.jpg)
LINCOLN — In 2000, state funding made up a third of the University of Nebraska’s operating budget.
Today, it has shrunk to 19%. Earlier this year, less-than-requested state funding led the NU Board of Regents to adopt $20 million in cuts across the university’s five campuses. The University of Nebraska-Lincoln faces another $27.5 million in cuts to pull itself out of a yearslong structural deficit.
NU Regents also approved an average 5% tuition increase on 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 led to smaller funding bumps for the university, lawmakers, former university leaders and finance experts told the Flatwater Free Press. More recently, Nebraska governors and lawmakers have prioritized tax cuts, leaving less money for things like higher education.
“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 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, UNL faculty senate president. “...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.”
***
State funding is the backbone of the university’s state-aided budget. That’s the combo of tuition and state taxpayer dollars meant to support academics and NU’s public mission.
It’s an unrestricted fund, meaning the university can spend that money where it wants.
“That’s what the Legislature is essentially funding, the ability to teach students,” said Harvey Perlman, former UNL chancellor for 16 years. “Instructional costs have gone up, and the Legislature has not kept up.”
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.
State funding hasn’t kept pace 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 this year, Barnes said, money to pay rising salaries and health care premiums.
One year of inflationary cuts doesn’t have a huge impact, 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 budget. This year: 13.25%.
“That kept forcing us to scrape back at the university,” said Tom Bergquist, retired director of the Legislative Fiscal Office. “When things got tight finance-wise, they were the largest discretionary item.”
As the Legislature felt pulled in different financial directions, the conversations regarding state appropriations evolved.
Perlman, who led UNL from 2000 to 2016, said that in the past, “it was not as negative a tone as I sense today.”
During Kristensen’s time in the Legislature, the university had strong supporters 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 university projects.
“Most of that money has gone away now,” he said.
Recent projects like the proposed Perkins County Canal and a new prison have siphoned money away from the university, lawmakers said. Lowering property taxes has also decreased the amount of money coming into state coffers. This year, the Legislature had to make cuts to balance the budget. The state is currently projected to run a deficit in 2025, 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…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 NU’s request.
Taxpayers shouldn’t be asked to make up for declining enrollment 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.”
***
Earlier this year, the Board of Regents hiked tuition by an average of 5%. Apart from this adjustment, Barnes said, the system has largely tried to avoid raising tuition.
“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 2025, undergraduate resident tuition at UNL tripled from $92 per credit hour to $277. But had tuition kept up with inflation, 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.
UNL charges the lowest tuition in the Big 10, Stark said.
The pressure of keeping tuition affordable is starting to hurt the university, former chancellor Perlman thinks, especially as state funding lags.
“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.”
Revolving funds, endowment dollars and federal funds have grown to replace stagnant growth in state aid.
Money made from student fees and services like 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 NU’s budget. Stark points out that money is nearly all earmarked for a specific purpose. “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 exploded in recent decades as NU and higher education in general 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, though some of those cuts are tied up in court. 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 shift to corporate research projects and philanthropy, Gold said.
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.
“The thing for the Legislature is to understand…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 th
