Talking about a slew of increasing expenses beyond their control, administrators from many of the state’s public universities made their cases Thursday for state funding increases of more than 10% in the future.
Leaders from the state’s 14 public colleges outlined their needs during public presentations. Several officials pointed to increased costs for providing health care to employees as a primary driver for their requests. Inflation, utilities and insurance hikes were also cited.
“We are being somewhat eaten up by inflationary costs that we can’t control, having to do with everything from technology, insurance, the need to enhance our campus safety and security, the construction cost to take care of deferred maintenance …” said Kelli Shomaker, Auburn University’s chief fiscal officer.
Auburn is requesting a 10% increase in its state appropriation for the 2027 fiscal year.
Several schools noted increased costs for multiple forms of insurance, including for computer-related attacks and losses.
“We are seeing significant increases related to cyber and property insurance,” said Peter Susman, chief administrative officer at the University of South Alabama.
For 2026, higher education, including community colleges, received about $2.5 billion in the $9.9 billion education budget.
Several school leaders acknowledged that their requests were nearly or more than double any expected increase in 2027, but said they wanted to paint a true picture of their needs.
There is a 5.75% cap on how much the education budget can grow in 2027. The cap created by lawmakers keeps spending increases in check so the state doesn’t plan to spend more money than it takes in. If tax receipts exceed the cap, the surplus is put into a series of reserve accounts and any remaining amounts are appropriated at lawmakers’ discretion.
In recent years, strong tax collections have left the state with recurring surpluses, which lawmakers then direct into a separate supplemental appropriation. Between 2021 and 2025, lawmakers allocated nearly $7 billion in supplemental tax revenue from the ETF.
Jim Purcell, Alabama Commission on Higher Education executive director, asked school leaders how they might convince legislators to allocate above what he called an artificial cap.
“We have to make the case, but it’s all about the return on investment,” Alabama State University President and former state senator Quinton Ross said. The Montgomery based school is asking for a 15% increase.
The University of Alabama campuses are asking for an additional 10%. Dana Keith, a senior vice chancellor for the UA system, and others said they hope lawmakers will be aware of how much of their increases are likely to be allocated to health care costs.
Alabama’s educator health insurance plan is facing a $380 million shortfall in 2027 that could compete with teacher pay raises in the state budget.
“Because of the rising cost in the employee benefits that eats into the incremental money that we’re getting every year (and that) we really appreciate, when you continue to drop that cap down, it does kind of strangle the operations and almost forces your hand to increase tuition in order to help offset your recurring costs,” Keith said.
Systemwide, about 22% of UA’s $3.4 billion in revenue in fiscal 2026 comes from state appropriations. Tuition and fees make up 26%.
Several school leaders mentioned the need for pay increases to help retain and recruit faculty and expand enrollment in high-demand fields.
“We can’t keep up with the demand as it relates to engineers,” said Alabama A&M Vice President Carlton Spellman about the needs of major employers in the Huntsville area. The school has broken enrollment records three years in a row.
Nearby Athens State University is asking for an 18% increase, in part to help recruit faculty. It competes with industry in the Huntsville area and the county has one of the lowest unemployment rates in the state.
“We’re looking to recruit the best talent we can for the university … we’re seeing a smaller and smaller pool of applicants,” said Jonathan Craft, the school’s interim vice president for financial affairs.
Performance-based funding
Evan Thornton, the University of North Alabama’s vice president for business and financial affairs, asked about the status of $15 million designated by lawmakers in 2023 for performance-based funding for the schools. Purcell earlier this year said the schools could never come to a consensus on how it should be divided.
The money is still available, Purcell said, and lawmakers will meet next week for the second meeting in a renewed conversation about tying some high education funding to specific metrics.
Jacksonville State University President Don Killingsworth repeated a message he made earlier in the week that universities need to be active in this discussion.
“We need to be at the table to offer some sort of compromise before we are handed something we may not like,” he said Thursday.
He suggested it would be better if schools are judged against their own past performance rather than against other institutions.
Thornton said UNA partners with nearly 100 businesses to help meet their workforce needs and in recent years has had significant increases in education and nursing graduates, two perpetually in-demand fields.
Federal funding cuts
Purcell also asked some institutions about the impact of federal funding cuts this year and if they’re impacting these budget requests.
Spellman at AAMU said the university has seen about $5 million in funding stopped, and more could be halted.
“There have been some conversations that some funding of those funds will be backfilled, but we haven’t received anything official yet,” Spellman said.
Shomaker at Auburn said the cuts will be “a long-range hit.”
“We had over $800 million in research grants that we had already secured when this administration came in, so we’re still working down some of those grants we already have,” Shomaker said. “Where we’re seeing the slowdown is the pipeline for new proposals to be issued by this administration so that our researchers can actually apply for those grants. I do not think we’re going to see that impact on this campus for maybe another year, maybe a little longer.”
It is the responsibility of ACHE to present one higher education funding request to Ivey’s office. The commission will likely vote on that early next month.
Ivey will present her education and General Fund budget recommendations to lawmakers in mid-January when their session begins.