The University of Louisville board of trustees’ finance committee meets in April 2019. | Photo by Olivia Krauth

The University of Louisville is eyeing a 2.5% tuition and fee increase for the coming school year, officials told trustees Thursday — the maximum increase possible under state law.

In the first look at budget plans for the 2020 fiscal year, Chief Financial Officer Dan Durbin recommended the increase to raise $7.7 million in revenue. The proposed increase amounts to $286 per year for a full-time, in-state student. Out-of-state students would pay an extra $676.

Last year, UofL raised tuition 4% — the maximum allowed in one year under guidance from the Council on Postsecondary Education. However, UofL’s overall increase last year is considered to be 3.5% as the institution cut a student fee, allowing the university to raise tuition 2.5% without hitting CPE’s limit of 6% in increases across two years.

UofL is proposing the increase to help give employees a 2% raise, something President Neeli Bendapudi said is long overdue. Raising salaries, even only a cost-of-living adjustment, can help keep UofL “competitive” and retain talent.

“Are we excited, thrilled to do it? No,” Bendapudi said. “But it’s a necessary evil today.”

Noting UofL’s projected increase is under the national average of 3%, Bendapudi told reporters she hopes to reduce future increases each coming year until tuition is frozen.

The proposed increase would be the largest part of an effort to balance the budget a year after a 5% spending cut to the university’s general fund. Additional “internal savings” would account for $7.6 million in the coming year.

New revenue — $5.7 million in new gifts and $500,000 in state performance funding — also would help balance the budget.

The lone student representative on the board, student government President Jonathan Fuller, did not speak against the increase. Instead, he asked trustees to consider small incremental increases for online courses instead of an 8.7% jump after four years of holding prices steady.

Under that proposal, online courses would see a net increase of $43 per credit hour. The online rate would drop to the in-person rate at $490, but then add a $50 fee per hour.

UofL’s online courses have seen double-digit growth across the last six or seven years, a UofL official told trustees. Increasingly, the school is seeing a shift from face-to-face courses to online, with some students taking both.

Bendapudi said UofL plans to boost financial aid to match the potential tuition increase, but she did not know how much aid would increase. For the 2018-19 year, UofL raised financial aid 4% to match the 4% increase.

Durbin noted that even with the increases, UofL would not be the most expensive public school in Kentucky. UofL ranks third behind Eastern Kentucky and the University of Kentucky, based on the current cost of attendance for resident students.

UofL’s $1.2 billion budget is split into two pots: The general fund, which includes tuition, and the non-general fund, which includes athletics and clinical revenue. The latter covers over half of the total revenue stream for the university.

Tuition and fees make up nearly two-thirds of the general fund. State appropriations, which have decreased for years, cover about 25% of the general fund.

Trustees will revisit the budget in a workshop on May 13 before a final vote in June. A budget must be passed by June 30.