Tuition for UT-Knoxville may increase between 4 and 6 percent for fiscal year 2015, according to Chris Cimino, vice-chancellor for finance and administration.
For students who entered UT under the new 15-in-4 tuition model, the increase will remain locked at 3 percent.
Cimino's office is still finalizing the change, which must be approved by the Board of Trustees.
The tuition rise stems from the state government's approximately $200 million drop in revenue.
In response to underperformance by both the corporate franchise and excise tax, which collected less than expected, Gov. Bill Haslam amended his 2015 budget. The subsequent April 1 revision cut all additional funding to public post-secondary schools via the 2010 Complete College Tennessee Act.
As a result, $30 million will disappear. UT-Knoxville was slated to absorb at least one third of that money.
The CCTA tied state funding to university performance, creating a cash reward for schools succeeding in categories like retention and six-year graduation. Prior to CCTA, funds were allocated solely according to the size of a school's student population.
"Because of that then, retention, progression and graduation became key things that all of our campuses have really focused on," said Butch Peccolo, chief financial officer for the UT System.
Because UT-Knoxville outperformed many community colleges and state universities, the campus was slated to receive a new $6 million for next year, in addition to a nearly-$4 million renewal from the current fiscal year. In fact, Knoxville's performance merited an increase more than double that of any other school.
Instead, UT-Knoxville and improving schools will not receive any new money.
The 2014 funding will continue only for those schools that saw marked improvement. Lower performing schools will see all funding from the CCTA disappear. Current losses only compound the lasting effects of The Great Recession, which forced the state to cut $60 million from UT's budget in the late 2000s – money that Cimino said will likely never return.
Even if state revenue comes back next year, Peccolo said he does not expect the state will return funds lost in the meantime.
The state budget office declined to comment on the appropriations bill until it is finalized by the State Assembly.
The increased funding from the CCTA would have been used to raise salaries for faculty and staff, Cimino said – a crucial element of the Top 25 initiative. A 2011 study found UT was consistently underpaying its employees in comparison to what those employees could receive at similar institutions elsewhere.
To correct the wage gap, UT enacted consistent percentage pay increases over the last three years, though Cimino said employee evaluations provided flexibility in awarding the raises. However, an additional $150 million is still needed to align employee compensation at UT with compensation at its peer universities.
"(Chancellor Jimmy Cheek) is very concerned with everything from advising, to tutoring, to the recruitment and admissions aspect of the university," Cimino said. "Those are all top priorities, equally as important as making sure those that are here have adequate compensation."
Lack of state funding, Peccolo said, has been the central force behind tuition hikes. Because the state has shown increasingly less financial support to UT, he said students have been forced to shoulder a greater portion of costly projects.
"Conversely," Peccolo said, "if the state stands up and starts doing their share, fully funding these things, the commitment from our side is, we'll mitigate what we increase."
To protect students and their families, Cimino noted that financial support from the state remains critically important.
"So in order to keep improving, to be able to hire the faculty back, to build and retain the faculty, to pay them and have the right compensation, and all of the other infrastructure needed for a university," Cimino said, "we've got to have that support from the state."