The budget situation in Nevada is so dire that lawmakers there could cut more than twice the amount they spent on higher education last year and still not fill the state’s projected $1.2-billion shortfall.
Despite the gap, which equals nearly a third of the state’s spending, the incoming governor, Brian E. Sandoval, a Republican, has pledged that he will not raise taxes to put the state’s budget back into the black.
Mr. Sandoval is one of a dozen Republicans who were swept into governors’ offices in November promising to hold the line on taxes and rein in state spending. Half of those states—Maine, Nevada, Ohio, Pennsylvania, South Carolina, and Wisconsin—face shortfalls so large that they nearly equal or even surpass the entire amount the state spends on higher education.
Those enormous budget gaps, and the likely battles over where to slice spending without tax increases, put public colleges in those states at the greatest risk of steep cuts in financial support during the legislative sessions that will begin this month in many states.
At the same time, the newly elected Republican governors, assisted by a big new group of legislators from the same party, may be willing to apply their philosophy of small government to higher education by considering measures to loosen state regulations, which colleges often say impede their ability to operate efficiently and save money.
Of the 28 new governors elected in November, 18 are Republicans. Over all, the party will control 20 state governments, up from nine. Democrats will hold control of both the legislature and the governor’s mansion in just 11 states.
Daniel Klaich, chancellor of the Nevada System of Higher Education, says the new governor, who earned a bachelor’s degree at the University of Nevada at Reno, seems ready to give the system more independence. But the positive effects of less regulation, such as greater control of construction projects, may still be erased by steep reductions in state money, the chancellor says.
“I do think he wants to give the universities and colleges more control of their own destiny,” Mr. Klaich says of the new governor. “But all of those positive things have to be measured in the context of ... the magnitude of the budget cut he might present.”
The new crop of governors will take over at a time when many states continue to grapple with fiscal difficulties. While the nation’s economy is slowly recovering, at least 35 states anticipate revenue shortfalls for the 2012 fiscal year (which begins for all but four states in July), according to a November report by the National Conference of State Legislatures. In those states, tax revenues are expected to fall $82-billion short of spending.
In addition, 15 states face a total of nearly $27-billion in midyear deficits, which they will have to close by the end of the 2011 fiscal year. Since last July, midyear cuts in eight states have cost colleges a total of nearly $712-million, according to the state-legislature group. In all, states have had to close nearly $400-billion in deficits since 2008.
The next fiscal year will also be difficult because the $54-billion in federal stimulus funds meant to shore up education spending will be gone. In fact, many states used up those allocations in the 2010 budget cycle. That money largely saved higher education from major cuts in most states; nationally, spending on public colleges fell by less than 2 percent from the 2008 to 2010 fiscal years.
The forecast may be even bleaker in some states, like South Carolina. It cut higher-education appropriations by more than 15 percent between 2008 and 2010, even with the use of federal dollars, according to the Grapevine Project at Illinois State University, which tracks state money for higher education.
New Political Climate
While a year of tough budgets is familiar to many college officials, the political climate in which they will operate has shifted significantly with the election of several state leaders who claim the mantle of the Tea Party and who take their cues from Gov. Chris Christie, the New Jersey Republican elected in 2009.
Governor Christie has gained national attention for refusing to raise taxes while slashing nearly $11-billion from the state’s budget, including $173-million from higher education. That amounted to a reduction of about 15 percent for most four-year colleges, prompting a 4-percent tuition increase for in-state students at Rutgers University and warnings from other colleges that they will have to consider limiting course offerings and deferring maintenance on campus buildings.
But the political and practical difficulties of simply cutting spending are apparent in at least a half-dozen states where the size of the budget deficit eclipses all of higher-education spending and, in some cases, many other areas of the budget as well. Gaps that large put governors and lawmakers in the difficult position of having to choose among such priorities as health care for low-income residents, public safety, and campuses.
“If we eliminated every bit of state government except education and Medicaid, we couldn’t eliminate the budget deficit,” says State Sen. A. Shane Massey, Republican of South Carolina.
The state’s new governor, Nikki R. Haley, a Republican backed by the Tea Party, has sworn off tax increases as a way to fill the state’s $877-million revenue shortfall, which nearly equals the amount it spent on higher education in 2010.
The election results make it clear that there’s very little public appetite for any tax increase, Senator Massey said.
Even with little room in the state budget for spending increases, lawmakers are still interested in making sure that public colleges are accountable for the state money they do receive, and that they remain affordable for state residents, he says. “The real concern is that universities have had dramatic increases in tuition.”
That sentiment led the state’s Budget and Control Board last year to put a hold on new construction at any four-year campus where tuition had increased by 7 percent or more in 2010, and at any two-year campus where tuition had gone up by 6.3 percent or more. It’s not clear if the new governor will continue to support that restriction, which so far has had little, if any, effect on campus construction projects, because the rule didn’t apply to work already under way and made exceptions for deferred-maintenance or work to fix safety problems.
Economic Catalyst
While several Republican governors and legislators have expressed concern about the rising costs of higher education, many also view colleges as a tool for economic development.
In Maine, State Sen. Richard W. Rosen, a Republican, says there is broad recognition that higher education was underfinanced during the recent fiscal downturn. His peers, he says, now see colleges as partners with the state in developing the economy.
But the new governor, Paul R. LePage, a Republican who was backed by some Tea Party supporters, has said he will not raise taxes to fill the state’s projected $436-million revenue shortfall. That gap dwarfs the $264-million that Maine spent on higher education in the 2010 fiscal year, according to the Grapevine Project.
Even without budget increases on the table, there are lower-cost ways that the state and its colleges can work together to improve Maine’s degree-attainment rate and the economic climate, Senator Rosen says. He is interested in the governor’s proposal to add a “13th year” to high school, essentially a dual-enrollment program that would allow students to enroll in online or distance-education courses, largely at community colleges, and earn college credits while living at home.
In Nevada, says Mr. Klaich, chancellor of the higher-education system, the new governor wants to explore the economic-development possibilities of colleges. He has said, for example, that he wants to focus more higher-education programs on the economic needs of the state.
But public colleges “can’t do it on nothing.” Mr. Klaich says. “And we can’t do it as budgets continue to be in a free fall.”
Slippery Slope
Similar tensions exist around the country between increased expectations for higher education and probable budget cuts. In many states, that conflict has drawn attention to the debate over how much freedom to give colleges to manage their own affairs.
Many college officials, while continuing to lobby for more financial support, are also focusing more on efforts to increase their autonomy. Receiving a smaller share of money from the state, they argue, entitles them to greater freedom from government oversight.
In South Carolina, public colleges are backing legislation to free them from state rules on construction, personnel, and purchasing. A similar proposal stalled in 2010, but the bill appears to have a better chance of passing this year, Senator Massey says.: “Hopefully we’ll be able to give them some flexibility.”
Eric D. Fingerhut, chancellor of the Ohio University system, says Governor-elect John R. Kasich, another Republican who has pledged not to raise taxes, appears to support colleges’ economic-development role. He has, for instance, talked about the need to increase the amount of research that can be commercialized, Mr. Fingerhut says.
But the task of preserving higher-education appropriations in Ohio is daunting. The projected budget deficit for the coming year is $3-billion, compared with the $2.2-billion the state spent on higher education in 2010.
Mr. Fingerhut is hopeful that the new governor, who earned a bachelor’s degree at Ohio State University, will support a bill to streamline the contracting process for campus construction projects. But the chancellor adds that he doesn’t consider such autonomy as a trade for giving up state money.
Elsewhere, Mr. Klaich says he would like state leaders in Nevada to eliminate some regulatory constraints that cost the university system time and money. In particular, he argues, oversight of construction by the state’s Public Works Board can delay the building process, and subjecting campus staff members to both the university system and the state’s personnel system involves unnecessary bureaucracy.
But such changes in state oversight would not offset the effects of deep budget cuts that the university system has already endured, much less further reductions that may be looming, he says. Previous cuts have resulted in the elimination of nearly 700 positions, about 9 percent of the system’s work force.
Budget cuts may also result in tuition increases that would put college out of reach for a large portion of the fast-growing number of low-income and minority students in the state, he adds.
Ultimately, he says, cutting the system’s fiscal and regulatory ties to the state creates the possibility of severing the relationship between Nevada and its public colleges entirely.
“The state system is being asked to be more entrepreneurial and become more privatized,” he says. “And the question is, How far is the state willing to go? That’s the discussion I think we’re going to have.”