The NEW New Depression in Higher Education: Or, I Dont Know Whether to Kill Myself or Go Bowling

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The NEW New Depression in Higher EducationOr, I
Dont Know Whether to Kill Myself or Go Bowling

• State Budgets and Higher Education in 2003 a
  10-Part Revue in Country-Western Motif
• Jane V. Wellman
• NCHELP Spring Conference
• May 21, 2003

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Part I It Wouldnt Be So Bad, If It Hadnt Been
So Good Change in State General Fund Spending,
last 10 FY
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Part II Today Im Going Over All The Things that
Took Me Down(What Happened?)

• Source of the problem spending or revenues?
• Capital gains increases fueled revenue spikes
  from 1995 2000
• State spending as percent of GDP quite constant
• Medicaid increase over 50 since 1998 over
  budget in every state each year
• Tax rates dropped in 43 states during the 90s
• 42 states put money into rainy day funds
• Source National Association of State Budget
  Officers, 5/03.

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Part III I Borrowed the Shoes, But the Holes are
MineCreative Financing as a Budget Balancer

• State credit is weak
• 16 states have negative outlook 8 downgraded
  since 2001, 4 others on watch list
• Deficit financing (tobacco, pension bonds,
  securitizing debt)
• Delays in mailing state tax refunds
• Sell/leasing of State properties
• Optimistic revenue estimates
• Recalculation of actuarial assumptions for
  retirement funds
• Delays in disbursements to local government and
  schools
• Source National Association of State Budget
  Officers, 5/03.

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Part IV Dont Cry Down My Back, Baby, Youll
Rust My Spurs

• Oregon 50 school districts are shortening the
  school year mid-year cuts in school spending in
  California, Missouri, Oklahoma
• Ohio 17,000 children are losing child care
  subsidies
• Kentucky 900 non-violent offenders were
  released early from prison 19 states cutting
  corrections spending
• Texas 275,000 fewer children will receive
  health care
• Colorado suspended property tax breaks for
  120,000 elderly residents
• Cuts to local government 12 states reducing
  payments
• National Cuts in Medicaid coverage currently
  being proposed in 22 states eliminate 1.7 million
  people from coverage
• Source Center for Budget Policy Priorities,
  5/03 NY Times, 4/21

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Part V You Are The First, Right After MeTax
Increases

• 25 States have enacted or proposed general tax
  increases
• Income, corporate, excise, property, sales
• Another 15 have increased revenues from fees,
  postponing previously enacted tax increases, and
  expanding gambling
• Total enacted and proposed increases 18
  billion in FY 03 more than 2X increases in FY
  01 02 combined

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Part VI You Get Nothing for a Nickel, Twice as
Much for a Dime Funding Down, Tuitions Up

• The lucky states flat funding or modest
  increases for higher education (Alaska, Indiana,
  Missouri, Nevada) all others are cutting base
  budgets, and raising tuitions
• California state budget deficit of /- 38
  billion proposal to cover 10 billion in
  borrowed funds, securitized by ½ cent increase in
  state sales tax, already at 7.5 UC base cut
  4.5 percent CSU 8, CCCs 6 - tuition increases
  not final, pending final budget but will likely
  be at least 12 in UC, and more in CSU
• North Carolina all state agencies returning 5
  of FY 03 budgets with less than 60 days left in
  the fiscal year. UNC cuts for 04 expected to be
  between 83 - 130 million. UNC Board wants to
  hold line on tuitions Legislature may increase.
• New York SUNY cut 15, CUNY 12 tuition up
  1,400 (maybe more)
• Michigan 6.5 cut for state colleges
  universities tuition likely up 10 state
  cutting funding for Michigan Merit putting
  into need-based aid

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Part VII Ill Tread Water, as Long as You
Think You Can Make It RainCreative Tuition
Financing Options

• Market-based tuition Texas, Miami of Ohio
• High tuition/High Aid Colorado, New York
• High tuition/less aid Massachusetts

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Part VIII Please Put Her Out of My
MiseryStaffing Cuts, Enrollment Freezes

• Part-time staff layoff notices in at least 15
  states
• Hiring freezes everywhere
• Retirement buy-outs
• Access maintained in some markets but
• Enrollments unfunded in most states
• Admissions cut offs, early deadlines, majors
  closed
• Agency consolidations, loan reserves used for
  base operating costs

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Part IX When The Phone Dont Ring, Youll Know
Its MeRestructuring of Governance, Emphasis on
Accountability

• Strengthen local boards/reduce decentralize
  State control some examples
• Massachusetts
• Texas
• Florida
• Report Card states Colorado, Florida, Virginia,
  Tennessee, Arkansas, New Jersey

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Part X Im Going Someplace I Hope I Can
FindComing Attractions

• Continued fiscal uncertainty
• Structural gaps in state funding
• Enrollment growth and change
• Governance uncertainty
• Continued pressure on accountability costs,
  productivity, outcomes
• Tensions between state/federal roles