KU Lawrence campus posted $22M loss in fiscal year 2023, but new state funding helped stave off cuts

photo by: Shawn Valverde/Special to the Journal-World

The University of Kansas campus is pictured in this September 2023 aerial photo.

The state of Kansas to the rescue.

That’s not a phrase you hear often in the state’s higher education circles, as a frequent refrain from academic administrators has been about continued declines in state funding for universities.

But 2023 financial statements for the University of Kansas indeed show that the state came to the rescue of the university’s finances after KU saw federal grants — mainly related to the pandemic — drop by $52 million in the fiscal year, which ended in June.

How did KU manage to avoid major cuts to operations as a result? State funding is the largest part of the answer.

KU — including the Lawrence campus and the medical center in Kansas City — received $301 million in state funding in fiscal year 2023, an increase of about $41 million from the prior year. A $19 million increase in gifts to the university also helped, as did a better stock market. KU’s investment portfolio posted $12 million in gains after losing $17 million in fiscal year 2022.

Still, the state was the big deal.

“We would be cutting, we would be cutting again,” Jeff DeWitt, KU’s chief financial officer, said of KU’s predicament if the state hadn’t significantly increased funding.

DeWitt was in Topeka on Wednesday presenting KU’s year-end financial report to a fiscal committee of the Kansas Board of Regents. As part of his presentation, he made sure to thank the governor and the Legislature for the additional state funding. He said the state funding doesn’t solve all the issues facing KU, but it is a huge block to build upon.

“The state funding allowed us to do a strategy to get healthy,” DeWitt said.

That strategy is still very much underway. The 2023 financial statements do serve as a reminder that the idea of a rescue is relative. At the moment, signs of a rescue look stronger on the KU Medical Center campus than on the university’s main campus in Lawrence.

KU’s Lawrence campus had a loss of $22 million in the 2023 fiscal year. But, importantly, that loss didn’t surprise KU leaders. DeWitt has been saying for the last several years that KU’s main operations are facing a structural deficit — its expenses are consistently above its revenues. (Note: Numbers don’t include money for capital and other building projects.)

KU in 2023 used cash reserves to cover that $22 million loss, rather than cutting $22 million worth of payroll or services. The Lawrence campus is budgeted to have a $13 million loss in fiscal year 2024, which also will be covered by cash reserves.

By 2025, the Lawrence campus needs to be at a breakeven point, and on its way to producing more in revenue than it has in expenses. If that doesn’t happen, then the cuts to services will return, DeWitt said. KU is banking on everything from new enrollment initiatives to a business plan to use KU facilities to host conventions and conferences to generate new revenue. It also is revamping many of its purchasing programs in an effort to get greater efficiencies on the expense side of the university.

While it may be hard to classify a $22 million deficit as good news, it largely was in 2023 because that number came in right where DeWitt expected. The better news is that KU’s overall number, which includes the medical center and other divisions, finished better than expected.

Even with the $22 million loss on the Lawrence campus, KU overall posted ordinary revenues that exceeded expenses by $4.4 million. DeWitt had thought the overall operations might post a slight loss.

Kansas Athletics was the only other major KU entity to post a loss. Its expenses exceeded revenues by about $9 million, according to the financial statements. (The numbers don’t include the $75 million in gifts and donations for capital projects, like the football stadium or Allen Fieldhouse. With those numbers Kansas Athletics’ bottom line grew during 2023.)

The KU Medical Center finished the year with $1 million more in revenue than expenses, while KU’s Memorial Union Corporation finished with revenues about $590,000 ahead of expenses. The KU entity that had the largest bottom line, though, was the University of Kansas Center for Research Inc. That entity, which oversees the financial aspects of the research activity on the KU campus, had revenues over expenses of $10 million in 2023.

DeWitt told Regents on Wednesday that KU is on track to eliminate its structural deficit at the Lawrence campus, but continued state funding will be important. He said KU’s budget is based on the Legislature approving Gov. Laura Kelly’s recommended budget for higher education.

DeWitt said he wasn’t yet comfortable predicting whether that recommended budget will hold during the legislative session, as lawmakers are still working on several pieces of legislation.

Other items of note from KU’s fiscal year 2023 financial statements include:

• KU tuition revenue in 2023 totaled $320.3 million, which was down from $323.8 million in 2022.

• Gift revenue in 2023 totaled $90.9 million, up from $71.3 million in 2022.

• Spending on instruction totaled $460 million, up from $425 million in 2022.

• Spending on research totaled $375 million, up from $334 million in 2022.

• Spending related to scholarships and fellowships totaled $23 million, down from $43 million in 2022, when scholarships were elevated due to pandemic-related funding. The $23 million figure was slightly below the 2021 total for scholarships and fellowships, which was $28 million.

• Spending on academic support activities totaled $81 million, up from $67 million in 2022. Much of the increase is related to a realignment of KU’s academic advisers. The university has made significant changes to its advising program as part of an effort to increase the retention of students.


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