Louisiana’s universities can now have more freedom on moving forward with contracts, purchasing and construction projects with less state intervention.
The University of New Orleans also is on its way out of the LSU System.
Gov. Bobby Jindal signed the “LA GRAD Act 2.0” legislation — House Bill 549 — into law on Tuesday at LSU and then he traveled to UNO to sign Senate Bill 266 that moves UNO into the University of Louisiana System, which has similar research institutions.
The UNO transfer will not be finalized until it is approved by the Southern Association of Colleges and Schools accrediting body in early December. The LSU System announced it is dismantling its UNO chancellor search committee and leaving those duties to the UL System.
The GRAD Act 2.0 legislation sponsored by House Speaker Jim Tucker, R-Terrytown, gives colleges more autonomy in purchasing and other projects in exchange for increased college graduation and retention rates and overall graduates.
The law builds on last year’s LA GRAD Act that allows colleges to hike tuition costs by up to 10 percent a year if they agree to meet certain performance goals. The 2.0 legislation does not allow for any additional tuition hikes.
Jindal told a bevy of businessmen, university officials and legislators gathered at LSU: “This important piece of legislation empowers the people who work with our students on a daily basis — the ones who know best how to manage their own campuses — instead of trying to micromanage their activities from the state level.”
LSU estimates savings of $52 million in five years by having flexibility similar to universities in states like North Carolina, Virginia and Arizona.
The new law offers three tiered levels of autonomy with increased performance goals for each level of greater freedoms.
Currently at LSU, a contract for more than $100,000 requires 13 steps and 22 weeks to be finalized, Jindal said. GRAD Act 2.0 will greatly streamline that process.
LSU spends more than $750,000 on delivery services annually, Jindal said. The new law will allow LSU to save $330,000 a year just on that contract, he said.
“The people can have great confidence that higher education is moving in the right direction,” Tucker said.
The GRAD Act 2.0 legislation, as dubbed by Jindal, was pushed by Louisiana’s Flagship Coalition of business leaders supporting LSU. The law applies to higher education statewide.
“We can compete with the best if we’re playing by the same rules,” said coalition co-chairman Sean Reilly, of Baton Rouge.
Jindal said he is confident that universities will not abuse the freedoms and direct more contracts to friends and boosters because Louisiana Board of Regents and the Joint Legislative Committee on the Budget will oversee their activities.
“We won’t let you down,” said LSU Chancellor Michael Martin.
Some of the main GRAD Act 2.0 freedoms include:
• Allowing colleges to “roll forward” extra revenues each year, so they are not forced to spend any reserves at the end of each fiscal year.
• Giving colleges extra authority to execute more contracts without additional red tape.
• Allowing colleges more procurement freedoms on buying equipment and on bulk supply purchases.
• Letting colleges move forward with self-funded construction projects and renovations without state control.
• Granting colleges the ability to go out on their own on some risk management costs, like worker’s compensation insurance.
Louisiana’s college graduation rates are the second-lowest in the Southern region, but Jindal noted they are improving. He also pointed out that the state has several of the fastest-growing community colleges in the nation.
Higher education has had about 26 percent of its state funds sliced in more than two years, but Jindal argued the overall college budgets are only down by about 3 percent. That is largely because of tuition hikes. The 10 percent tuition increase this fall, for instance, allows LSU to raise its tuition and fees from $5,764 to nearly $6,350 this fall.
The UNO legislation sponsored by state Sen. Conrad Appel, R-Metairie, began as a Jindal-proposed merger of UNO and Southern University at New Orleans. Once that plan failed, it emerged as a compromise to move UNO out of the LSU System, where many UNO supporters say the college has been mistreated.
At the bill signing, Joe King, UNO’s acting chancellor, called attention to the desk Jindal used.
“It is from this desk, that the founding chancellor of UNO, Homer L. Hitt, made the initial request for UNO to move from the LSU System,” King said. “Today his vision will be fulfilled.”