The Jindal administration asked State Treasurer John Kennedy for a $40 million funding seed this week to ensure higher education can pay its bills next month.
There’s just one problem: The state’s general fund is running at a $172 million deficit, meaning Kennedy already is shuffling dollars to keep the state in the black.
Kennedy can choose among an array of funds to plump up the general fund, which acts as the state’s primary checking account. He can borrow money set aside for highway improvements, the Lake Charles Civic Center, the Centroplex, New Orleans ferries and other expenses with accounts accessible by state government.
The catch is the dollars must be repaid by Aug. 14, including the $40 million that Kennedy now must grab for the state’s public colleges and universities.
“The general fund is in cash flow deficit as of today and is currently having to inter-fund borrow to meet daily cash flow needs. So the fulfillment of any seed funding request at this point would require the Treasury to inter-fund borrow that much further in order to meet that new ‘borrowing,’ ” Jason Redmond, deputy state treasurer, said Friday.
Commissioner of Administration Kristy Nichols, the governor’s chief budget adviser, said the seed for higher education is just a timing issue. The state funds colleges and universities on a month-to-month basis. Some revenue won’t be collected until the end of the fiscal year in June.
“We have requested the seed to fund higher education for May until the rest of the fourth quarter revenue can be collected. There is no cash flow issue associated with higher education funding,” Nichols said in a prepared statement.
The Legislative Fiscal Office predicted problems with higher education funding months ago. At the time, the office speculated schools could run out of their share of state funding by January.
The problem is a patchwork system of funding for higher education in this year’s $25.6 billion state budget. A variety of dollars need to fall into place in order for the funding to exist.
Roughly $340 million, or 40 percent of the funds colleges and universities expect to get from the state, is so-called “one-time” money. The “one-time” money is supposed to materialize from property sales, legal settlements and back taxes the state expects to collect.
The money goes into the Overcollections Fund, then is transferred to schools.
As of October, schools were paying bills mainly out of the other pool of money available to them — the state general fund — rather than from the Overcollections Fund. As of Friday, key money from hospital leases and legal settlements still needs to materialize.
Jason Droddy, LSU’s director of external affairs, said he learned about the need for a treasury seed this week when the system requested $26 million in funding for May. The request excludes health care services.
Droddy said he sees no cause for concern.
“My understanding is they expect that request to be fulfilled by the treasury,” he said.