Rutgers University's Board of Governors on Wednesday approved a $3.6 billion budget that calls for a 2.2 percent tuition increase.

Annual undergraduate tuition for in-state students will now go to $10,954 from $10,718. The resolution for the increase called the 2.2 percent hike  "modest but necessary."

Mandatory fees will increase by 2.8 percent at the New Brunswick campus, 2.79 percent at the Newark campus and 3.76 percent at the Camden campus. Tuition and mandatory fees for a full-time, in-state arts and sciences student at Rutgers-Camden was $13,370 for the school year that just ended.

As with many other public institutions, the university has seen costs continue to rise while state funding was in some years deeply cut or remained flat. A chart on the Rutgers website shows how Rutgers' revenue sources have shifted over time.

In 1990, twice as much money came from state aid as tuition and fees. Tuition and fees began to outweigh state funding in 2004, and students now give Rutgers twice as much money as the state does.

New Jersey ranks 32nd in the nation in per-capita spending on higher education, according to data compiled by the Center for the Study of Education Policy at Illinois State University in cooperation with the State Higher Education Executive Officers.

Adjusted by personal income, New Jersey ranks 43rd in the nation for higher education funding per $1,000 in personal income.

Rutgers' Board of Governors will also adopt a budget for next year. The budget for the 2013-14 year, which ended June 30, was balanced at total revenues and expenditures of $3,597,479,000. That $3.6 billion budget included the integration of most of the former University of Medicine and Dentistry of New Jersey, which Rutgers acquired July 1, 2013 as part of a statewide restructuring of higher education.

But that integration has hit Rutgers' finances hard, and balancing the budget may be tough. In a June 17 letter to the Board of Governors and Board of Trustees, John J. Farmer Jr., then the acting general counsel for the university, warned of a budget that could feature a deficit:

"I am informed that for the first time in memory, the university will be presenting to the Finance and Facilities Committee a budget in the red for the fiscal year beginning July 1, 2015," Farmer wrote.

He cited "unanticipated shortfalls in the medical school budgets of tens of millions of dollars" and the costs of leaving the Big East athletic division.

The university will also soon be renegotiating contracts with almost all the unions that represents its faculty and staff.

"The university is, therefore, particularly in the short term, in an extremely precarious financial position," Farmer wrote.

"Our financial issues may be short-term, but our long-term viability is dependent on how we are able to navigate them," he wrote.

Asked in June about the budget issues, a Rutgers spokesman released the following statement:

"While the Rutgers budget for fiscal year 2014-2015 will not be finalized until it is approved by the Board of Governors in July, it is no secret that the integration of UMDNJ has been costly to Rutgers. The fiscal difficulties that Rutgers inherited from the medical schools continue to present serious near-term challenges for us."