June 3, 2014 - Legislative Update From The President
As it relates to higher education, HB 1 (the state budget for the upcoming 2014-15 fiscal year) appears to have ended the legislative process in fairly similar condition to how it started. Specifically, no additional reductions were made to state funding for higher education, and institutions stand to benefit from additional resources generated from tuition increases planned for this fall. One caveat is that many legislators continue to express serious concern regarding future budget projections, particularly for the 2015-16 fiscal year.
Recent press articles have suggested that the budget, as approved by the Legislature, includes pay raises for state employees. Unfortunately, there is no additional state funding provided in HB1 for raises in higher education. As such, any pay raises would have to come from additional resources generated by the tuition increase this fall. As I have reminded everyone in prior communications, the current fiscal year operating budget was balanced using one-time and restricted funds, and this structural imbalance must be addressed in the upcoming fiscal year. While I am certainly in favor of providing our employees with some type of pay increase, final decisions regarding any pay raises will be have to wait until additional details about revenue and expense projections are clarified.
HB 1033 (WISE) won strong approval in both houses of the legislature, providing $40 million in new funding for higher education to enhance programs that produce graduates for high demand jobs. Amendments changed the original language which stipulated that funds for WISE would be recurring, instead leaving the funds to be appropriated annually by the Legislature. For the upcoming fiscal year, it appears the $40 million will include a mix of appropriations from state general funds and one-time funds, creating some uncertainty as to exactly how these monies can be effectively expended by institutions in support of relevant degree programs. Although allocations for individual institutions from the WISE fund have yet to be determined, a 20% private match is required.
HB 142, by Rep. Richard (and touted by Treasurer John Kennedy) passed the House and won approval in the Senate after being heavily amended in the Senate Finance Committee. The original Bill called for a 10% reduction in all consulting and professional services contracts with the resulting savings dedicated to higher education. Modifications to the bill exclude contracts of the Secretary of State and those pertaining to medicaid. These modifications take much of the money "off the table" where this Bill is concerned. Additionally, modifications to HB 142 redefine affected contracts as those subject to scrutiny by the Office of Contractual Review. Furthermore, these contracts and any reductions under the Bill's provisions would be subject to approval by the Joint Legislative Committee on the Budget (JLCB). Although approved by the Legislature, the Bill is still subject to potential veto by the Governor.
HB 2 (Capital Outlay), as passed by the Legislature, includes additional high-priority funding for a new Science and Technology building on Southeastern's campus. This project has been on the drawing board for several years but now stands a much better chance to move forward in the near future.
HB 6 won approval in the Legislature, and the Governor is expected to sign the Bill. This legislation will help ensure reasonable employer contribution rates for employees who participate in the Optional Retirement Plan. The contribution rate was set to drop to around 3.6% next year, but the adopted legislation allows our Board to approve an employer contribution rate that will be more in line with the current rate.
As we continue to digest the results of the legislative session, and work our way through recently submitted campus budget requests, additional information will be shared with our campus community.
John L. Crain