The funding of the proposed 2014 fiscal year higher education budget forces the Board of Regents to use non-recurring money to fund universities for the first time, putting them at risk of mid-year cuts.
“The [2013 to 2014 fiscal year] Executive Budget fundamentally changes the manner in which higher education has been historically funded,” states a Board of Regents document shared between Commissioner of Higher Education Jim Purcell and University presidents. “The predominant source of the state’s support towards higher education funding in the Executive Budget is non-recurring, one-time funds, which by their nature, may not be available for future years.”
Higher education is traditionally paid for with money from the general fund, but this year, nearly $700 million was taken out of that fund, while about $600 million was added to another fund within the budget titled statutory dedications, said Council for a Better Louisiana President Barry Erwin.
“I’ve been here a long time and haven’t ever seen a budget constructed like this,” said Interim System President and Chancellor William “Bill” Jenkins. “It’s really different.”
When statutory dedications are added to a department’s budget, the money is considered one-time money because it’s not part of the general fund, which is made up of annual, recurring money funded by taxpayer dollars, Erwin said.
About $348 million within statutory dedications depends on contracts being signed, sales being made and other processes that could potentially not happen, rendering whatever money falls through unavailable for use in the higher education budget, said LSU System Chief Financial Officer Wendy Simoneaux.
Simoneaux said non-recurring funds present two problems: what the budget will look like next year, and if the money will come through.
“We believe that the reforms we have proposed have value in their own right, and we also believe it’s important to utilize available dollars to protect higher education – they are dollars that can be used just like General Fund, and we have every confidence that they will be available,” said assistant commissioner for Policy and Communications in the Division of Administration Michael DiResto in an email.
Simoneaux said the Board of Regents has not traditionally used non-recurring funds in the funding formula, but it is including the money out of necessity.
There are too many moving parts to know where they are with the budget and allocations right now, Simoneaux said.
“Usually, the Board of Regents only allocates to campuses from recurring money, but this year significantly more of our budget is from one-time funds,” Simoneaux said. “The problem is: how do you allocate money that might not be there?”
If the money doesn’t materialize, universities would receive a midyear budget cut to compensate, Simoneaux said.
“Things have to happen before we get that money,” Simoneaux said. “If these things don’t go through, the whole state isn’t going to share in that non-funding, it would just be higher education. If it doesn’t materialize, it comes from us.”
However, even if all the non-general fund money does materialize, the amount used in the funding formula will decline $85 million from the previous fiscal year, a decrease of 14.6 percent, according to Board of Regents documents.
“As long as you’re rearranging dollars to fill a hole, you’ll have the same problem next year,” Erwin said. “This is not a good thing, and they did the same thing last year. We’ve been cutting and cutting every year, and it’s gotten tighter and tighter.”
University leaders say they expect the Board of Regents to determine university appropriations soon.
“Usually the Board of Regents only allocates to campuses from recurring money, but this year significantly more of our budget is from one-time funds…The problem is: How do you allocate money that might not be there?”
