As LSU is putting together its $562 million operating budget for the coming year, administrators have discovered they’ll probably come up about 3% short, but the Board of Supervisors wants to try to find the money elsewhere and not raise fees again.
“There’s not going to be a raise in fees,” Supervisor Jay Blossman said Tuesday.
Blossman is adamant that this year, LSU won’t opt for its go-to practice when the amount of revenues don’t match the amount of money needed. “And there is not going to be layoffs,” he added, nor will there be a cut in spending on activities or programs for students.
The Mandeville lawyer and former banker, who is sending a son to LSU, was named to lead an ad hoc committee of five supervisors to scrutinize LSU finances and find some money.
Blossman’s task force was formed by LSU Board Chairman James M. Williams, a Metairie lawyer, upon receiving an initial report on where the university system stands after the Louisiana Legislature agreed to keep LSU’s appropriation pretty much the same as last year. Administrators need board approval by September to begin spending the state money.
While the amounts received from the state were like last year, Louisiana taxpayers have reduced their appropriation to LSU by roughly half since 2009. LSU received received $254 million from state coffers in 2009 and $115 million for this fiscal year. The difference has been made up, in large part, by fee and tuition increases.
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“Last year we were put in the very difficult position of having to increase the cost of attending LSU,” Williams said in late June, when he established the task force. “We all want to be careful not to always seek those resources on the backs of the families who pay the costs of attending LSU.”
While grateful for a standstill appropriation from the Legislature and governor, the supervisors say the state’s contribution isn’t keeping up with the cost of running the university system.
"Mandated costs," the monies the university has to pay each year – such as annual increases for retirement and group health insurance – have grown about $43 million since 2009. From last year to this, administrators are going to have pay about $7 million to $10 million more to cover cost increases, Dan Layzell, LSU’s chief financial officer, told the supervisors in a June 28 briefing. To keep from taking the money out of instruction or research, administrators in the past had raised the fees paid by the students and their families.
Supervisors say state legislators have failed to make higher education enough of a priority and have forced high costs onto students and their families, thereby undermining the university’s mission of making a college education accessible to every Louisiana resident. The 16 supervisors, who are appointed by the governor for staggered terms, set policy and make ultimate decisions for the universities, medical and law schools, as well as the agricultural research and outreach for the LSU System.
“We have to have a substantially different funding model driven by the state and from the private side and from the users, students,” said Supervisor Stephen Perry, of New Orleans. “The challenge needs to go out (to) every business leader in the state, to our partners at the LABIs (Louisiana Association of Business & Industry), the New Orleans Business Councils, the Greater New Orleans Inc.’s, and others that we are at an existential crisis in post-secondary education structural funding and philosophical commitment to the state.”
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LSU administrators said Wednesday they would make an announcement on the budget sometime in the future.
Blossman said the expected shortfall is about $10 million – maybe $14 million depending on faculty pay.
Blossman’s task force is meeting Friday and reviewing financial data provided by LSU administrators.
The committee will pay particular attention to the agreements with affiliates of the university. LSU, like most major non-profit, higher education institutions, has contracted with groups to raise the money and build projects that ultimately translate into revenues for the university.
One example is the recently opened $450 million Nicholson Gateway development that mixes housing for about 1,500 students with almost 40,000 square feet of retail space on 28 acres of the LSU Baton Rouge campus.
At the risk of oversimplifying, Blossman said, through various foundations LSU provides the land and customer base for businesses that serve as private partners. It's a symbiotic relationship but one where the financial arrangements are spelled out in contracts, often years old, that basically split profits after debts are paid.
“I just want to know the breakdown,” Blossman said. “We’re putting up valuable assets. It can’t be all the profits go to the private partners.”
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Another example of an affiliate is the Tiger Athletic Foundation. Formed in 1983 to support LSU’s football, baseball and other athletic programs, TAF is a nonprofit sitting on nearly a half billion dollars in assets, $498.7 million in 2017, and a quarter billion in funds, $244.4 million, according to disclosures filed with the Internal Revenue Service. TAF’s principal offices are in the Pete Maravich Assembly Center on the LSU campus.
“I want to know the arrangements. If we’re paying the TAF light bill I want to know … I mean, I think TAF can afford to pay the light bill, if they’re not already,” said Blossman, who was the state’s chief utility regulator when he chaired the Louisiana Public Service Commission before stepping down in 2008.