industries in our region. It is for this reason that the
University is requesting an additional $4 million in funding to
support a second Eminent Faculty Research team. In fact, the
Office of Workforce Competitiveness has recommended in its draft
report entitled “Investing in Institutionally-Based, Shared Use
Nanotechnology Facilities for Research, Education and Product
Development” that the University be given an additional $4
million to attract an Eminent Faculty team in Nanotechnology to
bolster Connecticut’s economic development in this important
industry.
It is critical to maintain and increase funding for this
program to enable the University to enhance existing research
strengths and expand our commercialization efforts.
Maintain Funding for the Center for Entrepreneurship and
Innovation
The Center for Entrepreneurship and Innovation (CCEI) was
established in 2006 when the 21st Century Jobs Bill was enacted
and funding was provided in the state budget. Created as a
partnership between UConn’s Schools of Business and Law, the
CCEI is already providing a pipeline of talented, knowledgeable,
and skilled entrepreneurs to the State’s economy. The Center
facilitates the development of technology businesses in
Connecticut and enhances Connecticut’s business climate by
helping new as well as existing companies solve the complex
business and legal problems they often face upon a project’s
start-up. Since the Center opened for business in January 2007,
more than 130 companies, from a wide range of industries, have
received assistance, with an additional 45 scheduled for the
coming Spring. And the School of Business now offers expanded
curricular concentrations in entrepreneurship at the
undergraduate, MBA, and doctoral level, while the School of Law
now offers a clinical course as well as an advanced fieldwork
course in intellectual property law.
Restoring the Endowment Matching Grant Program
The endowment state matching grant program at the University
began in 1995 and has been a valuable inducement to UConn
donors. The program has helped the University increase its
endowment from $50 million in 1995 to nearly $336 million today.
Unfortunately, in 2004 the state significantly scaled back
the extremely successful Endowment State Matching Grant program
to the point where the public colleges and universities could no
longer use the state match as an incentive for donors to
contribute to their endowments. The amendments enacted in 2004
prohibit the release of any state match for privately raised
endowed funds until the State’s Rainy Fund reaches 10% of the
General Fund budget. Currently the Rainy Day Fund level is $1.38
billion and it would need to be increased to $1.63 billion in
order for the state match to be released. With no certainty as
to whether or when the trigger amount would be achieved, the
program has been rendered useless to the public colleges and
universities as a reliable incentive for prospective donors. In
fact, the UConn Foundation has discontinued communicating to
donors about the expectation of receiving the state match and
the Foundation’s independent auditors will no longer permit it
to recognize the amount due from the State under this program as
an Accounts Receivable on our balance sheet.
Clearly, the Rainy Day Fund trigger needs to be eliminated so
that donors have an incentive to invest particularly since the
UConn Foundation is in the beginning stages of launching a new
major capital campaign. The success of the upcoming campaign is
vitally important to the University’s goal of becoming one of
the top 20 public research universities in the United States.
While the University has seen dramatic growth in its endowment
over the past 12 years – due in large part to the prior success
of the matching grant program – UConn’s level of endowment is
substantially below all other public research universities
currently ranked in the top 25 by U.S. News and World Report.
Currently, UConn is the only university in the top 25 that is
reporting less than $1 billion in endowment at present.
The state endowment matching program has proven to be an
effective incentive program and the University requests that the
Rainy Day Fund Trigger be removed.
Securing Funding to Expand UConn’s Nanotechnology
Infrastructure
The Connecticut Advisory Council on Nanotechnology identifies
nanotechnology as “critical to the future competitiveness of
Connecticut’s diverse manufacturing sectors – from aerospace to
advanced materials to fuel cells to pharmaceuticals and
biotechnology.” UConn is well poised to ensure that
Connecticut’s industrial base is not left behind in this
important field. Across its Storrs and Health Center campuses
there are nearly 80 faculty members actively engaged in funded
nanotechnology research and more than $25 million in funded
nanotech research over the past three years, involving a broad
range of nanotechnology areas from functional and structural
materials, optoelectronic and photonicnanosized devices to
biologically-related nanostructured materials and devices to
nanomedicine. Additionally, the University has amassed a
nanotechnology infrastructure of advanced instrumentation, cell
modeling capabilities and clean room facilities valued at more
than $38 million. [1]
Much more investment is needed, however, for Connecticut to
maintain its competitiveness in this rapidly evolving field. In
its draft report entitled, “Investing in Institutionally-Based,
Shared Use Nanotechnology Facilities for Research, Education and
Product Development,” Connecticut’s Office of Workforce
Competitiveness calls for an investment in equipment of $10.2
million and $8.75 million ($1.75 million a year for five years)
in technical support staff at UConn. This investment would allow
for the purchase of state-of-the-art instrumentation critical to
the manufacturing sector and provide technical staff to make the
instrumentation available to industry, researchers, faculty and
students.
[1] Office of Workforce Competitiveness Report entitled
“Investing in Institutionally-Based, Shared Use Nanotechnology
Facilities for Research, Education and Product Development
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