April 18, 2013 - Campus Budget Update
While much of the legislative focus to date in Baton Rouge has swirled around the Governor's now "parked" income tax swap proposal, I believe in the near future the attention will turn to House Bill No. 1, the proposed budget for the upcoming 2013-14 fiscal year which begins July 1. Clearly there are going to be some very difficult budget challenges for the Legislature to address.
Since my February 25 campus update about the Governor's proposed executive budget, we have continued to study it and its potential impact on Southeastern. If HB 1 is enacted exactly as proposed by the Governor, our revenues would be about $1.2 million less next year - assuming static enrollment and the implementation of the 10% tuition increase allowed under the GRAD Act. In addition, our expenses for retirement, insurance and risk management contributions are expected to increase by about $1.4 million. The net result would be a need for us to reduce budgeted expenditures next year by about $2.6 million.
In my February 25 campus update, I indicated concern about the magnitude of contingencies and uncertain revenue items included in the proposed state budget for next year. We now know a great deal more about these details, and I believe there is indeed much cause for concern. The proposed budget for higher education includes almost $490 million in one-time and contingent revenues. These funds are integrated in the proposed state budget in such a way that if the revenue is not realized, the funding for higher education is reduced accordingly.
Southeastern's part of the $490 million "statutory dedications from the over-collections fund" amounts to slightly over $20 million. Unfortunately, we have no way to predict how the legislative process will play out with regard to inclusion of these funds in the budget. As it stands now, given the uncertainty regarding these funds, our budget reduction for next year could fall somewhere between the previously mentioned $2.6 million and $22.6 million.
Of course, any additional reduction is made more challenging by the fact that our state support has been cut by nearly $40 million since the beginning of the 2009 fiscal year.
While these are sobering amounts, it is still very early in the legislative session which concludes June 6. As we all know from prior experience, much can happen over the span of the session. I anticipate that will be the case this year, and we should not be surprised to see the process unfold with many potentially drastic ups and downs before final resolution is reached.
I will continue to keep the campus informed as new developments come to light.