The University of Vermont announced it was facing a $12 million structural budget deficit for the next fiscal year due to a projected drop in overall undergraduate enrollment.

The university expects a 15% decline in freshman undergraduates this coming fall compared to last year, and a 7% decrease in total undergraduate enrollment.

Tuition accounts for two-thirds of the university’s general fund, officials said in an email to staff, while expenses have continued to grow. In response, university officials said they’re taking steps to cut expenses across departments by 3.25%.

Alicia Estay, the university’s vice president for finance, administration and human resources, and Jay Jacobs, the vice president for enrollment management, said in the email reviewed by VtDigger that they hope to stabilize the budget in a year’s time.

“UVM cannot cut its way to a sustainable future, but we do need a stable financial base on which to build one,” they said in their email. “We will position UVM to respond more effectively to a shifting enrollment landscape in the years ahead rather than relying on short-term fixes to address recurring budget pressures.”

Next year’s enrollment decline highlights a stark reality facing universities and colleges across the country. In part because of a drop in birth rates following the Great Recession, the number of 18-year-olds entering the higher education system is beginning to drop this year, a phenomenon dubbed the “demographic cliff.”

Vermont and the Northeast have been disproportionately impacted by these headwinds, partly thanks to the region’s own demographic struggles. A number of Vermont-based colleges have shut their doors over the last decade, including Sterling College, Goddard College and Green Mountain College, among others. The announcement on Wednesday indicates Vermont’s flagship university isn’t immune to the trends.

“The demographics are catching up to all of us,” Gov. Phil Scott said during a news conference on Wednesday.

UVM President Marlene Tromp broke the news of the enrollment drop to lawmakers on the House Appropriations Committee on Wednesday. She called the drop in enrollment “tremendously significant, not just for our university, but for our state.”

The Trump administration’s policies towards international citizens and students have also compounded the demographic problems facing higher education institutions, and the University of Vermont.

Ivy League universities such as Harvard, which would normally accept more international students, are now “reaching for students that would ordinarily come to us,” Tromp told lawmakers on Wednesday.

Tromp and other university officials were at the Statehouse pitching lawmakers on plans to build a new “multipurpose center” at UVM. The $175 million project would host UVM’s basketball teams, as well as concerts and other events, with a capacity of 5,000 spectators.

“Because of our excellence, we compete with these very top-tier schools,” she said. “But because of our capacity to provide the kinds of facilities they expect, they’re taking those other offers.”

The plan has drawn controversy from lawmakers over its use of funds from the state’s Higher Education Endowment Trust Fund, which helps pay for aid to students at UVM, as well as students in the Vermont State Colleges System or at other in-state schools.

This story was republished with permission from VtDigger, which offers its reporting at no cost to local news organizations through its Community News Sharing Project. To learn more, visit vtdigger.org/community-news-sharing-project.