Louisiana Higher Ed System Avoids Major Pitfall

061515_budgetLouisiana’s public higher education system avoided a bleak fate with the new state budget the legislature passed on June 11. Gov. Bobby Jindal’s initial proposed budget for fiscal year 2015-16 would have substantially reduced the amount the state invests. In a worst-case scenario, Louisiana’s state investment in higher education would have dropped by 82 percent.

The proposed cuts would have been a disaster for the state’s public higher education system, which has already experienced a substantial reduction in funding since 2008. Many believed that the system was not equipped to handle further cuts.

“People say, ‘You need to run your universities more like businesses,’ and I say, ‘Well, that may or may not be true, but the point is I defy any business to tell me how they can take 50 percent of a cut and an additional 82 percent [and still be in operation]. It’s just not possible,” said Dr. Joseph Rallo, president of the Louisiana Board of Regents.

The crisis was averted when the state legislature drafted a new budget that uses alternative funding sources to keep the budget almost equivalent to FY 2014-15 levels. That outcome was about the best public higher education could expect for this year, particularly given Jindal’s initial proposal. Louisiana was facing a $1.6 billion deficit, which would have fallen most heavily on health care and higher education. Faced with such a scenario, many states would raise taxes, but in Louisiana the situation was complicated by the fact that Jindal had signed a “no new taxes” pledge in 2003 with the Americans for Tax Reform, an anti-tax group led by Grover Norquist.

The state will introduce new taxes, but the legislature and the administration worked around Jindal’s no-new-tax pledge with the SAVE Act, which will create a tax credit for the revenue raised. SAVE will assign a fee of about $1,500 per higher education student. The fee would only exist on paper, because students would receive a tax credit of the same amount to offset the fee. Funds raised would be used as a tax credit to offset other revenues raised. Ultimately, the Louisiana Board of Regents, the entity responsible for distributing money to the four systems of higher education, would receive about $350 million.

State legislators on both sides of the aisle expressed distaste for the plan but said it was necessary to avoid the budget being vetoed by the governor during the 20-day review period after June 11. However, higher education officials in the state point out that there are benefits to SAVE. For one, it will stave off economic ruin, and for the first time ever the state will have a dedicated funding stream for higher education. “It’s not a complete dedication, it’s not all the dollars necessary, but it is a huge step in the right direction for higher ed,” said Dr. Monty Sullivan, president of the Louisiana Community and Technical College System (LCTCS).

Since the SAVE provision funds will cap out at $350 million annually, it still falls short of the $700 million to $800 million the system needs. Looking ahead to next year, Rallo said the Board of Regents will be working to ensure that higher education has reliable sources of money. Although the SAVE Act is a step in the right direction, it is not popular and may not survive with the next governor. “We want to make sure higher ed doesn’t just get whatever is left over,” Rallo said.

Higher education as a whole suffered with all the cuts to higher education, but both Rallo and Sullivan point out that there is an economic argument to be made for it since many new jobs are coming in to the state. A large majority require a high school diploma and a certificate, which means that the community and technical colleges have an important role to play in the state’s economy. In fact, community colleges are enrolling more students than ever, despite reductions in funding.

The number of LCTCS graduates is growing year by year. In 2014, there were X graduates, and Sullivan said that the system wants to see that number double to 40,000 by 2020. Part of the strategy will be to focus on job-specific certificates and courses. For the colleges, that means honing in on the career track and making sure they provide the pathway for students to move directly into their chosen field after graduation. “Universities provide a place for people to find themselves, but in a time of reduced circumstance, the ability for community colleges to be a place for people to find themselves will be less and less of our mission,” Sullivan said.

Staff writer Catherine Morris can be reached at cmorris@diverseeducation.com.