Uncertainty over Gov. Bobby Jindal’s proposed 2013-14 budget for public colleges and universities is sparking widespread alarm both at the Capitol and on Louisiana’s campuses.
The distress is twofold. This year’s proposed $209 million budget cut would make six straight years that the governor and legislators have taken an ax to college and university state revenues. Secondly, much of the money earmarked for higher education is speculative and may not materialize at all.
Jindal’s budget proposal also counts on schools making up some, but not all, of their shrinking budgets with tuition increases.
Campus leaders argue Louisiana is underfunding its higher education system to the point that top-flight academic talent is leaving or avoiding the state, and students are being forced to pay more money for fewer course options offered in more crowded classrooms.
Some of those leaders claim this year’s budget proposal is more troubling than previous ones because so much of the money is, so far, intangible.
The governor’s $24.7 billion overall, comprehensive budget proposal reduces higher education funding 21 percent to $774 million, down from $983 million in the current year. About 63 percent — $489 million — falls into two categories.
The first is the so-called “one-time” or “nonrecurring” income that likely won’t be available in future years. The second category is called “contingencies,” which are projected revenues that may or may not pan out. Contingencies include settling legal cases, collecting old debts and selling state property.
Should any of those dollars fail to materialize — for instance, the $47 million in projected revenue for property sales — Jindal’s budget proposal dictates that higher education would be cut the corresponding amount.
If the money does turn up, colleges and universities are essentially living on one-year’s worth of revenues without the benefit of knowing what level of funding will be available the following year, higher education officials point out.
The proposed budget has resulted in varied levels of concern from the four presidents running the state’s public college and university systems.
Much of the anxiety comes from having to build their own budgets with uncertain funding from the state.
University of Louisiana System President Sandra Woodley said that makes it difficult to negotiate contracts with teachers for the more than 90,000 students the UL System is expected to enroll across its nine campuses in the fall.
Lawmakers will begin debating the state spending plan April 8 at the start of the two-month regular legislative session.
Legislative reaction to the governor’s higher-education funding plan is varied. One lawmaker called it “embarrassing,” while others have expressed confidence that higher education will receive a more stable source of funding once all the details are hashed out.
State Rep. Cameron Henry, R-Metairie, opposes the way the governor is handling the state budget. He is a member of a group dubbed the fiscal hawks after they stalled the budget process last year to protest what they called a patchwork approach to balance it.
Henry said the Jindal administration is basing the higher education budget on “phantom” money.
“The decisions being made send a troubling message that this governor doesn’t see higher ed as a priority,” he said. “This will make it difficult for our institutions to attract and retain our students. This is truly breathtaking.”
Jindal did not respond to an interview request made through his press office. His chief budget aide, Commissioner of Administration Kristy Nichols, defended the proposal last week, saying she’s confident the state’s higher education institutions will see all of the money projected for them.
State Commissioner of Higher Education Jim Purcell said the uncertainty complicates making the decisions that go into running a campus, such as hiring staff and negotiating teaching contracts.
The budget proposal “fundamentally changes the manner in which higher education has been historically funded,” he said, referring to the large emphasis on one-time money and the contingencies.
“This makes it very difficult to do what we do, which is generate human capital,” he added.
Jindal’s “great job” in attracting a diverse group of new industries to the state is undermined by a shaky financial outlook for the institutions that are supposed to produce workers to fill those new jobs, Purcell said.
Purcell said this year could mark the first time the state’s higher education management panel, the state Board of Regents, has to run one-time money through the higher education funding formula — the mechanism the state uses to distribute funds to individual campuses.
One part of the budget that has sparked criticism at the State Capitol is the proposed use of $120 million from tobacco companies to fund the Taylor Opportunity Program for Students, or TOPS, the state’s popular scholarship program for college students.
The tobacco money comes from the $200 billion or so in settlements that major tobacco companies agreed to pay to states in 1998 to end lawsuits related to health-care costs. That money is considered one-time funding.
Some legislators claim the governor’s approach creates a $120 million-sized hole in future TOPS budgets.
The governor’s proposal further includes just three months of funding for LSU’s E.A. Conway Medical Center in Monroe and strips all funding from LSU’s Huey P. Long Medical Center in Pineville. The idea is that the Jindal administration will be able to find private partners to run those facilities before the July 1 start of the 2013-14 fiscal year.
The governor’s plan also calls for another $75 million cut from the higher education budget to be offset with $75 million in tuition increases authorized by the La Grad Act. The law gives schools permission to raise tuition up to 10 percent each year without legislative approval provided they meet certain performance targets, including graduation and retention rates.
If the governor’s budget proposal passes as is, it would represent an 84.5 percent, or, $1.24 billion decrease in state funding to higher education from the funding levels of 2008, according the Regents.
“I think the administration definitely had difficulty putting together a budget considering all the issues that are out there, but we believe the risk should be allocated across all state entities and not just higher ed,” Purcell said.
As it stands, Purcell said campuses need to be mindful that as much as two-thirds of their budgets are at risk.
“We’ve been given a budget that tells us the most that we can expect,” not what schools will actually get, Purcell said.
Southern University System President Ronald Mason said even if everything falls into place, his system still must contend with a $7 million hole in its budget following year-after-year budget cuts and declining enrollment. If Southern can’t close that gap, administrators may have to close some programs, he said.
Nichols, the governor’s budget aide, said the administration prepared the budget in a way that actually “protects” higher education.
“Obviously we are committed to higher ed,” Nichols said. “So committed we made sure to find any money we could.”
Nichols said that without the one-time money and contingency funding, the state’s colleges and universities would have to absorb a 19 percent budget cut.
“And that would be irresponsible,” she said.
Nichols defended crafting a budget that relies partly on selling property, a funding mechanism legislators have questioned, especially in an uncertain economy.
Nichols argued that the majority of the properties have been appraised, noting that they all are underutilized and adding that the administration has identified parties that “are highly interested” in the properties.
“We would not have put it in the bill if we didn’t think the money was coming in,” she said.
Nichols also said the use of one-time money has been a routine part of preparing a budget in state government and has never directly led to a midyear budget reduction.
“The process of projecting revenue collections is not new,” she said. “Using one-time money is not new.”
Nichols said the Jindal administration has averaged $300 million in one-time money every year. She added that the administrations of Gov. Kathleen Blanco and Gov. Mike Foster averaged $500 million annually in one-time funding in the six years prior to Jindal taking office.
“When you identify money that’s going to be collected, it wouldn’t make sense not to put it in the budget and then have to cut higher ed instead,” she said.
Louisiana Community and Technical College System President Joe May said he has “no reason to think the funds won’t materialize.” He said he often prefers the governor’s budget proposal to the final version crafted by state legislators.
State Sen. Conrad Appel, R-Metairie, the chairman of the state Senate Education Committee, brushed off most of the uproar over the governor’s proposal.
“This is nothing but the governor starting a conversation about the budget,” Appel said. “It’s going to be changed and it’s going to be sliced and diced all different ways before the final vote is taken. If this was April or May, maybe I’d be worried; but not now, it’s way too early.”