Universities pinched by delayed funding

By Bobby Harrison/NEMS Daily Journal

JACKSON – Mississippi’s eight public universities could be hurt more than the local school districts by Gov. Haley Barbour’s decision to save about $125 million in federal funds for the upcoming fiscal year.
Under an agreement signed into law by the governor during the 2010 session, federal money the state expected to receive would be divided among several agencies.
The bulk of that money – about $85 million – would go to kindergarten through 12th-grade education. The second largest amount – about $15.3 million – would go to the public universities.
But Barbour announced last week that he and the legislative leaders have agreed to save the money for the upcoming fiscal year, which begins July 1.
House Appropriations Chair Johnny Stringer, D-Montrose, said he does not believe the decision hurts the local school districts because they have another pot of federal money – about $98 million – that also was passed by Congress.
Barbour cannot prevent them from spending that money, even though he has asked them not to.
But no other source of federal money exists for the institutions of higher learning, which are reeling from budget cuts caused by the unprecedented drop in state tax collections.
Part of the problem is that Congress acted much later than expected in approving help for the cash-strapped states.
By the time the legislation was passed in August, the new budget year for state agencies had started.
Barbour and many legislative leaders said the agencies already had made adjustments to deal with less state money, so the new federal money could be saved for another year.
Plus, the governor argues that the state legislation gives him discretion on whether to expend the federal money during the current budget year.
Hank Bounds, commissioner of higher education, agreed that the budgets at the eight universities already are in place and that he would not want to spend the full $15 million for the current year.
“If we were given the money now, we obviously would manage it,” Bounds said. “My preference would be to be given the opportunity to manage it.”
Plus, Bounds said, there is no guarantee that the universities will get the money when it is redistributed by the Legislature during the 2011 session.
Bounds said the money would help now because some of the universities face more difficult financial problems than the others for the current year.
For instance, Mississippi Valley State University suffered an 11 percent drop in enrollment. Universities officials were counting on a systemwide tuition increase of 6.8 percent this year and 6.9 percent the following year, plus record enrollment, to partially offset the loss in state funds.
With that big of a drop in Valley’s enrollment, Bounds said additional steps will have to be taken to deal with that school’s budget situation.
Late last year the College Board put in place what Bounds called “a business plan” to deal with the expected $185 million shortfall in state funds through fiscal year 2013, which will end June 30, 2014.
Under the plan, about 35 percent of the shortfall would be made up through tuition increases.
The rest would be absorbed through “efficiencies” and cuts, such as the 29 layoffs announced last week at the University of Southern Mississippi.
Mississippi State has in place an incentive program to encourage some faculty to retire. The University of Mississippi already has eliminated about 30 positions.
“What we said going into building the business plan is that if the loss of state funds is deeper than anticipated, we will have to cut more or raise tuition,” Bounds said. “If the loss of state money is less than expected, it will be an opportunity to not cut as much or to reduce tuition.”
The state appropriation for universities in 2010 is 13 percent less that 2009. To make matters worse, $66.2 million, or more than 13 percent of the universities’ total budget, comes from federal stimulus funds that will not be available next year.
Having to replace the federal stimulus funds, which are disbursed throughout the state budget, is why Barbour has said he wants to save the additional federal funds that the state will get as a result of the August action by the Congress and President Barack Obama.

Contact Bobby Harrison at (601) 353-3119 or bobby.harrison@djournal.com.