OFFICE OF FISCAL ANALYSIS
Legislative Office Building, Room 5200
Hartford, CT 06106 (860) 240-0200
http://www.cga.ct.gov/ofa
SB-996
AN ACT CONCERNING FUNDRAISING BY THE FOUNDATION OF
THE UNIVERSITY OF CONNECTICUT.
Primary Analyst: JS 3/25/21
Contributing Analyst(s):
Reviewer: SB
OFA Fiscal Note
State Impact:
Agency Affected Fund-Effect FY 22 $ FY 23 $
UConn Various - Cost 1 million 1 million
Note: Various=Various
Municipal Impact: None
Explanation
The bill, which would prevent the University of Connecticut
(UConn) from reducing its support to the university's foundation
under certain conditions, results in a cost to UConn of $1 million in
each of FY 22 and FY 23. The bill's cost to UConn is a revenue gain of
the same amount to UConn's foundation, which is not a state entity.
Under current law, UConn is required to decrease its support to the
foundation by $1 million in the next fiscal year whenever the
endowment value has equaled or exceeded $500 million on January 1.
This is the first step of statutory schedule that would gradually
decrease UConn support to the foundation as the endowment value
rises. The reduction would take effect in FY 22 because the
endowment value on January 1, 2021 reached approximately $517.8
million, according to UConn. The lowered cost would be a savings to
UConn. In recent years, UConn's support to the foundation has been
slightly less than half of the foundation's total operating revenue.
The bill prevents the decrease in support in the new biennium,
thereby generating a $1 million annual cost to UConn, by imposing a 2021SB-00996-R000195-FN.DOCX Page 2 of 2
new condition that will not be met in FY 22 or FY 23. The bill specifies
that in order for UConn to be required to reduce its support, the two-
year average of total gifts and commitments generated by the
foundation (over the two prior fiscal years) must be less than five times
the average UConn support to the foundation for the same years. For
FY 20 and FY 21, average UConn support to the foundation
(approximately $12.2 million) multiplied by five results in a threshold
of nearly $60.8 million. The annual average of total gifts and
commitments for FY 20 and FY 21 is expected to far exceed this
threshold, based on data from FY 20 and other recent years. Therefore,
the bill's condition will not be met, and consequently UConn support
to the foundation will not decline, in FY 22. It is similarly anticipated
the condition will not be met in FY 23
The Out Years
The annualized ongoing fiscal impact identified above would
continue into the future subject to changes in the support UConn
provides to the foundation, total gifts and commitments generated by
the foundation, and the endowment value.