State Cuts Grow Deep

Experts had predicted states would have to cut higher education funding. The scope is becoming clearer every day.

May 15, 2020
 
Istock.com/Cynthia Shirk
University of California, Los Angeles

Seemingly daily lately, officials in states around the country have announced the need to make major cuts that could hit colleges and universities. And Thursday was no exception, as California governor Gavin Newsom said the state would have to cut higher education by $1.7 billion to close a mammoth $54.3 billion budget hole caused by the pandemic.

Among the $6 billion in cuts to the state budget Newsom announced is a $400 million hit to California State University, according to state budget documents. The University of California was cut about $363 million. California Community Colleges will get $740 million less than last year.

Newsom, a Democrat, at a press conference lamented that just in January, the state was celebrating a record surplus and all-time low unemployment. But “just like that, in almost a blink of the eye,” he said, the state’s expected revenue dropped by almost a fourth.

On the other side of the country, the City University of New York system is worrying about “potentially deep cuts to our academic programs, campuses and our students” after the state’s latest fiscal plan two weeks ago predicted the shuttering of businesses, the dimming of the lights on Broadway and the loss of jobs during the pandemic will force Governor Andrew Cuomo, a Democrat, to make $8.2 billion in cuts next month.

In Colorado, a new projection Tuesday on how that state’s finances are being affected by the pandemic found that state lawmakers will have to make $3.1 billion in cuts. At the least, it would wipe out the state’s plans to increase its spending on higher education by 7 percent, and kill initiatives like forgiving the student debt of teachers.

When the pandemic hit, state budget and higher education experts predicted that colleges and universities, already facing their own financial problems during the pandemic, would face the additional blow of state budget cuts. States nationwide are seeing tax revenue drop as they have to pay additional costs -- everything from testing for the virus to providing medical care during a pandemic. But it was hard to tell how bad it was going to be.

States, though, are now beginning to see the impact the outbreak is having on tax collections, and they being able to put a number to the cuts they will have to make in the upcoming budget year -- which, depending on the state, will begin in the next few months. Governors or budget leaders in legislatures have begun announcing that they will have to make billions in cuts, and in many states, they are telling colleges and universities to start preparing plans for surviving with less state money.

“The new revenue forecasts are showing steep declines,” said Jeff Chapman, director of the state fiscal health project at the Pew Charitable Trust. Even so, the cuts could be even deeper depending on how long the recession and the pandemic continue. “There are still a lot of questions about how deep the drop will go and how long it will last,” he said.

Just this week, in addition to the bad news coming out of California and Colorado, Oregon’s Higher Education Coordinating Commission on Tuesday released its assessment of the effect the cuts Governor Kate Brown, a Democrat, is preparing would have on the state's colleges and universities. Brown told state agencies last month to prepare plans for taking an 8.5 percent cut over the two-year budget cycle.

But because the state is about to begin the second year of that cycle, that would work out to be a 17 percent cut, said Ben Cannon, the commission’s executive director, in an interview. More federal aid could soften the blow, as would dipping into the state’s rainy day fund, he said.

But the cut would cost the state’s public universities $71 million and its community colleges $54 million, he said, which will likely mean more layoffs. “All of the colleges and universities have implemented furloughs, and in some cases layoffs,” Cannon said in an interview. “If the potential state budget effect is enacted, we would see additional furloughs and layoffs.”

The day before, on Monday, Democratic Nevada governor Steve Sisolak declared a fiscal state of emergency, projecting a $741 to $911 million budget shortfall. “With the closure of Nevada businesses, including the gaming industry, that was necessary to protect the health of Nevadans, the drop in revenue is not unexpected and it is significant,” Sisolak said in a statement.

The announcement came just a few days after Nevada’s Board of Regents, already anticipating state cuts, discussed how they’d go about cutting colleges’ budgets by 6 percent, 10 percent and 14 percent, with students being hit with a surcharge on top of tuition in the worst scenario.

Also on Monday, Louisiana state economic forecasters for the first time estimated how much the state will have to cut its budget in the upcoming year. They came up with $500 million to as much as $1.5 billion.

"No crisis we've had comes anywhere close to this," state legislative economist Greg Albrecht told Louisiana’s budget writers, according to The News Star, in Monroe, La.

Louisiana’s colleges were already in a precarious situation. Kim Hunter Reed, the state’s commissioner of higher education, told state lawmakers that the state’s colleges have already lost $97 million due to the pandemic. Funding from Congress’s CARES Act, approved in March, “in no way will make sure we have all that we need,” as the losses continue to mount. “As you know we are still in this fight, still in this recovery,” she told the House appropriations committee.

That was just this week.

Last week, Ohio governor Mike DeWine, a Republican, announced the state will have to make $775 million in cuts during the remainder of the current budget year, which ends June 30. That includes $110 million from higher education. It means a 3.8 percent cut for the state’s colleges, including a $14.9 million hit for Ohio State University.

The university has already taken steps like pausing hiring and pay increases, its spokesman Benjamin Johnson said. The latest cut would come on top of the 5 percent to 20 percent cut the university’s administration has told colleges to begin planning for.

And two weeks ago, on May 2, the chairmen of the Georgia Legislature’s appropriations committees jointly wrote state agencies, warning them to prepare for 14 percent across-the-board cuts, as lawmakers prepare to find nearly $4 billion in cuts from the state budget in coming weeks.

"We find ourselves in unprecedented times. COVID-19 has dealt a blow to our local, state, national and world economies," the letter lamented.

Terry England, the Republican chairman of the House appropriations committee, said in an email, “I do expect that higher ed will be participating in the cuts here in Georgia.”

In response to the letter, University of Georgia regents asked the system's 26 campuses to ready a plan in which the system’s chancellor and presidents will be furloughed. All faculty and staff will also face furloughs of between four and eight days. Those with the highest salaries would have to take 16 days, resulting in a 6.2 percent pay cut.

And three weeks ago, on April 23, Virginia’s General Assembly agreed to freeze new spending in the budget it had passed in March, until the state can get a better handle on the impact the pandemic will have on its coffers. Put on pause was higher education funding, including giving colleges additional funds in return for freezing tuition.

The gloomy details about state cuts come as House Democrats on Tuesday pushed for another coronavirus relief package, including $500 billion in aid to states to lessen their cuts.

The clearest tie between federal aid and state higher education funding came last Friday when Missouri state legislators decided to put on hold a 10 percent cut in higher education funding to see if Congress sends the state more money.

If it doesn’t, the cuts would go into effect, said Paul Wagner, executive director of the state’s Council on Public Higher Education, an association made up of the presidents and chancellors of Missouri’s 13 public four-year institutions and the president of the University of Missouri system.

In Congress, the House could as early as today approve the $3 trillion plan Democrats proposed Tuesday, which would require that states not cut higher education funding as a condition of their share of an additional $90 billion state stabilization fund for education. Colleges and universities would also get another $37 billion under the proposal.

But Republicans who control the Senate, and who have already approved $3 trillion in coronavirus relief, are in no rush to consider another package. Republican Senate Majority Leader Mitch McConnell told reporters he wants to assess how well the money spent so far is taking care of the country’s needs.

Only if Republicans, working with the Trump administration, decide another stimulus package is needed will they engage with Democrats on what should be included, McConnell said.

However, Republicans are facing pressure from Republican state officials. England, the Republican chairman of the Georgia House appropriations committee, and Blake Tillery, his counterpart in the Senate and also a Republican, wrote the state’s congressional delegation two weeks seeking the aid for the state.

“We share your regard for conservative spending practices, and despite the expected reductions in force and services for our people because of these painful budget cuts, we will do our part,” they wrote. “In turn, we respectfully ask that you advocate and support the appropriation of $500 billion in flexible state stabilization funds. The money is needed to help offset greater upheaval and longer recovery in Georgia.”

Meanwhile, California State University chancellor Timothy White lamented Thursday’s cuts. “While the fiscal outlook set forth in Governor Newsom’s May budget revision is not unexpected, it is indeed daunting and portends challenging times across the California State University and the entire state,” he said.

University of California president Janet Napolitano said in a statement, “The University of California recognizes the unprecedented challenges California is facing in the wake of COVID-19 and regrets that Governor Newsom was put into a position to steeply reduce the university’s budget.”

The cuts being discussed are raising fears of a repeat of the budget reductions colleges and universities faced in the last recession about a decade ago. 

“We must avoid the types of devastating cuts that turned more than 500,000 students away from our colleges in the Great Recession. Now, more than ever, community colleges must stay strong for California,” Eloy Ortiz Oakley, chancellor of California Community Colleges, said in a statement, after news of the cuts.

The cuts being discussed is raising fears of a repeat of the cuts colleges and universities faced in the last recession about a decade ago. 

“We must avoid the types of devastating cuts that turned more than 500,000 students away from our colleges in the Great Recession. Now, more than ever, community colleges must stay strong for California.” ” Eloy Ortiz Oakley, chancellor of California Community Colleges, said in a statement, after news of the cuts.

The cuts being discussed are raising fears of a repeat of the cuts colleges and universities faced in the last recession in 2008.

“We know that state resources will be constrained at least for the short-term future,” Eloy Ortiz Oakley, chancellor of California Community Colleges, said in a statement. “But we cannot allow what happened during the Great Recession of a decade ago to repeat itself. Severe budget cuts to higher education at the time forced community colleges to turn away 500,000 students, allowing California to fall further behind in the production of college-educated workers and hindering economic recovery.”

Angie Paccione, executive director of the Colorado Department of Higher Education, worried in an interview that the state cuts would hit students again.

She noted that before the last recession, students paid for only 30 percent of the cost of colleges. But after cuts brought steep tuition increases, they now pay 70 percent, which in turn has led to greater student debt. “Now they carry the burdens of the loans to their graves,” she said.

“We can’t let that happen again, and have [the amount of costs paid by] tuition go up to 80 percent,” she said. However, among the programs recommended for cuts in Colorado, in a legislative report, is a new program that would have forgiven the student debt of up to 100 teachers a year.

But Cannon, in Oregon, said institutions likely won’t be able to rely raising tuition this time, and the impact of the state cuts will be layoffs. “It is far less likely, or close to impossible, for colleges and universities to go back to that well to offset state reductions. I don’t think we have that tool in the tool kit,” he said.

“To ask students and families to take on more debt seems implausible.”

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