A Message from the President
June 1, 2010 - Legislative and Budget Update
House Bill 1, the Governor’s proposed State budget for 2010-11, has moved from the Appropriations Committee to the House floor for debate. Unfortunately, as a result of a dispute between House and Senate leadership over use of money from the State’s “rainy day fund,” the budget came out of Committee with additional reductions recommended for higher education.
Even though these are only initial steps in the legislative process to complete the budget, there already has been much discussion and debate about funding for higher education. Actually, much of this has been about the 2011-12 fiscal year when the nearly $300 million in federal stimulus funds will no longer be available to help offset reductions to Louisiana’s higher education institutions.
State higher education leaders recently presented a variety of “what-if” scenarios for the 2011-12 fiscal year to the Senate Finance Committee. One of those scenarios included closure of eight regional universities in order to offset the loss of stimulus funds. While those presenting this information made it clear the presentation represented only an “exercise” to demonstrate the magnitude of the problem, it understandably created a firestorm of controversy.
Southeastern was not one of the eight institutions listed in that particular exercise. Nevertheless, the implications of the magnitude of future budget challenges are crystal clear for all higher education institutions in Louisiana, including ours.
The Governor’s proposed budget for next fiscal year did not include additional reductions for higher education; however, recent shortfalls in State tax collections, and nervousness among legislators about the fiscal challenges projected for 2011-12, make it increasingly likely the 2010-11 budget may be modified to include reductions during the legislative process.
Even if this does not happen, continued implementation of the State’s new funding formula for higher education is likely to result in less operating funds next year for Southeastern. In a recent preliminary projection of formula funds, both our System and our institution would receive reduced allocations. In fact, Southeastern could lose nearly $2 million in State funding for next fiscal year as a result of the new formula. While I continue to work with higher education leaders and others to make them aware of what I consider to be problematic aspects of the new formula, I feel strongly that we must move forward with planning for next year based on the projections we have been given.
In addition to the projected reduction in State formula funds, our mandatory operating costs, including retirement, insurance and risk management contributions, will increase by approximately $3 million next year. Although we anticipate being able to increase tuition next year by at least 5% under previously approved legislation, this action generates only about $2 million in additional revenue.
The bottom line is that we face a projected net budget deficit for next fiscal year of nearly $3 million, and that amount could easily grow as the proposed budget moves through the legislative process over the next few weeks. As I indicated in my last campus update, because of these continuing budget concerns we will move forward with additional organizational changes, as well as program and staff reductions.
As we have in the past, we will move cautiously in hopes of minimizing the potential negative impact on our faculty, staff, and especially our students. It is a tribute to our outstanding and dedicated faculty and staff that we have been able to meet the significant budget challenges of the past eighteen months with minimal impact on our students.