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Midyear budget shows larger surplus; regents debate reserves and warn of FY26–27 shortfalls if one‑time funds lapse
Summary
CSCU’s midyear update raised the projected FY25 surplus to $44.3 million. Regents debated use of roughly $600 million in system reserves and heard a presentation that the governor’s proposed budget would eliminate ARPA one‑time funds, producing projected deficits of $37.4 million in FY26 and $52.9 million in FY27.
The Board of Regents on Feb. 27 adopted a midyear fiscal report that increased the system's projected fiscal‑year 2025 surplus from an earlier estimate of $3.9 million to $44.3 million, driven by $37 million of higher revenues and $3 million of reduced expenditures, system staff said.
Chief Financial Officer Lloyd Blanchard presented the midyear update and a slide summary of how the governor’s proposed budget would affect FY26 and FY27. Blanchard said one‑time funds received in FY25—largely ARPA and other one‑time allocations totaling about $156.4 million—are not repeated in the governor’s proposal. With the governor’s block‑grant increases factored in but without the one‑time funds, the system projects a $37.4 million deficit in FY26 and a $52.9 million deficit in FY27 unless mitigation or new revenue sources are found.
Regents also debated the size and use of system reserves. Multiple speakers described a systemwide reserves balance in the hundreds of millions. One regent summarized reserves at a “round number” of about $600 million; Chancellor Chang provided a more detailed split: roughly $359 million in designated reserves and about $276 million undesignated across the system and system office. The chancellor gave institution‑level snapshots: Central with roughly $118 million in reserves (about $8.6 million undesignated), Eastern about $51 million (about $2.9 million undesignated), Southern about $73.7 million (about $23 million undesignated), Western about $16 million (about $6.7 million undesignated), CT State about $234 million (about $209 million undesignated), Charter Oak about $11.7 million (about $2.5 million undesignated), and the system office with designated reserves of about $106 million and about $23 million undesignated.
Regents and student representatives urged consideration of directing reserves toward student‑facing needs such as food insecurity, accessibility repairs and IT improvements. Others cautioned that reserves may be needed to plug federal funding gaps if one‑time federal funds lapse or if federal policy changes affect funding flows. The board asked committees to review covenants on designated funds, consider prudent reserve levels, and identify student service gaps; the chair asked for committee updates within 30 days.
CFO Blanchard said staff will produce an updated estimate of the FY25 surplus incorporating final spring census numbers and that the finance office will continue to report progress to the board.
