At a committee hearing in Tallahassee, the Appropriations Committee on Higher Education heard university finance chiefs and State University System Chancellor Ray Rodriguez describe wages and benefits, health insurance and retirement costs as the largest, recurring cost drivers and urged changes to how the state funds its universities.

Chancellor Ray Rodriguez, who leads the State University System, told the panel the system’s general‑fund base rose from about $1.7 billion in fiscal 2012‑13 to $4.7 billion in the most recent year, an increase of roughly $3.0 billion. He said much of the growth covered rising employer costs: “Our payment to the state insurance plan for health insurance from all of our universities has increased $643,000,000 during that 12 year period,” and contributions to the Florida Retirement System “have increased $524,000,000.”

The chancellor also defended Florida’s shift from enrollment‑based to performance‑based funding in 2013 as a driver of student success: “We went away from an enrollment based funding and rolled out performance based funding,” he said, adding that the model improved accountability and helped push system graduation and retention rates above national averages.

Why it matters: Committee members are weighing whether to revise the state’s funding model, how to treat nonrecurring appropriations, and whether to give universities more flexibility to set out‑of‑state and professional program tuition. Those decisions affect campus budgets, long‑range planning and resident affordability.

Major cost drivers and campus examples

Florida State University Chief Financial Officer Kyle Clark said education and general (E&G) wages and benefits are the largest line item at FSU: “the first category and the largest category are, wages, and benefits, which total around 71% of our total, expenses for education general funds.” Clark said fringe benefits for FY 24‑25 averaged about 35% of base pay. Clark also provided a breakdown of other E&G categories at FSU: equipment and supplies about 6%, financial aid about 5%, professional services about 4%, utilities about 3%, IT about 3% and repairs and maintenance about 2%.

University of Florida Chief Financial Officer Nick Kozloff said UF’s research scale and land‑grant responsibilities add unique costs: “for every dollar of both direct and indirect research funding we get, we as a university invest about 50¢ of our own money.” Kozloff also noted UF Health is a major component unit for UF, explaining that “that is mostly our UF Health enterprise… there are about $6,000,000,000 of our $10,000,000,000 operating expenses.”

Other university finance officers echoed those themes and added nuance. Gerald Hector, CFO at the University of Central Florida, said geography and institutional strategy (for example UCF’s push to expand engineering) shape cost profiles. Scott Bennett of the University of North Florida and Jason Iraff of Florida Atlantic University described growth plans and local cost pressures such as high South Florida living costs.

Revenue mix beyond state appropriations

University leaders outlined a layered revenue picture beyond appropriations and tuition: auxiliaries (housing, parking, athletics), restricted sponsored research grants, capital projects and component units such as foundations and health enterprises. Clark said restricted funds at FSU make up about 20% of overall funding and component units about 5%; Kozloff stressed UF Health’s share of UF’s operating scale.

Chancellor Rodriguez and CFOs cautioned that many of those revenues are contractually restricted or pledged to debt service (e.g., parking garages) and cannot be repurposed freely.

Concerns about funding structure and nonrecurring dollars

Speakers repeatedly raised the effects of large nonrecurring appropriations and unfunded mandates. Bennett and others said episodic, nonrecurring funds complicate long‑range planning. Clark noted deferred maintenance and plant operation gaps, saying maintenance funding has been inconsistent and that “without proper maintenance funding, universities face significant deferred maintenance backlogs, leading to higher long term costs.”

Clark gave a campus example of unfunded or foregone revenue and waiver impacts at FSU, listing a set of waivers and costs and concluding that the combination “you get $56,000,000 in unfunded mandates to the institution.” Rebecca Brown, CFO at Florida A&M University (FAMU), emphasized student‑success gains under the performance‑based model but said FAMU’s Pell access rate fell from 65% to 56.1% even as other outcome metrics rose.

Audit and governance questions

Senator Smith asked whether the Board of Governors had proposed rules to rein in excessive spending tied to charter flights or consulting contracts that had drawn press coverage. Chancellor Rodriguez said internal audit at campuses identified problems before the Auditor General’s report and noted that the Auditor General’s findings are shared with universities and with the Board’s internal audit staff for follow up: “I think we have controls at each of our institutions that do look for this.”

Debate over out‑of‑state tuition flexibility

Committee members pressed university leaders on whether local boards of trustees should be allowed more flexibility to raise out‑of‑state tuition. Several CFOs said local flexibility would be useful. Kyle Clark told the panel such flexibility should be exercised by university boards using national benchmarks: “that would be best left to the university boards of trustees,” he said. Rebecca Brown said she would “like for that to be, individually by institution” but recommended guidelines to preserve some consistency.

Chancellor Rodriguez cautioned that raising out‑of‑state enrollment or tuition has tradeoffs with state appropriations. He said research indicates a national trend in which state support declines as net tuition grows, and he urged the legislature and universities to consider that dynamic: “there are a number of states that charge their in‑state students more than we’re charging them for out of state. It’s a fair conversation to have…but we need to be very careful that we also have the conversation at the same time of what should that mix be between in state and out of state that the Florida legislature is comfortable with.”

No formal funding changes; next steps

No statutory changes or appropriation votes were taken at the hearing. Chancellor Rodriguez said he would ask staff to model ranking impacts of different out‑of‑state pricing scenarios and report back to the committee: “I’d like to run those scenarios with my staff and come back to you with some answers.” The committee adjourned after closing remarks.

Ending

Committee members and system leaders agreed the state’s performance‑based model has driven measurable student success but described competing priorities — recurring versus one‑time funding, campus mission differences, uncompensated salary and benefit increases — that complicate a single formulaic fix. The committee signaled it will continue studying model changes, the role of nonrecurring appropriations and whether to grant campuses more tuition‑setting flexibility for out‑of‑state and professional programs.