Kentucky State University faces a potential budget shortfall of up to $3.4 million for the 2010 fiscal year, according to a presentation made to the Board of Regents.
University officials have just over a month to find enough items to cut. The board meets again April 24 to consider the budget and set next year's tuition rates.
"We do not do deficit budgets," KSU President Mary Sias said Friday at a meeting.
"And that will mean that some of the things that people have asked for that they think are high priorities may not be coming."
The university will battle more than $1 million in rising costs of energy, service contracts and liability insurance. Health insurance for faculty could cost between $125,000 and $200,000 more next year.
Some of KSU's regional stewardship projects could be in jeopardy. Support of the Frankfort Arts Foundation and Thorn Hill Academy costs the university thousands of dollars each year, Sias said.
"They're not huge amounts of money, but all of those things are on the table," she said.
Regents said Friday that their priorities are avoiding layoffs, improving student retention and fixing infrastructure problems, including leaking roofs and an aging boiler.
Next month, the regents will consider raising resident tuition between 3 and 4 percent, the ceiling set for Kentucky's comprehensive universities by the Council on Postsecondary Education.
An increase of 3 percent would net an additional $315,000 for the university, and a 4 percent jump would bring in $420,000 more.
"We do recognize that while we're in hardship, our students and our families are in hardship also," Sias said.
"We already have families calling because parents have lost jobs; some people have two and three kids here. They have been paying, and they are no longer able to pay."
A 4 percent increase would cost KSU's in-state students $228 more per year in tuition and fees. Annual tuition would go from $5,692 to $5,920.
Sias said the university will look at ways of employing more students on campus, and reducing the number of hours required for a degree so they can finish in four years.
The university could get some relief from the more than $100 billion in federal stimulus dollars intended for public education, but the one-time funds shouldn't be used for recurring expenses like salaries, Sias said.
She warned regents Friday that cuts must be made soon. The state revenue shortfall is expected to grow, Sias said.
"We have not hit bottom yet," she said. "The state's appropriation for higher education is in jeopardy."