As students, faculty and staff grapple with budget cuts that are starting to have concrete impacts on the University, some professors and administrators say these cuts have been a long time coming.
The most recent string of cuts started in early 2006, according to James Richardson, economics professor. Richardson sits on the Revenue Forecasting Committee, the brain trust that predicts how much cash the state will have on hand.
Richardson said three economic trends created a surge in tax revenue for the state.
First, the Louisiana tax code was restructured in the early 2000s.
“We changed it to a more growth-oriented structure,” Richardson said.
Second, the state’s coffers swelled as the state began rebuilding after Hurricane Katrina. Federal recovery funds and private insurance money flowed freely, and homeowners worked — and spent — furiously to rebuild their homes and lives.
Third, the oil industry was booming, and the state reaped the benefits.
Flush with cash because of these three factors, the state began spending.
Richardson said the state government ramped up spending across the board during that time, including in higher education. Numbers from the Board of Regents, which oversees the state’s higher education programs, show higher education’s budget blooming from $1.03 billion in 2005-06 to $1.42 billion in 2008-09.
Richardson said the state created many new programs during that time that were designed to be permanent.
“By the end of 2008, we had all these new obligations,” he said.
The state Legislature also started slashing taxes, most notably by repealing the Stelly Plan, which would have increased the state income tax starting in 2009.
The revenue boom didn’t last, however. When the national economy tanked in the fall of 2008, Louisiana’s wells of cash dried up, and the state could no longer afford the new programs it had created.
“In 2006 and 2007, we made the easy decision to spend more,”
Richardson said. “In 2008, we had to make a harder one.”
The Legislature had no choice but to start scaling back.
Ideally, Richardson said, the legislators could simply backtrack, eliminating the programs they had established when times were good.
But because of a maze of constitutional and technical limitations, it wasn’t that easy.
“The other piece of the puzzle is that, over the past 20 years, we’ve created all kind of restraints [on cutting programs],” Richardson said.
Some programs were given dedicated sources of funding, while others were given “non-discretionary” statuses by constitutional decree. For example, the state’s Minimum Foundation Program, which doles out funds to primary and secondary education, is protected from cuts entirely — and that program accounts for almost a third of the state’s budget, Richardson said.
“The only things that are cuttable that have any sizable money are higher education and health care,” Richardson said.
When the hard times hit, higher education had to suffer cuts far worse than the rest of the state budget.
After giving higher education a funding peak of $1.42 billion in 2008-09, the state slashed funding to just more than $1 billion in 2009-10 — a cut by almost a third.
Overall, higher education has had general state funding slashed by $274.6 million since January 2009. That puts the system’s funding at a level just under the funding it had in 2005-06.
The University’s share of those cuts totals $42 million, according to Eric Monday, vice chancellor of Finance and Administrative Services.
That translates into 376 total cut positions — 283 of those were vacant positions, but 93 employees have lost their jobs.
And the cuts are far from over.
The University will announce today a plan to cut its share of a $518 million state-wide cut as part of a state-mandated “exercise” for FY 2011-12, the next fiscal year. That number is a projection, and the final cut may be less than that.
But if the cut does materialize, it will put the University’s funding at a lower level than it has been in decades — a decrease Chancellor Michael Martin said would be “ruinous to LSU for generations,” when the cuts were first announced.
Provost and Executive Vice Chancellor Jack Hamilton said the University’s current woes are a result of this historical context, but are also a result of legislative priorities.
“It was a priority of the state leadership,” Hamilton said of higher education. “If you look at the growth, it starts with [former Gov. Mike] Foster and goes through [former Gov. Kathleen] Blanco.”
Hamilton refused to comment on the priorities of Gov. Bobby Jindal’s administration.
Hamilton said the state has to decide higher education is a priority to prevent future cuts.
President of the Faculty Senate Kevin Cope echoed Hamilton’s sentiments about priorities.
“This shows that the state really needs to take a more stable approach to funding higher education,” he said.
He argued legislators should find a way to reserve funds during economic booms — like those of 2006 to 2008 — so that “when the cash comes in, we don’t squander it.”
“Louisiana suffers from chronic, under-informed enthusiasm,” Cope said.
—-
Contact Matthew Albright at [email protected]