Funding Woes

As Illinois, Louisiana and Wisconsin threatened nine-figure reductions in higher education funding, public colleges and universities in those states made their own threats in return. System leaders warned -- often and loudly -- that layoffs, program cuts and the general welfare of the states' college students were on the line if legislators went forward with the proposed cuts.

Now two of the three states appear to be on the path to dramatically minimizing funding reductions. But while Louisiana and Illinois staved off cuts that were roughly $600 million and $400 million, respectively, the University of Wisconsin System remains vulnerable to a $300 million reduction over the next two years.

And unlike in Illinois and Louisiana, where the legislatures plan to raise taxes to offset cuts proposed by their governors, Wisconsin’s Republican-controlled Legislature hasn’t showed a public willingness to lower the proposed cuts, although a joint committee on finance is expected to discuss the UW system this week.

State higher education budgets are precarious things. They’re often first proposed by a governor as part of a state’s overall budget, and then sent to the state Legislature, which debates and refines funding proposals until a final state budget is passed, usually in May or June.

Funding bills can change drastically in scope throughout the legislative process, depending on the politics involved.

In Illinois, for example, the legislative and executive branches are controlled by different parties, and thus the state Legislature -- which is controlled by a supermajority of Democrats -- was expected to rein in the $400 million in cuts proposed by Republican Governor Bruce Rauner. The governor's budget proposed $6 billion in spending cuts. Illinois has a broken pension system with a shortfall of $111 billion, as well as the worst credit rating of any state in the country.

“Nobody figured we’d get off without some reduction, [but] most everyone understood what the governor proposed was not going to be what we had to live with,” said Randy Dunn, president of the Southern Illinois University System, which stood to lose $62 million under Rauner’s plan.

Democratic legislators in Springfield, the state’s capital, last week said they would reduce public college funding by 6.5 percent instead of 31.5 percent. They plan to raise taxes to close the gap.

In Louisiana, where both the governorship and the state Legislature are controlled by Republicans, officials are also working to fund universities at higher levels than Governor Bobby Jindal originally proposed, and have drummed up $615 million in additional revenue, the bulk of which is going to universities. Instead of an 82 percent higher education reduction, the House of Representatives is now proposing just $40 million in cuts. A bill has been sent to the Senate for approval.

Though Louisiana's Legislature has lessened funding cuts, it does not seem ready to give Louisiana’s public universities control over tuition -- which is set by lawmakers. The state’s House of Representatives last week voted against two measures that would have given universities the ability to set their own tuition rates.

Advocating for More

Somewhere in the legislative process, university leaders testify before state leaders and lobby for funding. And when massive cuts are threatened, presidents try to be as loud as possible.

In Illinois, the presidents and trustees of all nine of the state’s public universities paid a simultaneous visit to lawmakers in Springfield this week, seeking more state funding.

“One of the things that any president has to do in providing budget testimony to legislators, particularly when you’re looking at the level of cuts we were, is to try to equate the cut to what it means to the university, beyond just dollars,” Dunn said. “Part of the challenge that presidents have in these situations is articulating the impact.”

Yet often leaders with a lot to lose do more than testify. This year, with massive cuts looming, several leaders have equated cuts with layoffs, or more financial strain on students.

When the Louisiana Legislature threatened $392 million in cuts, the leader of the state’s largest university system threatened financial exigency in return. The possibility of such a drastic move by Louisiana State University -- which would have eliminated tenured faculty jobs, forced programs to close and likely damaged the reputation of the university -- made headlines nationwide, in part because of its rarity and severity.

When funding cuts were threatened in Arizona this year, Arizona State University President Michael Crow sent an email to alumni slamming the state Legislature. And when a 14 percent cut was passed in March, Crow called the reductions a “drastic remedy” to budget problems and a “setback for Arizonans who already are frustrated by the state's sluggish economic recovery.”

Daniel Hurley, incoming president of the Presidents Council, State Universities of Michigan, and former head of government relations and state policy at the American Association of State Colleges and Universities, called the proposed cuts in Louisiana and Wisconsin “historically extreme.”

“The sheer magnitude of those proposed cuts really required an elevated response on the part of the public higher education community,” he said.

Proposed cuts in Wisconsin prompted the University of Wisconsin at Madison's chancellor to publicly announce a reduction in some 430 jobs, another move that made headlines.

“Our programs and services are all useful and worthy of support, but we have attempted to prioritize those most essential,” Chancellor Rebecca Blank wrote in an April blog post announcing plans for layoffs and budget cuts. “I recognize that this process will impact good people and limit our ability to serve students and the state. I particularly regret the impact these cuts will have on our employees and their families.”

Blank declined to be interviewed for this article.

The Madison campus is not alone. If Republican Governor Scott Walker’s cuts are approved, the other dozen or so campuses in the UW system are planning to offer early retirement to more than 1,000 employees, cut 330 positions through layoffs and attrition, and leave more than 90 vacant positions open for the foreseeable future, according to an analysis by the Wisconsin Budget Project.

And UW system leader Ray Cross threatened to quit if Walker's proposed cuts aren't reduced.

Wisconsin’s Uncertainty

Walker, a 2016 presidential hopeful, has made tax cuts a trademark of his tenure, leaving little revenue for a discretionary budget item like higher education. The Republican-controlled Legislature has, up until now, backed him in this strategy. Last year lawmakers approved his plan for $541 million in tax cuts, and Walker says he’s reduced taxes by $2 billion since 2011.

Yet Wisconsin is a state where legislators control much more than just funding. Walker’s proposal for the next two years includes $300 million in cuts -- a 13 percent reduction in the higher education budget -- to the state’s only four-year public university system, as well as mandatory tuition freezes. If the provision is approved, come 2017 Wisconsin’s public universities will have forgone in-state tuition increases for four straight years.

The Legislature is slated to discuss the University of Wisconsin’s budget this week. Leaders of the joint finance committee -- whose offices did not respond to requests for comment -- have thus far been mum on Walker’s proposed cut.

“It’s really a mixed bag at this point in terms of what the Legislature is saying,” said Tamarine Cornelius, a policy analyst with Wisconsin Budget Project. “It’s really up in the air.”

However, legislators do plan to ax the only provision in Walker’s budget that some university leaders were pleased about: increased autonomy. In the face of cuts, Walker had planned to create a separate authority that would give the UW system more control over its budget. That idea will likely be scrapped, lawmakers have said.

More and more, tuition is overtaking state funding as the primary revenue stream for public colleges. Last year states increased higher education spending 5 percent overall, the third consecutive year of improved funding. But as recently as 2012 the average state's spending was cut by 8 percent, and higher education funding remains below pre-recession levels in 47 states.

Planning Blind

A drawn-out budget process makes it difficult for colleges to plan for the next year.

Decisions on tuition, enrollment, faculty hiring and whether to fund new programs or cut old ones are often made without knowledge of what state funding will be for a fiscal year that is often just months or, in some cases, weeks away.

“We’re having to gamble on a whole lot of things,” F. King Alexander, president of the Louisiana State University System, said in April, well before legislators’ decision last week to reduce the planned cuts.

Although legislators in Illinois plan to cut around 6.5 percent of the state’s higher education budget, it’s not a done deal. The governor could veto the Legislature’s fiscal 2016 budget, which is expected in the coming weeks. If that happens, the Legislature will likely override the veto, but the governor can call lawmakers back to Springfield in the summer for special sessions aimed at finding a compromise.

In short, it could be a while before universities in Illinois receive a final funding figure.

“More so than any other public institutions, and certainly private organizations, public colleges and universities are put in an incredible bind when there are significant state budget cuts proposed,” said Hurley, the state policy expert.

“That time between when the state budget is proposed and when it’s passed, a lot can happen in that time frame. These are massive enterprises, and a lot of planning has to take place,” he continued. “When there are potential huge cuts out there looming, but it’s not quite clear what’s going to happen… it causes for a lot of anxiety and tension.”

For example, when Southern Illinois University’s Board of Trustees considered tuition rates for the coming year, it had to do so without a clear idea of how much revenue would come from the state. At the time, the 31.5 percent in cuts proposed by the governor was the only figure on the table, and neither SIU’s president nor its trustees knew how much funding the state would actually cut.

The board ended up raising tuition by 5 percent.

“We were looking at tuition with great uncertainty as to what the state was doing,” said Dunn, the SIU leader. “There was still, back in April, a very real concern that while it may not be the 31 percent the governor proposed, we could be looking at half that.”

The university developed contingency plans in case cuts were severe. Officials created lists of potential reductions and prioritized them by importance and savings.

“The idea would be that we could flip the switch on a sufficient number of these lists we’ve been working on to match the amount of money we had to come up with,” Dunn said.

Illinois saw a substantial, and rare, 21 percent increase in state funding last year (most of the additional revenue was earmarked for staff pensions, and universities didn't actually see an increase in operating support), and Dunn said that perhaps college leaders need to adjust to a new funding reality. Many believe that Rauner, who was elected governor in 2014, is likely to propose higher education cuts again.

“A lot of us in Illinois looked at what was going on in other states… and for many years we were able to say, ‘Thank goodness we’re in Illinois,’” Dunn said. “We didn’t see these stories of disaster that were taking place in some other areas of the country. And there was some comfort in that. Maybe some of us got too comfortable.”