Legacy costs handicap UConn and UConn Health Center
Many of us are very proud of the University of Connecticut. From the more than 8,000 students who will graduate in just a few weeks, to the achievements of individual students like UConn’s first Rhodes Scholar, Wanjiku Gatheru, to the hundreds of thousands of patients from every city in the state served by UConn Health, at the 23 NCAA National Championships at UConn. There is a lot to celebrate.
Just last year, UConn’s Paige bueckers was the first freshman to win the John R. Wooden Award for Outstanding Player in College Basketball. Paige’s freshman season was unprecedented, but even she couldn’t compete at this level if she had to wear ten-pound ankle weights in competition – and UConn and UConn Health shouldn’t have to, either.
A critical issue is the government’s unfunded pension and health care liabilities charged to UConn and UConn Health. These legacy costs, not created or controlled by UConn or UConn Health, will cost these public institutions a combined total of $ 283 million over the next three years. While the state covers 100% of the salaries and marginal costs of most employees of other state agencies, UConn and UConn Health must fully fund the salaries and marginal costs of the majority of their employees through fees. tuition and fees, clinical and federal research grant income. .
It is not the “fault” of any individual, institution or generation of leaders. It is a problem that has been building for decades, that many current elected officials recognize and want to solve. We hope they will.
Because it really matters. Let’s count the ways:
· Budget: Without these unfunded legacy costs, neither UConn nor UConn Health would have deficit budgets in the current fiscal year.
· Students: Each year, $ 850 per student is used to reimburse these legacy costs.
· Research: Because of these legacy costs, employee benefit rates for research grants at UConn and UConn Health are about 20% higher than those of its competitors, resulting in a decrease in grants to Connecticut.
Healthcare: UConn Health’s marginal tariffs, due to unfunded legacy state costs, are 46% higher than those of other Connecticut hospitals and providers – costing UConn Health more than $ 50 million per year. No private entity could cover these costs.
The issue of legacy costs is particularly problematic for UConn Health, which has spent the past six years growing its services, cutting expenses by millions of dollars, and increasing patient revenues by an average of 10% per year. These self-generated clinical revenues now represent half of UConn Health’s budget, with tuition fees and other non-state revenues accounting for more than 25% more. Due to steadily increasing financial performance, Pre-COVID, UConn Health would have ended last year ahead of budget, if not for the pandemic. This year, UConn Health was able to achieve over $ 60 million in cost reductions and revenue increases, and without the unfunded legacy state costs, would not have projected a deficit. Due to these unfunded government commitments, however, UConn Health will face an estimated deficit of $ 53.8 million.
Some have suggested that the state simply “sell” UConn Health. This ignores two important facts. The first is that it would not reduce the legacy costs that the state currently charges UConn Health. Rather, it would simply displace, i.e. add, those legacy costs to student tuition fees. It also ignores an even more important fact that UConn Health is of great value to the state. UConn Health is the state’s only public university health system and the only health care system with a mission to educate, create knowledge, and provide access to care to all Connecticut residents, regardless of type. insurance. In particular, UConn Health provides a vital public service to Connecticut residents by providing access to thousands of Medicaid Specialty medical and dental patient visits each year. This vital mission of public access to healthcare is reflected in data that shows UConn Health patients come from each of Connecticut’s 169 cities.
UConn Health’s teaching hospital is integrated with its academic mission and we must be proud that UConn Health is the largest provider of medical and dental graduates in the state of Connecticut. Simply put, UConn Health from an educational, research and clinical care perspective is a public institution with a public service mission of which we can be proud.
Overall, UConn and UConn Health combine for an economic impact of $ 5.3 billion in the state of Connecticut. That figure includes more than $ 277 million in state and local tax revenue and the $ 485 million impact of research firm UConn. They also support more than 25,900 jobs, as well as 2,149 other jobs involved in UConn research. It is a key driver of Connecticut’s economy.
We shouldn’t blindly support UConn or UConn Health, like we support the Huskies on the playing fields. It is fair to review the decisions of the UConn board and administration to ensure that we continue. to get the most out of government investment. In this case however, a fair analysis shows that they do not need a bailout, just a level playing field.
John P. Malfettone is the president of UConn Proud and past president of the UConn Foundation. Denis Nayden is a member of the board of directors of Proud UConn and former UConn board member. UConn Proud is an independent 501 (c) 4 nonprofit, established in 2018, to promote the link between excellence at the University of Connecticut and its impact on the state of Connecticut.
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