On the Hook in Louisiana

Louisiana won't fund its merit-based scholarship program for the rest of this academic year, requiring universities to make up the difference.

February 19, 2016

Facing a $940 million budget deficit, Louisiana will stop funding its merit-based scholarship program for the rest of the year. And if the Legislature doesn’t find new sources of revenue by June, Louisiana's commissioner of higher education warned, the state’s public colleges and universities will have to suspend operations.

Louisiana universities are facing the largest midyear cut in state history, Governor John Bel Edwards said in a televised speech last Thursday. Even if the Legislature can find additional revenue, higher education will need to cut $42 million this year. Louisiana's total higher education budget is $769 million, and if the Legislature cannot raise more revenue, higher education could face a $200 million cut.

“I don't say this to scare you. But I am going to be honest with you,” Edwards said. “No more tricks. No more smoke and mirrors.”

This semester, Louisiana will not provide the remaining $28 million needed to cover students’ TOPS scholarships. The scholarships are given to Louisiana high school students who meet certain academic requirements and are used by more than 50,000 students every year.

And next year, unless the Legislature shifts gears, the state will fund only 25 percent of the scholarships. In the fall, current students could lose their scholarships, and fewer high school students will receive them in the first place.

“Every student now in high school will have to bear most if not all of the cost of attendance to college,” Joseph Rallo, Louisiana’s commissioner of education, wrote in a letter to Jay Dardenne, Edwards’s budget chief.

High-achieving Louisiana students have been counting on the TOPS money, said George Pernsteiner, president of the State Higher Education Executive Officers association. For many residents, the program isn’t just important; it’s “almost a right that students earn” by excelling in high school and meeting the scholarship requirements.

“It’s difficult,” he said, “to take away something that people believe they have earned.”

But because the scholarship program is an agreement between the state and its students, Louisiana isn’t allowed to revoke the scholarships midyear. That’s why -- at least for now -- the cuts won’t affect students using the scholarships. For the rest of the semester, universities will have to pay for them, cutting other funding sources to make up the difference.

“One can only hope this is an attention-getting strategy, as a prelude to some necessary but tough decisions,” Paul Lingenfelter, past president of the State Higher Education Executive Officers association, said in an email.

Lingenfelter compared Louisiana’s strategy to the situation in Illinois, where a months-long budget stalemate has forced universities to cover the costs of over 100,000 students’ Monetary Award Program grants, which are meant to be covered by the state.

“Essentially college and university students are bearing the brunt of fiscal irresponsibility at the level of state government,” Lingenfelter said. “I don't think any state really wants its colleges and universities to operate on a shaky financial margin -- but the kind of fiscal policies being practiced in Illinois and Louisiana will fundamentally weaken higher education.”

In Illinois, most colleges chose to cover their students' scholarship costs, but it wasn't required, and colleges that couldn't afford the cost had to deny students the grant funding they were meant to receive. In Louisiana, colleges won't have that option.

"This is kind of new and uncharted territory," said Frank Ballmann, director of federal relations for the National Association of State Student Grant and Aid Programs. "I had never thought of the idea of state grants as a contract between two parties where one party might hand the obligation off to someone else."

Louisiana's arrangement is certainly better for the students, Ballmann added. At least for now, they won't have to drop out, and they won't be billed for the cost of the scholarship. But other than the elite privates and flagship publics, which likely have larger endowments, many Louisiana colleges will struggle to make up the difference.

Closed Colleges

It’s been a rough decade for Louisiana higher education. Since the recession, Louisiana has cut higher education funding by 41 percent -- more than any other state in the country -- and raised tuition by 66 percent. When the think tank Young Invincibles graded states on their support for public higher education, Louisiana got a D minus.

Even so, midyear cuts of this size are unprecedented, and Edwards’s announcement left students and university officials floundering. On top of the scholarship funds, the higher education budget cuts could leave Louisiana's colleges without the resources to finish out the semester.

“We do not know at this point exactly what this means for students,” F. King Alexander, president of Louisiana State University, said in an email to students after the governor's speech last week. “This is the first time such a suspension has occurred and no process exists for implementation.”

A $940 million budget deficit is serious, and Edwards is making it clear that everything is on the table. In his speech, he listed services that could face cuts: hospice care, aid for children with developmental disabilities, end-stage kidney dialysis. The services in jeopardy, he said, “literally mean the difference between life and death.”

And then there’s football.

“Many students will not be able to graduate [from college], and student athletes across the state at those schools will be ineligible to play next semester,” he said. “That means you can say farewell to college football next fall.”

In a letter to Edwards’s budget chief Thursday, Joseph Rallo, the higher education commissioner, confirmed that without new revenue, the state’s colleges would suspend classes this spring and graduation would be canceled. Students would receive a grade of incomplete for the classes they couldn’t finish in the spring, and as a result, athletes wouldn’t be able to play sports the next year.

Needless to say, football is important in Louisiana. The threat to the program generated national attention, along with some retaliatory cynicism.

But some hope that the threat will draw attention to the budget shortfall and help keep Louisiana colleges open through the semester, a goal that could have long-lasting implications for the local economy and low-income students.

Leaving college in the spring with a transcript full of incompletes will harm vulnerable students the most, Pernsteiner said. Even if Louisiana colleges open back up in the fall, even if scholarship funding reappears, how many low-income students will be able to come back for an extra semester?

“The students who don’t have means really become the ones who suffer,” he said, “and I think that drags down a whole economy in the years to come.”

But even if the Legislature raised taxes or found other sources of revenue, it’s unlikely that it will fund this year’s scholarships, Dardenne wrote in a letter to Rallo. He asked that the Board of Regents contact all systems and campuses and tell them not to expect any more funding this year.


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