Archive for Wednesday, November 19, 2014

Regents, university officials fear budget cuts ahead

November 19, 2014

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— University officials in Kansas and members of the Board of Regents are growing concerned that higher education may be on the chopping block next year as lawmakers try to deal with a projected $715 million revenue shortfall.

Although Gov. Sam Brownback won't announce his budget proposal until the start of the 2015 session in January, university presidents told the Kansas Board of Regents Wednesday that they don't even want to begin discussing tuition rates for next year until they get a better idea of what they can expect in the form of state support.

"We really don't know where the state is yet, and therefore to look at tuition and fees outside of understanding our whole budget is something that is of great interest and some concern," Wichita State University President John Bardo said.

Bardo is the current chairman of the Regents' Council of Presidents, which met earlier in the day to prepare its report to the board.

During that meeting, he highlighted a recent article by the conservative think tank Kansas Policy Institute which suggested, among other things, that universities could spend down their cash reserves to make up for cuts in state funding and to pay for a one-time cut in tuition rates.

"That sounds terrific," Bardo said. "The problem with that is that the state's not replacing it with anything, and so if you spend it down and you take down tuition, then the question you have to ask at the end of the day is, 'access to what?' Access without quality is no bargain."

"We all recognize the state is having financial issues. We get that," Bardo said. "But at the same time, you don't exacerbate those issues by creating an artificial problem."

Meanwhile, some of the regents themselves expressed concern about a proposal some lawmakers are advocating called "performance based budgeting," where each university's funding would be tied to specific performance measures.

During the board's annual retreat in August, several lawmakers asked the board to draw up a specific proposal for such a funding system, and a task force was formed to come up with a plan.

Regents President and CEO Andy Tompkins said that group has been developing a plan that assumes the performance-based money would be additional money on top of their base budgets, to be used as incentives for schools to achieve performance goals.

But in the wake of new revenue estimates showing that lawmakers will need to cut hundreds of millions of dollars in state spending over the next two years, Regent Fred Logan, of Johnson County, said he was starting to have reservations about the idea.

"I think our task force here has done a really nice job with the mission they were given. I'm still not convinced the mission is the right one," Logan said. "To me, the whole key is whether there will be some new funding devoted to this. ... I'm not very interested in forwarding a proposal that forms a pretext for simply reallocating existing funding."

Later in the meeting, as the board was voting to approve its list of policy initiatives it wants to push for in the Legislature, Logan added an item to oppose any changes in the way block grants are allocated among the universities.

For most state agencies, lawmakers approve detailed budgets that specify how much money is to be used for wages and salaries, purchasing supplies and other functions. But universities are funded with block grants — a pot of money set aside for the system as a whole, and divided among each institution based on its size and mission.

"The board doesn't want to get into the business here of saying we're going to take some existing funds from, let's say, Pittsburg State University, and we're going to give those to Emporia State University," Logan said. "I would hate to ever see a move to cannibalize one another in higher education. It would be a total catastrophe."

Comments

Dave Trabert 3 years, 5 months ago

This article doesn't mention it but the source of the recommended reserve reduction is unspent tuition. The Kansas Policy Institute proposal doesn't address any of the other cash reserves held by universities...just their unspent tuition money. http://www.kansaspolicy.org/ResearchCenters/BudgetandSpending/BudgetandSpendingStudies/120528.aspx

Table 8 in the KPI plan shows that universities accumulated $75.6 million in unspent tuition between 2003 and 2014. The KPI Budget Plan recommends requiring the use of half of that money through a one-time reduction in state aid; we also recommend that universities offer a one-time reduction in tuition with the balance of the increase and collectively retain an $11.8 million reserve as existed in 2003.

Each university would have the same resources available to spend next year under our plan...the reduction in aid would be covered by the use of their unnecessary tuition reserves. Full aid would be restored the following year.

Steve King 3 years, 5 months ago

What happens when you blow off your reserve? That's a temporary fix. And we still have the same problem, declining revenues.

Dave Trabert 3 years, 5 months ago

Universities would still have a reserve equal to the amount held in 2003 in that account. There is no record of universities claiming they had inadequate reserves. They did just fine with the previous amount and can do so again. Also, the reserves in this particular fund are only a small portion of total reserves.

Our plan shows how to balance the budget based on the new, lower revenue estimates. There is no need for tax increases or service reductions. The State just needs to make better use of existing resources and provide services at a better price.

Greg Cooper 3 years, 5 months ago

Dave, does it make any difference to you that it takes over $15 million in 2014 dollars to get the same value as $11.8 million in 2003. There's no telling why you can not make comparisons like this yourself, except that you don't want to present all facts. 20% reduction in cash reserves, which you advocate, is not a stimulating thought. Any thoughts son this?

John Sickels 3 years, 5 months ago

Dave never adjusts for inflation and he thinks we are too stupid to realize that.

Beth Newman 3 years, 5 months ago

"The state just needs to make better use of existing resources and provide services at a better price..." That's a lie. It's impossible to have better and efficient services for the taxpayer, which we want, without rationally raising taxes. In fact it's quite simple to accomplish. Your agenda however, isn't about a rational approach. In your view even if raising taxes would work(and the majority of Kansans would be behind it), it's wrong ideologically. Besides, most of the Kansans I know are more concerned about when it would be the best time pragmatically and rationally... to move away from this State. You know...to those States that are raising taxes for the well being of it's citizens. There are a few States left that practice real (for the people) Democracy. Governmental systems biased on lies like the one in the State of Kansas have become unattractive to the country as a whole... and no one is moving here. Run Away! Run Away!

Beth Newman 3 years, 5 months ago

Move to those states where members of the group-Anonymous- have access to established political authority. There is not only hope...there are many. I wonder how many folks in this state are even aware of such things.

Greg Cooper 3 years, 5 months ago

This is the exact comment Dave should be making at all times.

Lawrence Freeman 3 years, 5 months ago

If BGL is still there after Jan 1st they'll deserve the cuts!

Lawrence Freeman 3 years, 5 months ago

Probably, but just because we elect thieves and liars doesn't mean when should also hire them as well.

Jack Martin 3 years, 5 months ago

This issue is a perennial favorite of KPI, whether for universities or K-12 schools. We have addressed this multiple times, but will do so again.

These so-called "reserves" are measured by KPI in the summer. Tuition payments don't start coming in until September, so to pay employees and vendors until then we use these balances. And contrary to what is claimed above, there were cash management problems as a result of lower balances in the past. More at: http://publicaffairs.ku.edu/govrelations/state/updates/2013/apr30

We're following standard cash management practices. No business would spend down accounts needed to pay employees and vendors and be in business for long.

Dave Trabert 3 years, 5 months ago

These funds operate like a personal checkbook...the balance goes up when more money is deposited than is spent. The increases indicate that universities collected more than was needed to be spent, so we are proposing that some of that money be spent now.

I would be delighted to have a public debate with Jack Martin about cash management practices.

James Howlette 3 years, 5 months ago

I keep extra funds in my personal bank account in case something happens to my revenue sources or I face unexpected expenses. I'd save even more if I knew I didn't get paid as much during the summer. It's called fiscal responsibility. You might want to study up on that one, Dave.

Andy Anderson 3 years, 5 months ago

Just raise tuition. That's what a business would do. Complex critical thinkers in government schools need the work.

"Economists predict the cost of attending state colleges will soar to $120,000 by 2015. Currently over $40 billion in student loan debt has forced many former students into financial bondage or even bankruptcy."

http://inflationdata.com/Inflation/Inflation_Articles/Education_Inflation.asp

Mark Rainey 3 years, 5 months ago

Mr. Trabert, you appear informed, are very engaged, what is your motivation/income source? Why are you "advising" our elected officials? 
A quick search shows only a connection to a web of corporate and private anti-regulation and anti-climate change groups with difficult to track funding.  Here is a few that pop up with your name.

JHF, SFT,RF,SPN,CRLCF,AFP,DTDCF,FHR,PRI,CI,HF,NRI,CEI,KPF,IEA,BF,DCF,LHBF,JLF,TPN,EGS,IER,MI,AEI,IWF,CSE,MC,DT,GMU.

Dave Trabert 3 years, 5 months ago

KPI is an independent think-tank that advocates for free market solutions, limited government and the protection of personal freedom. Our work centers on state and local economic policy with primary emphasis on education, tax and fiscal policy and transparency. We empower citizens, legislators, and other government officials with objective research and creative ideas to promote a low-tax, pro-growth environment that preserves the ability of governments to provide high quality services

Tom Weiss 3 years, 5 months ago

I would think that if a think-tank is committed to advocating certain things, then it is not really a think-tank. More like an advertising firm or propagandist. I gather you were behind the Brownback fantasy of low-tax, pro-growth environment. What business in its right mind would move to a state that does not value education just to save a small amount of taxes? Or to a state that treats its low income workers with no respect - cutting them off from Medicaid and Food Stamps.?

James Howlette 3 years, 5 months ago

Independent for tax purposes. Financially and ideologically dependent on the Kochs. And I really hope you're using "objective" ironically, because it certainly cannot be used to describe your organization.

Dorothy Hoyt-Reed 3 years, 5 months ago

People like Trabert also suggest that k-12 schools spend down their reserves, and some few schools have. But when the state is late with the money, the staff doesn't get paid. My husband and I do not spend our emergency funds, unless things get really desperate. We look for other avenues of revenue, like our vacation fund or a second job, or sell something. Of course, people like Trabert don't think people should have emergency funds, and in reality, most people can't afford to have emergency funds. This really doesn't sound very fiscally responsible, Mr. Trabert. After all, this is not a real emergency. Nationwide the economy is doing well enough. This "emergency" was created and can be undone.

Steve King 3 years, 5 months ago

Spending down your reserve is not financially prudent. Especially in light of the State's rocky finances. A Business 101 book will tell you that.

Greg Cooper 3 years, 5 months ago

Yeah, well, financially prudent only applies to the prudent way of making sure the Kochs have what they want and Dave gets paid for making government policy for the neo-Republican legislature, which will also prudently get its payoff.

Joe Blackford II 3 years, 5 months ago

HERE'S WHERE KSU PRESIDENT SCHULZ COULD SAVE $5,000,000 + /YR, 2014- ∞

Close Pat Roberts Hall aka the Biosecurity Research Institute (BRI)

This Money Pit was established to fabricate the propaganda that KSU should be the home of the National Bio and Agro-Defense Facility (NBAF). Since completion, no research was conducted at the BRI until the USDA brought a handful of tick disease researchers from USDA, University of Wyoming. The "staff" of the BRI have primarily been posing in containment suits for TV propaganda, NOT DOING RESEARCH !

"Fix the BRI Expenditure.

Define circumstances under which closing the facility (BRI) would be considered, i.e., under what conditions would it be a “failure.” Use this process as another lesson for the need for transparency and inclusiveness in all major decisions."

REPORT OF THE RESEARCH INFRASTRUCTURE TASK FORCE

http://www.k-state.edu/president/initiatives/ritf/RITF_final_report.pdf

Tom Weiss 3 years, 5 months ago

This might be a good time for the University of Kansas to go private! The State should just turn over ownership of the buildings to the University and let it become private. The state's share of the costs have declined to only 21 percent. Yes, tuition would have to be raised, nearly doubled. But there would some savings in costs of administration because the university would not have to spend time and money dealing with the state bureaucracy. And they would perhaps eliminate much of the meddling by organizations like KPI.

Bob Zimmerman 3 years, 5 months ago

We'll now KU can blame the state govt. for declining enrollment, instead of.....

James Howlette 3 years, 5 months ago

Rising tuition from declining state contributions and a sluggish economy?

John Sickels 3 years, 5 months ago

I thought having a robust cash reserve was fiscally conservative and sound policy.

The "spend cash reserves" thing is a hobby horse of Dave Trabert and KPI. They bring it up a lot. Yet spending reserves as they advise is horrible, non-conservative fiscal management. It is sheer lunacy.

This is proof positive that KPI is ideologically committed to the destruction of public education, both at the K-12 level and at the university level. They WANT the cash reserves spent, because it makes it less likely that schools can weather the program cuts and teacher reductions to which KPI is committed.

John Sickels 3 years, 5 months ago

To repeat, the "schools should spend their cash reserves" argument of KPI is NOT CONSERVATIVE by any normal or sane sense of the word.

It is radical. Right-wing radical, but radical nonetheless.

Steve King 3 years, 5 months ago

What I don't see in the KPI plan is a defined path to replace drawn down reserves. That seems problematic.

Here's your sign...

Noel Radomski 3 years, 5 months ago

The question of reserves played out in Wisconsin and hopefully Kansas will be good stewards of public revenues, tuition, and fees. Looking exclusively at reserves is not the complete picture; you need to determine if the reserves are obligated or planned. If they are obligated or planned then it's inappropriate to argue that the campus or system are poor stewards; it's just the opposite.

Noel Radomski UW-Madison

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