After several years of flat or increased budgets, LSU is looking at starting next year with $56.4 million less money.
The LSU Board of Supervisors without discussion approved Friday a $1.06 billion spending plan of unrestricted funds – a 5% reduction from this year’s $1.12 billion. The budget covers LSU’s colleges in Alexandria, Baton Rouge, Eunice, and Shreveport as well as the medicals schools and Pennington Biomedical Research Center.
LSU executives weren’t that concerned, noting that much of the shortfall will be made up with the use of one-time money, such as leftover salaries from unfilled positions, and increases in the number of students paying tuition and fees. Tuition and fees represent slightly more than half of the system’s revenues while the state’s appropriations make up about 36% of the funding.
But it also means no pay raises. “Unfortunately, LSU does not have the revenues available to include a merit increase program in the FY 2020-21 operating budget for its faculty or professional staff,” report to the Supervisors stated.
“Colleges and universities are by definition very people intensive operations,” said Daniel T. Layzell, LSU’s Executive Vice President For Finance & Administration and Chief Financial Officer. “Almost three-quarters of the university’s operating budget goes to pay for salaries and benefits. If you were to go to any other university in any other state in the United States, you would see basically a very similar pattern for those institutions too.”
Since taking office in 2016, Gov. John Bel Edwards had reversed an eight-year trend of cutting state appropriations to higher education institutions. He went into the legislative session earlier this year hoping to use surplus dollars to significantly increase funding for public colleges and universities. That plan was quickly sidelined when the state shut down businesses and directed people to stay home in hopes of mitigating the spread of the highly infectious and often deadly COVID-19. Universities also were closed. Tax receipts declined.
The Legislature ratcheted back the amount of taxpayer dollars used to support public higher education.
“Included in this decrease is reduction of state funds of $30 million, or 7.8%,” Layzell said. The rest, generally, came from the lack of interagency transfers that are related to the federal dollars sent to cover coronavirus expenses, which are being accounted for in another budget year.
In addition to less state appropriations, the amount of mandated costs – to pay for rises in the costs of retirement benefits and health insurance, for instance – went up by $306 million, he said. About 80-cents of every dollar paid for retirement goes to pay down pension liabilities covering all schoolteachers and university faculty.
The total funds available are $2.83 billion, including $1.78 million that is restricted for a particular purpose, such as sponsored research. The unrestricted funds are used for general operations and come primarily state appropriations and tuition.
“Our unrestricted operating budget goes to support our primary missions of teaching and service. The other goes to support services, libraries, student financial aids, and other administrative functions,” Layzell said.
The Board also approved the sale of the 14-acre-track of land in north Baton Rouge where the LSU Earl K. Long Medical Center once sat. Since the charity hospital was vacated in 2013 and torn down, leaving only the circular driveway and shade tree, the lot has overgrown with weeds. The LSU Health Care Services Division can’t afford the upkeep.
The property on which the Earl was built was purchased for $263,995 in 1963. LSU doesn’t know how much the property worth today but has a $2 million roof that needs replacing.
The Board forwarded its $1 billion construction wish list to begin that process to receive state funding and guarantees for financing. The priorities include an education building on the medical school’s campus in New Orleans and science laboratories on the Baton Rouge campus.
Friday was Mary Werner’s last meeting as the board’s chair. She was replaced by Robert Dampf, a Baton Rouge lawyer.