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HARTFORD, CT – The University of Connecticut generated about $5.3 billion in economic activity for the state in 2018, according to its own economists.

A report released Tuesday at the UConn Graduate Business School in downtown Hartford says the university employs nearly 26,000 residents who pay about $277.5 million in state and local tax revenue.

The report also found that UConn’s research supports about 1,394 jobs and the total economic impact of its $265 million in research spending is about $485 million.

Research and development is an area UConn President Thomas Katsouleas wants to double over the next 10 years.

But that’s not an easy task given the school’s multibillion-dollar unfunded pension liability.

The unfunded pension liability adds to the “fringe” rate for any employee hired on a research grant. Fringe costs for university employees include paid time off, health insurance, and any other benefits aside from their salary.

“We took it upon ourselves to reduce those [fringe] rates,” Katsouleas said. “That will be a $6 million hit to our budget.”

But it’s not a long-term solution, and Katsouleas said he wants to partner with the state to find one.

The cost of the unfunded pension liability for UConn and its Health Center in Farmington is $80 million a year, Katsouleas said. Last year, lawmakers found an additional $32 million to help UConn Health subsidize the unfunded accrued liability fringe benefit costs for some of its employees.

“We’re looking for creative ways to shift that burden to a different place,” Katsouleas said. “Because right now it disproportionately falls on things like faculty competing for federal funds, and it’s just not working well for the state.”

He said he won’t be able to spend hundreds of millions of dollars on research if the faculty aren’t on a level playing field to compete.

And if the state doesn’t help the university pay for these costs, Katsouleas said that it then it may be shifted to parents and students through their tuition. He said $700 of every student’s tuition already is used to cover the unfunded pension liability.

But Katsouleas added that shifting the burden on a spreadsheet “doesn’t make new revenue appear.”

The report, which was given Tuesday to lawmakers who are contending with a $28-million budget deficit, will be used as part of UConn’s plea to maintain their state funding.

christine stuart / ctnewsjunkie

The General Assembly will convene on Feb. 5 to adjust the two-year budget they approved last June.

Under that budget, the University of Connecticut and UConn Health Center are expected to get an allotment of $328.6 million this year.

Katsouleas said they are hoping the state holds them harmless and doesn’t cut that expected funding.

Gov. Ned Lamont said he’s going to try and “hold them steady,” and make sure they can complete the capital projects they’ve already started.

Lamont said people have to understand that the fringe benefit rates are related to “legacy costs,” and it doesn’t mean they are paying professors too much money.

“We’re not winning grants if we have to put all those legacy costs into that,” Lamont said.

But Lamont said he didn’t have an immediate answer for how to resolve the issue.