University regents approve fiscal 2026 budget that cuts spending, raises tuition and fees
The "M Circle" on the campus of the University of Maryland, College Park. (Photo by Sam Gauntt/Maryland Matters)
The University System of Maryland's Board of Regents voted Friday to approve a fiscal 2026 budget that is 7% smaller than last year's allocation, as well as tuition increases of up to 5% and fee hikes up to 10%.
The almost $8 billion budget, already approved by Gov. Wes Moore and the General Assembly, will trim operating costs while aiming to increase revenue to make up for $155 million in reduced funding. These reductions follow an almost 4% cut to the University System last year.
'At this extraordinary time, our universities must make some difficult decisions as they close their budget gaps,' University System Chancellor Jay Perman said Friday.
On Thursday, Perman took the unusual step of sending a video message to more than 40,000 faculty and staff members across the system, apologizing for the coming budget cuts but telling staff to brace for them. He replayed that video for the board on Friday.
While university administrators will first seek to generate new revenue and will protect employees from cuts as much as possible, the 'sheer size of the cut we're absorbing means that, for some universities, personnel actions cannot be taken off the table,' Perman said in the video.
At their previous meeting in May, the regents approved a resolution that allows presidents of individual campuses to implement furloughs and temporary salary reductions as part of their budget plans.
Universities told they should brace for the coming year's 7% budget cut
Senior Vice Chancellor for Administration and Finance Ellen Herbst said 60% of the system's operating costs are personnel-related. Two-thirds of the system's employees are funded by state support, Herbst said, while about a quarter are funded by federal grants and contracts.
She said though universities are looking to low-impact actions to address personnel costs first, such as eliminating vacancies and allowing 'natural attrition' to reduce payrolls, those actions alone may not be enough.
'We will take these actions with great care, but we will need to take some further actions,' Herbst said. 'We cannot address the shortfall in state funding without addressing personnel costs.'
Patrick Moran, president of the American Federation of State, County and Municipal Employees Maryland Council 3, which represents more than 6,000 University System employees, said the union and system need to work together to defend their shared values and protect employees as they face 'very real and critical threats.' Moran said the system must evaluate its use of costly vendors, reduce reliance on contractual employees, and listen to feedback from staff on how things can be better run.
'All of these things can be done before deciding to make devastating cuts to your personnel, especially those on the front lines,' he said.
Katherine Wasdin, a representative of the University of Maryland, College Park's American Association of University Professors chapter, expressed the importance of shared governance as the system makes its budget decisions.
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'Faculty and university senates must be involved in making these difficult budgetary decisions, as well as in how to respond to changing federal policies on education and research,' Wasdin, an associate professor of classics, said. 'It is thus imperative that all parts of the USM system promote the involvement of faculty in university management, rather than trying to thwart it.'
Under the budget plan, the University System will receive 29% of its funding from state appropriations, while 27% will come from tuition and fees. The next largest contribution comes from restricted funds, which consist mostly of federal contracts and grants, and will cover about 24% of the budget.
In addition to the reduction in state funding, the system estimates that the federal government's significant cuts to research grants and contracts could cost up to $150 million across its campuses, Herbst said.
To increase revenue to offset the losses in funding, tuition will increase across the system by 2-4% for in-state residents. The University of Maryland, College Park will see the highest increase at 4%, while the rest will see increases of 3% or less.
Tuition for nonresident undergrads will increase by 5% at Towson and UMBC, and 2% at the system's other institutions.
Regents committee calls for OK of $69 million for time to pull back spun-off businesses
Student fees, such as housing, dining and parking, will see bigger increases. Housing will see increases from 2% at Towson to 10% at Bowie State University, while board fee increases range from 2.2% at Salisbury University to 10.5% at College Park.
Bowie State University and the College Park campus will also raise parking fees by 3.8% and 5%, respectively.
The regents also voted Friday to approve extending the University of Maryland Global Campus's contract with UMGC Ventures, the university's former in-house information technology services unit which it turned into an independent business.
The online university will spend $69 million on the 18-month contract extension while it works to reintegrate Ventures and AccelerEd, a subsidiary of Ventures, back into the university. The reintegration comes after an August 2024 audit from the state's Office of Legislative Audits that found the spin-offs were too costly and appeared to bypass the school's normal procedures.
Herbst said that staff across the University System are continuously drawing up contingency plans for budget scenarios they could face later in the year, such as lower-than-expected enrollment, further federal funding cuts or change to eligibility for federal financial aid.
Pell Grants, the system's largest source of financial aid, covered more than $204 million in aid for about 45,000 students in fiscal 2024. More than 58,000 students in total received some form of federal student aid, Herbst added, and any significant eligibility changes could potentially impact enrollment numbers.
'All we know for sure about budgets is they're simply a plan, and then the year starts and we have to actually manage,' she said. 'This year will probably prove to be more challenging than many.'
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