Restoration but Little Relief

New Jersey colleges get some funds back in final spending bill, but must absorb $150 million in cuts -- and capped tuition.
July 10, 2006

As the smoke cleared on New Jersey’s budget situation over the weekend, college officials did not like much of what they saw.

The $30.8 billion budget signed into law by Gov. Jon S. Corzine early Saturday morning -- after a statewide shutdown inspired by disagreement between the governor and legislators over how to close the state's structural financial deficit, which this year soared to $4.5 billion -- restored nearly half of the more than $300 million in state support for colleges and universities that the governor had proposed cutting in his original spending plan in March.

But the $150 million or so in reductions that remain will take a serious bite out of the budgets of many institutions in the state – and the final budget legislation also caps at 8 percent the amount that New Jersey’s public colleges can raise tuition next year to try to close their budget gaps.

The final spending bill that Corzine signed gives the state’s public colleges the thing they wanted most: The state backed away from a plan to require the state’s four-year public colleges to pick up, for the first time, any increases in employees’ pension, health and other benefits. That proposal would have added $80 million in fringe benefit expenses to the colleges’ budgets in 2007, and college officials were even more troubled by the philosophical shift such a change would have represented than they were about the immediate financial costs.
The governor’s original spending plan also called for a 10 percent reduction across the board in permanent operating support for the institutions, which would have amounted to a combined $169 million loss for public four-year, public two-year, and private institutions. In the end, the legislation signed by Corzine Saturday will restore about $71 million, or 42 percent, of that total cut, Jane Oates, Corzine’s top higher education aide and executive director of the state higher education commission.

The state’s private colleges and the county colleges – New Jersey’s community colleges – had greater proportions of their funds restored than did the four-year public universities, Oates said. The private colleges will receive $19.5 million in 2006-7, down from $24 million the year before, and the two-year institutions had $9.5 million, or 60 percent, of their total $16.3 million cut restored. State officials said they had made a particular priority out of restoring funds for the two-year and private institutions, given the large numbers of low-income state residents that they educate.

Significant pools of money were not restored, however. In addition to the nearly $100 million in base appropriations that the colleges will lose, they also will have to pick up $40 million in salary increases that the state has negotiated for unionized employees and has historically paid on the institutions’ behalf.

College officials were also deeply disappointed by Corzine’s decision to veto funds for two relatively small programs that legislators had agreed to restore. The governor’s veto statement said he had excised from the budget $4.3 million for the Outstanding Scholars Recruitment Program, which provides scholarships aimed at keeping talented high school students in New Jersey to attend college, and $3 million for the state’s Higher Education Incentive Endowment Fund, which provides state matching funds for institutions that raise private funds. (Some college officials expressed frustration that the governor vetoed those funds but sustained a $21 million earmark for the University of Medicine and Dentistry of New Jersey, whose well-publicized governance problems are perceived to be at least partially responsible for the tough sledding the state's public colleges are having right now.)

The budget reductions will leave most of New Jersey's public colleges with significant shortfalls, and the final budget legislation limits their ability to close those gaps in the way that many public institutions often do: by passing the costs along to students. The budget measure says that any four-year state college that increases its tuition and student fees by more than 8 percent will lose 5 percent of its state appropriation for every percentage point the increase exceeds 8 percent.

The legislation also bars four-year institutions from providing any salary increase to "senior managerial employees," which state officials said was designed to ensure that the colleges direct their reduced resources toward classroom instruction and other purposes that directly aid students.

On top of the cuts, the tuition cap puts New Jersey's colleges "between the proverbial rock and a hard place," said Paul Shelly, communications director for the New Jersey Association of State Colleges and Universities, which represents nine public four-year institutions. "It makes a challenging situation extremely challenging."

In a statement Sunday, officials at Rutgers University, the state's flagship institution, said they were still assessing exactly what impact the finalized budget cuts would have. But "it is evident that Rutgers will have to increase tuition, lay off employees, eliminate positions, cancel courses and scale back programs and services across the university," the statement said.

Some colleges in the state had laid out worst-case scenarios of the steps they'd have to take if the original, full budget cuts had taken effect, and officials at some of those institutions said they hoped that the partial restorations would allow them to abandon some of the direst possibilities.

Matt Golden, director of communications and media relations at the College of New Jersey, in Trenton, said its officials believed the final spending bill would restore about $4 million of the $12 million that the college had expected to lose under the governor's original budget. (The college will particularly feel the veto of the funds for the Outstanding Scholars Recruitment Program, as it and Rutgers University, the state's flagship institution, attract the lion's share of those students, and the College of New Jersey has committed to using its own funds to fulfill the commitments made to students already enrolled through the program for 2006-7.)

Golden said that college officials were hopeful that the additional funds would allow them to avert a weeklong "temporary layoff" that the college had scheduled, if necessary, in January. Golden said the college also hoped to restore planned reductions in the library acquisitions budget. Beyond that, he said, the college will work its way through its list of possible program eliminations and other budget cuts and figure out which other ones it might avoid.

He and other college officials in New Jersey said they were especially concerned because the state's budgetary picture seems unlikely to improve significantly in the near future.

Oates, who became the state's top higher education official in March, just before Corzine unveiled his brutal budget for colleges, agreed, noting that as of now, the state faces a $2 billion budget deficit for 2007-8.

"I'm not sure that I could tell you that higher education's not going to be in the same situation this time next year," she said.


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