Nicholls State University President Bruce Murphy, like the heads of several public colleges in Louisiana, faces something of conundrum: Is he going to have to use tuition students pay for their education to cover overhead expenses for state government?
“Is that legal? To collect money for education and give it back to the state so the state can use that for the general fund?” Murphy said. “I’ve asked the governor this and I’ve asked legislators this. I haven’t gotten a good answer.”
There isn’t clear answer. Despite how it looks, state law doesn’t specifically address whether tuition money can be used to pay general state expenses, says the Board of Regents. Partially this is because colleges and universities, as public entities, have to contribute to the overhead just like any other state agency.
All state agencies are mandated to pitch in on expenses like health insurance premiums for state employees, retirement costs, the fees of the auditors who check the books, civil service training for workers, even security costs. Even though lawmakers kept state support of higher education at the same level as last year – the first time in nine years their budgets haven’t been cut – the amount the state appropriates just barely covers what the state charges.
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For the fiscal year that ended June 30, Nicholls State received $54,049 less than the $15.2 million the state wants returned to pay for what’s called “mandated costs.”
This is not a new phenomenon. Two years ago, Nicholls State administrators sent Baton Rouge $1.03 for every dollar they received in state support, Murphy said. Last fiscal year the amount was $1.07.
While the state’s appropriation hasn’t changed this year, the amount needed to cover mandated costs has increased every year and surely will again before the fiscal year is out.
But the creases in the collegiate couch where Murphy previously found loose change – leftovers after student dorm expenses were paid, philanthropic gifts, and the like – are quickly drying up.
The only other place to find money enough for state government demands is the tuition and fees students pay to cover the academic expenses of the institution.
Nicholls State isn’t the only public university looking for money enough to meet state demands. Southern University Baton Rouge had to return 99 percent of its $20.7 million state appropriation last fiscal year. Ninety-six percent of the $29.5 million in state funding Southeastern Louisiana University in Hammond received was returned to Baton Rouge; and 89 percent of the $127.5 million for the flagship LSU campus in Baton Rouge went towards paying mandated costs. Those colleges received about the same appropriation this fiscal year.
Across all 14 public four-year universities and 15 community colleges, 66 cents of every dollar of the $811.3 million state lawmakers budgeted for colleges and universities was returned to state government last year to pay mandated costs, according to the Regents, the board that oversees all management and policy for higher education.
A dozen institutions paid back more than 80 percent of their state appropriations and as the required expenses are rising, administrators are quickly coming to the point where they will have to dip into tuition and fees to come up with the money owed the state.
“It’s the smaller schools that are getting hit the hardest,” said Tony Clayton, a longtime member of the board which oversees the Southern University System schools.
“It’s shocking to me that the Legislature is willing to put out a plan that allows the state to claw back the money that they gave to educate our children and prepare them for the workforce,” he added.
While thankful for standstill budgets this year, the money provided probably won’t cover the projected increase in costs for insurance and retirements, said Jim Henderson, president of the University of Louisiana System, which oversees nine four-year universities with 90,000 students.
“Essentially we’re balancing the state budget with tuition and fee increases on students,” Henderson said.
From July 1, 2009 to June 30, 2017, the amount of money state taxpayers sent to support public higher education was slashed 16 times for $731 million, or about 53 percent. To cover the loss of the money, colleges and universities were allowed, under special conditions, to raise tuition and fees on students by 111 percent.
Where once taxpayers shouldered 61 percent of the costs of running a university, they now cover just 29 percent. Students are responsible for the rest.
There’s a lot of razzle-dazzle in the financial accounting for colleges and universities as in any large enterprise.
Overall, the total budgets for higher education have looked pretty much the same over the years: $2.43 billion in funding from all sources of revenue in Fiscal Year 2009 and $2.28 billion in Fiscal Year 2017, which ended on June 30. Still, that’s a bottom line decrease of about 6 percent or $150 million, explained Terrence Ginn, the deputy commissioner in charge of finances at the Board of Regents.
But those numbers are misleading. Tuition increases took up most, but not all, of that slack from the reductions in state support, he said.
At the same time, the state’s mandated costs went up 21 percent or from $120 million to a total of $565.3 million.
When factoring in other self-generated monies and scholarships with the mandated costs, the total amount of revenues available to run higher education institutions went down $364 million or about 15 percent less now than in 2009, Ginn said.
Adding to the complexity is the difference between the way regular state agencies and public universities receive their state money.
Drafting annual budgets for state agencies basically starts with what was spent the year before. Money is moved around, but in the end appropriations are set by law in July to cover various expenditures for the coming year. Generally, the Legislature and/or the Division of Administration must approve moving money allocated for one type of expenditure to pay for another expense.
But colleges and universities don’t know until August just how many students are going to enroll. They need the flexibility to hire more instructors and buy more desks at a moment’s notice.
Higher education appropriations come in pots, without specific allocations, to allow administrators to decide how best to spend the available dollars without having to clear the bureaucratic hurdles.
Commissioner of Administration Jay Dardenne says mandated costs are baked into the formula used to appropriate state dollars. But where state agencies can point directly to the amount covering mandated costs, universities have to find the dollars from the pot.
The costs rise every year.
“Those are staggering numbers,” Dardenne said. “It’s always been a problem. But it is the reality.”
The bigger issue, he said, is a state fiscal system that gives away too much and doesn’t generate the revenues needed to pay all the bills, much less make up ground from the cuts of previous years.
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That reality is hanging over lawmakers and businessmen who are congregating behind closed doors to hammer out an agreement on how to bridge a funding gap of well more than $1 billion when the new fiscal year starts July 1, 2018. An additional penny added to the sales tax to patch an earlier deficit is scheduled to end on June 30.
More state funding for higher education may not be in the cards.
Dardenne said he’ll score it a win if higher education comes out of the next legislative session with another standstill budget instead another cut.
“We’re hoping at some point to increase higher education,” Dardenne said. “But this is not going to be a time where we can make any significant increases.”
Percentage of state funds returned to the state to pay mandated costs
Nicholls State University 100 percent
Southern University Baton Rouge 99 percent
Southeastern Louisiana University 96 percent
Southern University New Orleans 94 percent
LSU Alexandria 93 percent
LSU Baton Rouge 89 percent
University of Louisiana at Lafayette 82 percent
University of New Orleans 69 percent
All state colleges and universities 66 percent