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LINCOLN — In 2000, state funding made up a third of the University of Nebraska’s operating budget.
Today, that has shrunk to 19% — $699 million of NU’s $3.6 billion total budget.
Earlier this year, a less-than-asked-for state appropriation led the NU Board of Regents to adopt $20 million in cuts across the system. The University of Nebraska-Lincoln faces another $27.5 million in cuts to try and pull itself out of a yearslong structural deficit.
NU Regents also approved an average 5% tuition increase on the university’s five campuses to try to make up for the rising costs and inflation they say state appropriations haven’t kept up with.
“They keep cutting back,” said Jack Stark, an Omaha-area regent. “That’s been a major issue, and why we’ve got the problems going on right now. I don’t see the budget cuts stopping. Our (enrollment) growth is not there, and there’s limitations from the state Legislature.”
Decades of cost increases to other big-ticket items like K-12 education, Medicaid and prisons have all led to smaller funding bumps for the university, a variety of lawmakers, former university chancellors and legislative finance experts told the Flatwater Free Press. More recently, lawmakers prioritized tax cuts, leaving less revenue to pay for the state’s various priorities.
“Do you want us to not fix roads? Or, (if) people are sick and needing food, should we not treat them, not give out food to the poor?” said Sen. Rob Clements, a Republican and chair of the state Appropriations Committee. “There’s priorities that have to be met in the budgeting process, and we have tried to treat everybody fairly.”
As state support wavers, the university is increasingly relying on other, more uncertain and rigid revenue sources while hiking tuition.
“The last couple of years, the discourse at the Legislature has been, ‘Sorry, you have enough money already,’” said John Shrader, president of the faculty senate at UNL. “We’re the bad guys, because we have a $27 million deficit, but frankly, the investment in this campus has not been as high as it needs to be for us to be what they want us to be.”
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State funding is the backbone of the university’s state-aided budget. That is the combination of tuition and state taxpayer dollars meant to support academics and the public service mission of the university.
It’s an unrestricted fund, meaning the university has the flexibility to spend that money where it wants.
“That’s what the Legislature is essentially funding, the ability to teach students and the instructional part of the university,” said Harvey Perlman, former UNL chancellor for 16 years. “Instructional costs have gone up, and the Legislature has not kept up with those increases.”
Twenty-five years ago, the state allocated $388 million to the university — 34% of NU’s total budget and 74% of the state-aided budget.
This year, that funding has grown to $699 million. But that allocation pays for much less — 19% of the total budget and 63% of the state-aided budget.
The dollar figures have mostly gone up year to year.
But state funding hasn’t kept up with inflation for the past two decades, said Anne Barnes, NU’s senior vice president and chief financial officer.
If it had, the university would have another $216 million in state appropriations , Barnes said. That would mean money to keep up with things like rising salaries and health care premiums.
One year of inflationary cuts isn’t a huge impact to the institution, said Doug Kristensen, retired chancellor of the University of Nebraska at Kearney and former speaker of the Nebraska Legislature.
“But if you do it over 20 years, that becomes a huge gap,” Kristensen said. “That’s the reason I think you’re seeing larger reductions … it’s very predictable, where we’re at.”
The university’s share of the state’s overall budget has also gone down.
In 1990, NU accounted for a quarter of the state’s budget. This year, it’s 13.25%, second to the Department of Health and Human Services at 42%. The budgets for K-12 education, Nebraska’s prison system and Medicaid have all ballooned during those decades.
“That kept forcing us to scrape back at the university,” said Tom Bergquist, retired director of the Legislative Fiscal Office. “When things got tight financewise, they were the largest discretionary item.”
As the Legislature felt pulled in different financial directions, the conversations regarding state appropriations evolved.
“The general tone of the conversation was, ‘We wish we could do more, but we can’t,’” said Perlman, who led UNL from 2000 to 2016. “Every once in a while, we were able to convince the Legislature that they ought to put a priority on the university … It was not as negative a tone as I sense today.”
Through Kristensen’s time in the Legislature, the university had strong supporters such as Sen. Jerome Warner looking out for it, he said. Funding increases that didn’t match inflation were viewed as cuts. The Appropriations Committee was more likely to fund special projects the university proposed.
“There were additional monies available in those years, so you could have that conversation,” Kristensen said. “Most of that money has gone away now.”
More recently, projects like the proposed Perkins County Canal and a new prison have siphoned money away from line items like the university, lawmakers said. The goal of lowering property taxes has also decreased the amount of money coming into state coffers. This year, the Legislature had to make cuts across the board to balance the budget. The state is currently projected to run a deficit in 2025 as well, which could require millions more in budget cuts.
Sen. Danielle Conrad, a Lincoln Democrat, said the implications for the future are clear.
“Every time the state doesn’t do its part to fund the university, moms and dads are going to get saddled with higher tuition checks, and students are going to get saddled with higher debt,” Conrad said. “And (fewer) kids are going to seek the university system because we’re pricing it out of reach.”
Clements, who represents Cass County and parts of east Lincoln, pointed out that the University of Nebraska did receive an increase in state aid this year while other agencies were held flat. Initially, Gov. Jim Pillen had proposed a 2% decrease to the university.
The Legislature ended up approving an increase of 1.25% over two years, half of what university officials had asked for.
Taxpayers shouldn’t be asked to make up for declining enrollment rates and increasing overhead costs, Clements said.
“If sales aren’t keeping up, a business probably cuts back somewhere in their expenses,” he said. “I think I would ask the university to increase their enrollment in order to get some more funding.”
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Earlier this year, the Board of Regents increased tuition systemwide by an average of 5%. Apart from this adjustment, Barnes said, the system has largely tried to avoid raising tuition, despite an increase in inflation and despite the fact that peer institutions have repeatedly implemented hikes.
“We don’t like that shifting of financial responsibility,” Barnes said. “But at the end of the day, if we don’t see it in the state piece, there’s certain things that we just have to do.”
From 2000 to 2020, undergraduate resident tuition at UNL rose from $92 per credit hour to $259. Since the end of a pandemic-prompted tuition freeze in 2024, the credit hour cost at UNL rose to $277 this year. Had tuition kept up with inflation since the pandemic, a credit hour would cost $325 for residents.
At the University of Iowa, one credit hour costs $399 for residents. The University of Kansas charges $376.
“We are the lowest in the Big Ten in tuition, and yet every time we go to raise those rates, we’re reminded of how hard that is on families,” Stark said. “We’re trying to be a land grant university and serve all our students, and yet keep it affordable. It’s a balancing act.”
But the pressure of keeping tuition affordable is starting to hurt the university, especially as state funding lags, Perlman said.
“You can’t run an institution with increasing costs by not increasing some revenue source,” Perlman said. “The Board of Regents seems to think it’s politically to their advantage at zero increases. But that has a devastating effect on the total budget of the university.”
The NU System also waives tuition for certain lowincome students, and the state has mandated tuition remissions for veterans and certain public employees, such as firefighters and corrections officers. University leaders estimate that that state mandate costs NU $4 million annually.
“If that’s the public policy of Nebraska, then the Legislature ought to be a partner in that. And they haven’t been,” Perlman said. “Because they’re not funded mandates, they reduce the quality of education for everybody.”
Tuition dollars have more than doubled in 20 years. But as a source of revenue, tuition has only shifted slightly as part of the total budget, decreasing from 12% to 11% in that same span of time. Revolving funds, endowment dollars and federal funds have grown to replace stagnant growth in state aid.
Revolving funds, or money made from student fees or such services as housing and dining, nearly doubled from 2010 to 2025. This money now makes up over a quarter of the university’s total budget, but is limited in how it can be spent.
Trust funds, or philanthropic dollars, are five times as high as they were 25 years ago, and have grown to 18% of the system’s budget.
“That’s all earmarked …” Stark said. “It looks like we have a lot of money when we don’t. It’s tied up.”
A fifth of the budget comes from federal funding, a revenue stream that has exploded in recent decades as NU’s campuses and higher education in general have ramped up research efforts.
In 2000, $167 million in federal funding came into the university. This year, federal funding amounted to $740 million.
But since January, the Trump administration has canceled billions in federal research dollars nationally. Some of those decisions are still tied up in the courts. As of this fall, the university has already lost $88 million in federal research dollars, said University of Nebraska System President Jeffrey Gold. The university could lose as much as $285 million, he said.
That uncertainty has caused the university to start shifting to more corporate research projects and philanthropy, Gold said.
“That leaves us with the opportunity to increase research grants and contracts, which we have done dramatically,” Gold said. “It leaves us with the opportunity to increase philanthropic support to the extent we can in either endowed or expendable funding.”
Gold said that before the current fiscal year, NU had already cut about $130 million in recurring costs out of its budget over the last decade. In the next two years, he estimates another $40 million in cuts will be needed.
Perlman said the Legislature should view the university as an opportunity to invest in Nebraska rather than a burden.
“The thing for the Legislature is to understand the importance of the university, and how the future of Nebraska is tied to its success,” Perlman said. “I think that’s clear that they don’t fully appreciate the importance of these investments.”
