Property insurance premiums for the University of Alabama System’s three campuses last year totaled $7.5 million.
This year, they’re $10.6 million, a more than $3 million, 42% increase.
“Rising property insurance is something that here in the last couple of years has become a significant (financial) factor,” Stan Acker, UA’s assistant vice chancellor for finance and administration, said recently. “That’s certainly a rising cost for everybody.”
Acker and leaders from the state’s 13 other public universities and the Alabama Commission on Higher Education recently discussed their fiscal 2025 budget requests.
The ACHE board will vote on a formal funding request for both two-year and four-year institutions at its Dec. 8 meeting. In the current nearly $8.8 billion state education budget, $2.25 billion is dedicated to higher education, including two- and four-year colleges. Lawmakers will begin the 2025 budget process in February when the legislative session begins.
Concerns about increases in insurance premiums, inflation, deferred maintenance and competition with the private sector for faculty and staff were among the themes shared by several officials during last week’s meeting.
Jim Hood, ACHE’s deputy director of financial and information systems, later told Alabama Daily News that property insurance rates are increasing as more frequent natural disasters are requiring insurance companies to pay out more money, especially with rising construction costs and supply chain issues.
“And it’s not only colleges and universities in high-risk areas that see higher premiums as a result,” Hood said. “Coverage costs are increasingly determined by what’s happening nationally. It seems natural disasters happening anywhere are affecting property insurance costs everywhere.”
Property insurance at the University of North Alabama recently increased by 30%, said Evan Thornton, vice president for business and financial affairs.
Also, liability insurance is increasing as more colleges and universities are involved in a growing number of lawsuits, and a growing frequency of cybercrime is another factor putting colleges and universities at risk, Hood said.
Property insurance and risks are already on the minds of some lawmakers. Legislation planned for the upcoming session would require providers to give at least 90-days notice before canceling, reducing or not renewing a property owner’s coverage.
Several school leaders said they need funding increases to help retain and attract faculty and non-classroom staff.
At Alabama A&M in Huntsville, where the labor market is especially tight, Chief Financial Officer Carlton Spellman said retention is an ongoing challenge.
“Even on my business and finance side, I’m having a hard time attracting and retaining accountants,” Spellman said. “We’re competing with industry and they’re snatching them up. They’re snatching up our accountants, our IT personnel, our police officers and, among our professors, our engineers in particular.”
Acker said UA is having the same problem at its three campuses.
“That’s always a challenge right now, finding and keeping people to provide the highest quality education experience for our students,” he said.
At least one school is using vacant positions to save money.
Troy University recently cut 100 empty positions from its budget in a cost-saving measure, Senior Vice Chancellor Jim Bookout said.
Enrollment growth, expenses
Another, happier, trend shared by several universities is growing enrollment.
Auburn University Chief Financial Officer Kelli Shomaker said Auburn and other SEC schools have seen increases in enrollment and students are coming from the Northeast and Western parts of the country. She attributes that to television campaigns during the COVID-19 pandemic.
“Our test scores continue to grow, with every class our ACT scores go up, our GPAs go up,” Shomaker said. “We’re attracting really bright students to Auburn.”
She also said Auburn has seen increases in a lot of expenses, mainly operational, ranging from 8% to 19%.
In Montgomery, Alabama State University saw 2,000 freshmen this year on a campus that can house 1,200.
“We are in desperate need of housing on campus,” ASU President Quinton Ross said. He said the university is looking at public-private partnership options for new housing.
Enrollment of first-year, full-time students at Alabama State University is trending up, said Alondrea Pritchett, interim vice-president for business and finance at Alabama State University.
“As with most institutions, our budget challenges are a result of rising costs,” Pritchett said. Those increases include health care, retirement and other benefits offered to employees.
“Our facilities are constantly depreciating at a rate that is hard to maintain in this economy,” she said.