A Message from the President
March 31, 2011 - Campus Budget Update
Recently Governor Jindal’s administration unveiled the Executive Budget - the recommended operating budget for the State for the upcoming fiscal year.
You will recall from my prior Budget Updates, as well as from our Budget/GRAD Act sessions last fall, our greatest area of concern going into next fiscal year is the loss of Federal stimulus funds that were used to offset or “backfill” a portion of state funding reductions that occurred over the last two fiscal years. Federal funds in the current fiscal year for Southeastern amount to $16.3 million. On top of the loss of $16.2 million in State support we have already absorbed over the last two years, loss of these funds next fiscal year would be devastating for our university.
While the Executive Budget is comprised of a very long and complicated set of documents, and it will be months before we know the final outcome, analysis so far reveals several important factors.
The budget proposes what in general terms can be considered a “flat” funding level overall for higher education for next year compared to the current year. This means that the proposed budget “backfills” the loss of Federal stimulus funds with funds from other sources. We are certainly pleased that Governor Jindal’s proposed budget does not recommend additional cuts for higher education.
Unfortunately, some of the sources of funds used to replace the lost Federal funds are potentially controversial and problematic. Specifically, the proposed budget relies on revenues from a number of unconventional sources which, in most instances, must still be approved by the Legislature.
The budget anticipates three separate actions that would result in additional self-generated revenues (tuition and fees) to help higher education maintain the current level of funding.
The first change would allow colleges and universities to charge for student enrollment above 12 credit hours, up to 15 credit hours. It is estimated this change could generate approximately $6 to $6.5 million next year for our institution.
The second change would index to increased tuition levels a previously approved operational fee paid by students. It is estimated this change could generate nearly $1 million at Southeastern next year.
Significantly, under the Louisiana Constitution, both of these proposed changes in tuition and fees will require approval by a 2/3 majority of both Houses of the Legislature. This could be a tough sell given that last year’s LA GRAD Act Legislation already created approval to increase tuition annually over the next several years.
While the Executive Budget appears to count the tuition increase for next year under the LA GRAD Act, this increase is contingent upon our meeting the necessary performance objectives stipulated in our GRAD Act Contract.
In addition to these measures that are specific to higher education, the Executive Budget includes a number of other provisions that either reduce costs or increase revenues to help balance the State budget. Should these proposals not come to fruition, due to legislative prerogative or otherwise, the final budget for higher education could be significantly different from what has been proposed.
For example, the Executive Budget incorporates a proposed change in the contribution rate by employees to the LASERS retirement system from 8 to 11 percent. While this proposal does not appear to affect faculty who are members of TRSL, or the ORP, it would affect many staff members at Southeastern and other institutions who participate in the LASERS retirement system.
The Executive Budget also incorporates additional revenues from various controversial measures that ultimately will have to be approved by the legislature. The much-publicized proposed privatization/sale of several State prisons is a good example.
The bottom line for Southeastern, and all of higher education, is that the final outcome of the budget process is far from certain. Although the proposed Executive Budget is an important first step, many extremely important aspects of the budget for next year will have to play out through the upcoming legislative process that will not conclude until this summer.
As always, I will continue to keep the campus apprised of developments as they occur.