Sharon, a finance staff presenter for the Vermont State Colleges system, told the finance committee that the Composite Financial Index (CFI) for fiscal year 2025 stands at 5.35, up from years when the system’s score was below zero. The CFI is a widely used higher-education benchmark that ranges from −4 to +10; a score of about 3 is considered a target for stable financial health.

Sharon explained the four components that comprise the CFI: the primary reserve ratio, the viability ratio, the return on net assets and the net operating ratio. She reported a primary reserve ratio of about 2.14 (roughly a semester of coverage), and that the system’s viability ratio had reached the 1.25 benchmark for the first time in recent years. Sharon cautioned that recent improvement had been supported by state bridge funding and that the system is making deliberate investments — including an enterprise resource planning (ERP) implementation (Workday) — that will draw down reserves in the near term as planned investments to increase long-term efficiency.

On the near-term budget picture, Sharon and Vermont State University leaders described the FY26 forecast. The system’s current forecast showed a $1.1 million favorable variance to budget driven in part by unbudgeted bridge funding. At the same time the university reported a projected $6.7 million shortfall in tuition, fees and room-and-board revenue for FY26, reflecting a 2.7% projected decline in enrollment and an approximately 8% decline in room-and-board revenue.

University leadership outlined mitigation measures they expect to use to address the FY26 shortfall: a hiring 'chill' (extra scrutiny on filling vacancies) projected to save about $2.8 million; anticipated scholarship expense reductions of roughly $1.2 million tied to lower enrollment; approximately $500,000 of operational expense reductions (travel, equipment and similar lines); and a planned withdrawal of $2.2 million from a board set-aside created in prior years. The presenters described these actions as sufficient to mitigate the current fiscal-year shortfall but characterized many as one-time or near-term actions; they said structural adjustments will be required for FY27 and beyond.

Sharon said the CFI and related dashboards are intended to help the board make informed choices, pointing to the need to balance temporary reserve drawdowns for strategic investments (ERP/Workday, online acceleration) against the long-term goal of sustainable growth in net assets. The committee discussed forward projection concerns and asked for continued monitoring of the financial metrics as bridge funding ends and investments are implemented.

Notes: CFI is calculated annually after financial statements are closed; bridge funding was identified as a major positive driver of recent improvement. The system plans to return to the committee with more detailed FY27 proposals and structural recommendations later in the budget cycle.