@Roentgen - CARES act funding drop was $10 million between 2022 and 2023, but there was a corresponding $11 million increase from state appropriation in 2023 and 2024 - funded by MO tax payers. However, it is interesting to note that the budgeted tuition increase of 9% never materialized in 2023, if you look at the projection from 2024 (budgeted net tuition for 2023 was $143 million in 2023 report, but projection for 2023 was $137 million in 2024 report). So outside of state funding, most of the other sources are pretty flat(or negative if you add an average 6% inflation) including patient medical service revenue.
Since most of the operating expense is from salaries and benefits, those are vulnerable to inflation.
From 2024 budget report, discussion on what is driving the expense
Operating Expenses
Overall, UMKC’s operating expenses are projected to increase by 6%. Salaries and wages
are budgeted to increase by 9.3% and include the effect of a 4% performance-based merit
and market raise pool. UMKC has experienced high turnover rates and extended fill rates
for many staff positions and will utilize the raise pool to address market concerns.
From 2024 report on revenue discussion
Moody’s 2023 outlook was revised to negative from stable for the U.S. higher education
sector as operating revenue growth is expected to significantly trail inflation in 2023. High
inflation, a tight labor market, and a return to more normal operations will drive sector
expenses materially higher through the second half of 2023
Revenue growth is expected to be about 2% across the sector and lag inflation.
Institutions heavily reliant on student charges with weak student demand will face the
greatest challenges.
To move the outlook back to stable, Moody’s would need to see revenue growth
matching inflation, improved investment returns, and sound student demand with steady
enrollment.
While growth in revenues is included,
revenues are not keeping pace with inflation and budgets reflect necessary efficiency actions
to manage resources within performance targets.
If inflation remains unchanged and undergraduate enrollment(and corresponding tuition revenue) drops, there is a potential that graduate tuition like med school could continue to raise faster than inflation to support the fixed costs for the university (this scenario is not limited to UMKC, could be any university experiencing drops unless there are additional revenue streams like research grants or patient medical revenue.
If the stock market didn’t perform as well as it did in 2023 and 2024 to increase revenue from investments, it may have caused even more deficits. Private universities with rich endowment could be the beneficiaries here compared to public universities