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 | Louisiana has a large, looming midyear shortfall, which worries higher education | | published on : 10-30-2015 | | Category : Higher Education | | Earlier this week, Gov. Bobby Jindal announced to the world that Louisiana had a balanced budget during a nationally televised GOP presidential debate.
"Our budget is balanced," Jindal told a CNBC moderator Wednesday night (Oct. 29). "We've had a balanced budget every year for eight years."
Several state legislators and budget officials back home in Baton Rouge see things differently. Just one quarter of the way into the current fiscal cycle, Louisiana is already short between $412 million and $622 million in funding, depending on how you count it.
The state will have to make midyear cuts and take other measures to close that gap. In other words, the so-called balanced budget Jindal signed in June is falling apart.
"I've been worried for some time," said Senate President John Alario, in an interview.
The state funding gap is the result of various shortfalls and deficits that have cropped up since the state budget went into effect July 1. In the latest bit of bad financial news for the state, the Jindal administration is expected to announce Friday morning (Oct. 30) that the state ended its last fiscal cycle with a $117 million deficit, which must be absorbed in the current budget.
This news comes as the state's finances are already beset with revenue issues that includes falling oil prices, which is expected to cost Louisiana an additional $135 million in revenue this year. Plus, the state's health care programs for the poor and uninsured are already known to be short about $335 million.
The bulk of the missing health care money is actually federal funding. Louisiana doesn't have money for its share of the health care services costs, so the state will lose out on the federal "matching" dollars, about $208 million, to pay for those health care services.
And more modest financial issues include a $20 million budget gap in the TOPS scholarship program, which must be fully covered. The Louisiana Department of Revenue also expects to hold back $16 million in state revenue back from being spent until a lawsuit over changes to a business utility tax gets resolved.
In all, this means the state is missing about $412 million in state funding for the current year. If federal heath care dollars are also taken into account, Louisiana is short a total of $622 million for various state services.
"I don't think we've ever been in this position before," said state Treasurer John Kennedy, a Republican, who has been active in state government since the early 1980s.
The $335 million shortfall in health care services will likely be handled within the Department of Health and Hospitals. The remaining $287 million shortfall will have to come from somewhere else, which has higher education officials worried.
While higher education certainly wouldn't be expected to absorb the full $287 million, anything approaching even a quarter of that figure would be devastating. To put it in perspective, Louisiana's entire community and technical colleges operating budget for this year wasn't much more than that -- about $307 million overall.
The Jindal administration is not expected to release a plan for coping with midyear cuts until next month. State legislators said they expect no action to take place until after the gubernatorial runoff on Nov. 21, when Jindal's replacement will be selected. The current governor and the incoming governor would probably coordinate on how to handle midyear cuts.
To cope with the shortfall, Jindal might access Louisiana's "rainy day" fund for financial emergencies. The governor is allowed to remove a third of the fund -- around $172 million -- to address pressing budget issues.
Both candidates for governor, U.S. Sen. David Vitter and state Rep. John Bel Edwards, have also said they would deal with the current year's financial crisis during a special fiscal session either in January or early February.
Louisiana's budget shortfalls typically fall on the backs of its public colleges and universities because so much other state funding -- health care dollars and coastal restoration dollars, for example -- has constitutional protections. It's easier to cut higher education funding than almost any other part of the budget.
Both gubernatorial candidates and state legislators have said they are hoping to insulate higher education from additional cuts. But the scope of the problem is so large, that it is hard to imagine they won't take at least some hits.
"I'm hoping we can avoid as much cutting as possible in higher education, but I'm not sure they can be spared," Alario said.
College and university officials hope the Legislature would take some "bold action" to stabilize the state's finances during its special sessions in January. Beyond the short-term concerns, Louisiana's colleges and universities need more certainty moving forward.
"We don't see things getting much better soon. If anything, it's going to get a little bit worse," said LSU President King Alexander, "It boils down to making the right choices." | | Related Keywords : | | higher education education nall |
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