West Virginia University officials have projected that the school’s budget deficit will widen to $45 million next fiscal year after the recent increase in insurance premiums for public employees.

This is $10 million higher than the forecast shared last month during President Gordon Gee’s State of the University Address.

Rob Alsop, vice president for Strategic Initiatives, told faculty Monday that the sudden adjustment was largely due to changes to PEIA by state lawmakers. 

He added that the increase in insurance premiums for public employees was higher than he expected, causing a significant jump in the school’s projected expenses next year.

“I made an incorrect assumption based on everything I’ve heard from the Legislature and folks in Charleston,” Alsop said. 

Last week, the PEIA Finance Board approved a 24% increase in premiums as part of a healthcare plan passed by Gov. Jim Justice and state lawmakers, affecting nearly 230,000 public employees.

According to Alsop, the University pays about 80% of the total cost of PEIA premiums for its employees.

“[PEIA] added several million dollars to that figure to move forward …,” he said. “But that figure is just about our target next year.”

WVU’s deficit could reach $75 million in the next five years, which school officials attribute to declining enrollment and high costs from inflation and wage increases.

As the main source of revenue for the University, enrollment will be the primary factor in the school’s financial future. 

Officials expect enrollment to drop by 5,000 students in the next decade.

"The revenues we're anticipated to get from the students in the market share that we have are not keeping up with the expense structure and the expenses that we have from a people and a supplies perspective of the institution," Alsop said.

To cover the deficit next year, Alsop said the University plans to cut costs by $21 million to make up for lost revenue caused by low enrollment. He added that $24 million of funding from the WVU Foundation will also be allocated as a “one-time effort."

“Given the ability to deploy some unspent endowment [funds], the Foundation is giving us a transition year. But it’s not something that’s permanent,” Alsop said.

Despite proposed tuition increases, he noted the University still expects revenue losses in the coming years.

With that in mind, school officials are preparing to operate as a smaller institution — one with fewer employees and programs.

Alsop and Provost Maryanne Reed provided some updates on these efforts Monday during a Faculty Senate meeting, saying administrators and colleges would be finalizing budget cuts in the next month.

However, a specific timeline and the number of jobs that would be impacted were not shared in the meeting.

“We’ll get you the timelines of information as soon as we can possibly do,” Alsop told faculty members. “I don’t like this not knowing as much as anybody, and we’ll try to get that clarity to you as quickly as we can — for a number of reasons.”

So far, officials have shared that employee reductions could range from not replacing positions due to retirement to reevaluating contracts for nonclassified staff.

Reed said the Provost’s Office would also be taking a “more aggressive approach” to academic transformation, which measures the overall success of degree programs.

Though specifics weren’t shared on which colleges would be impacted, Reed said these efforts could come in the form of combining colleges or academic programs in future years.

She said the Provost’s Office will also be looking at the performance of individual programs, including their research efforts, revenue and enrollment trends.

“So the point is, some of this may happen sooner rather than later. I know there's a desire for certainty. I completely understand that …,” Reed said. “But just know that we're going to move on this expeditiously but also thoughtfully.”