C.B. Forgotston: Flaw in "Rainy Day Fund"?

http://forgotston.com/

I just read where Commissioner of Administration Angele Davis said there was a “design flaw” in the Budget Stabilization Fund (a.k.a. the rainy day fund). (See story here.) As a result there would be little to no net revenues for the upcoming state budget if the leges used $250 Million of the fund.

There is no "design flaw." The fund was intentionally crafted to limit the flow of oil and gas revenues into the State General Fund ("SGF") in hopes that the state would reduce it's dependency on oil and gas revenues.

Alternative solution

If there is no desire to reduce the dependency on oil and gas revenues, there is alternative to refilling the fund.

The $250 Million taken out of the fund could be immediately replaced with $250 Million of the $860 Million 2007-08 surplus (per Const. Article VII, Section 10(D)(2)(d)) and thus all oil and gas revenues would continue to flow into the SGF and would be available for expenditure in the fiscal year that begins July 1.

This process has been used in the recent past to force more oil and gas revenues to flow into the SGF.

This scenario would increase revenues for the Operating Budget by $250 Million. There would, however, be less surplus money to spend on local and NGO capital projects.

If the goal is to forestall cuts to the Higher Education and Heathcare operating budgets this process accomplishes it.

Poor priorities not a flaw

Seems to me the only “design flaw” in the fund is the flaw that has always been in the state budget process -- poor priorities.

The comments from the commissioner begs the question of why are we just now learning of the "design flaw" in a fund that was originally put into the constitution in 1990 and was actually used in 2002? This is not her first time to work for a governor in the Division of Administration.

What am I missing?

C.B.

Please Listen Gov. Jindal

I was reading a blog article on theoldriverroad.com (The Old River Road) concerning higher education funding and it occurred to me that if so many people have so much to say about the funding of higher education why does it seem like Gov. Jindal is not interested in listening.  I know that it is true, he is a busy Governor, traveling around the country to...but his interest in the issue is still unknown.  If he was interested enough in cutting funding it seems he would also be interested in finding a solution.  I understand that under traditional circumstances Gov. Jindal does not want to use one-time funding to fund reoccurring expenses but are these traditional circumstances?  We are in an economic crisis and sometimes we have to do things we wouldn't normally do to make sure that all of Louisiana's Business is taken care of and that includes funding higher education.  I only hope he will listen.

One Take on Budget Cut Impact

The Monroe News Star reports that ULM President James Cofer has equated higher education cuts to the loss of a major manufacturer in the area. He cited a new study conducted by Applied Technology Reaseach Corp. The article is attached. Note that the study asserts that as far as economic development goes, every dollar invested in higher education returns about eight.

http://www.thenewsstar.com/article/20090421/UPDATES01/90421018

Response to JR Ball's Column in Baton Rouge Business Report

In yesterday's edition of the Baton Rouge Business Report, J.R. Ball outlined his suggestions to improve higher education in the state of Louisiana beyond budget cuts.

Ball argues that "it's time for officials at LSU, our flagship university, to start answering some tough questions." In the article, found online here, Ball recognizes the "masterful PR job" that LSU has conducted to inform and persuade Louisianians about the "current fiscal nightmare" by submitting "worst-case scenario budget projections." Indeed, Ball captured the sentiments of so many who refuse to lash out against Governor Jindal for his state budget that could cut funding for LSU.

"What LSU officials haven’t done, however, is embrace the concept that the university’s impact must reach beyond the Quad and Tiger Stadium. To be blunt, LSU has been woeful in its efforts to build a knowledge-based economy outside the gates of the campus," he said.

That being said, Ball is not certainly abandoning an understanding of the importance of higher education in Louisiana. "Yes, higher ed [including community and technical colleges] has been woefully underfunded for decades, and, yes, the flagship institution must be considered a bedrock of this state’s future, but it’s also true that LSU must change its thinking," he continued.

When will other leaders and citizen activists also hold the university systems accountable for the current financial state of higher education? It sounds like a failed company, really. Say, for instance, an investor decides to fund an emerging business venture. Then, when the company fails to produce results they promised to said investor, they come back with their hands out and without promises of reform, eager for more dollars. What incentive is there for the investor to continue financing the venture without proof that this company is holding up its end of the bargain? Simply, none.

While LSU has made important strides in educating the people of Louisiana, it is important to remember that taxpayers act as investors in the institution of education. We, as taxpayers, invest money into public higher education in hopes of seeing long-term economic stability in our state and consistent improvement in our way of life. And just as an investor would be hesitant to throw more money at a company whose management and leadership refuses to take responsibility for its past failures, it is understandable that taxpayers in Louisiana have their own reservations about throwing money at an institution that has made no promises of thrift, accountability or reform.

SOS Rally at Delgado TOMORROW

There will be a SOS rally at Delgado Community College tomorrow (Friday) morning and afternoon.  JOIN US at 2600 General Meyer Avenue!

Press Conference

There will be a press conference at 11 a.m. TOMORROW on the steps of the state Capitol hosted by House Democrats to discuss the impending budget cuts, specifically in higher education!

Advocate: Study: LSU’s economic impact big

An LSU study released Wednesday contends LSU generates more than $1.2 billion annually for the region — or 3 percent of the Baton Rouge metro area’s gross domestic product.

The study, titled “The Economic Impact of Louisiana State University on the Baton Rouge Metropolitan Statistical Area,” looks at factors such as jobs created, sales generated, residents drawn to the area and research dollars attracted because of the presence of the state’s flagship university.

LSU Chancellor Michael Martin said the study presents a strong case against $219 million in proposed cuts to the state’s higher education. That includes $102 million – about 15 percent of its state funding – from the LSU System and $34 million from the main LSU campus.

There's more

Jindal: La. Constitution change would spread out budget cuts

• By JORDAN BLUM
• Advocate Capitol News Bureau

LAFAYETTE — Gov. Bobby Jindal said Wednesday the budgetary blows to higher education and health care would lessen if the state Constitution were changed.

The catch is that such plans, which would have to win two-thirds approval of both houses of the Legislature and a majority of the state’s voters, could not be implemented until the 2010-2011 fiscal year. The plans would not ease the $632 million reduction to colleges and hospitals that Jindal has recommended for the upcoming fiscal year that begins July 1.

“Health care and higher education always take the brunt of budget reductions when our state revenue declines,” Jindal said, noting that people always say such a setup should be changed.

There's more

Egg the Capitol

http://www.wafb.com/global/story.asp?s=10127662 

Protesting the budget cuts on higher education is not an act of immaturity, selfishness, or disillusionment.  It is an act of concern that extends far beyond students.  We are not attacking the jobs created by the Farmerville chicken plant.  That is part of the state's economic development and recovery- we get that.   

But it is an illustration of how the government of Louisiana is constantly putting education on the back burner.  When will they realize that education builds the foundation for success?  A strong educational system will result in a strong state.  Our neighbor (and certainly most other states in the U.S.) have learned this.  

But we have the largest brain drain problem in the nation.  The 1,300 jobs created in Farmerville is great.  But it is not a long term investment in the future of our state.  We need to do more than that- more than 1,300 jobs.  And supporting higher education is the way to do that.  We need to stop giving people reasons to LEAVE Louisiana and stop making ourselves less and less attractive for people to COME to Louisiana.

The 1,300 jobs (which I would kind of expect more jobs to be saved for the price tag of $50 million) is a necessary step to help Louisiana recover.  But not at the expense of education.  This is just ONE of many illustrations of how skewed the government's priorities are today (and have been for far too long).  PUT EDUCATION FIRST- for once.  

College students protest cuts with egg baskets

Associated Press • April 3, 2009

BATON ROUGE — The dozen baskets of plastic eggs dropped off at the governor's office weren't to celebrate a happy Easter holiday. Instead, the college students that delivered them Friday said it was a form of protest.

The students say the eggs are a symbol of their disappointment with Gov. Bobby Jindal for agreeing to spend $50 million to keep open a chicken plant in north Louisiana while proposing $219 million in cuts to public colleges next year.

The students who delivered the baskets say the governor's priorities are skewed.

Jindal says the state intervened to keep open the Farmerville plant to save 1,300 jobs and 300 chicken farms. The college cuts are part of a series of reductions proposed to balance next year's budget against a hefty drop in state income.

http://www.thenewsstar.com/article/20090403/UPDATES01/90403027

Media Coverage!

Everybody watch Baton Rouge local news tonight and check the Advocate on Saturday for coverage of SOS members delivering Easter eggs to Governor Jindal’s office. The eggs symbolized our disappointment in Jindal’s priorities. How can a chicken processing plant get $50 million, and higher ed gets deep cuts.
For the chicken story visit http://www.2theadvocate.com/news/42307697.html

CUTS WOULD HIT LSU HARD

BY Jordan Blum
Advocate Capitol News Bureau

LSU would lay off at least 400 employees, cut back on scholarships and shut down some research institutions under proposed budget cuts, LSU Chancellor Michael Martin said Thursday.

The LSU campus and most of the LSU System’s other institutions released their proposals for meeting $102 million in budget cuts to the LSU System in Gov. Bobby Jindal’s executive budget.

The cuts represent nearly 15 percent of the state’s appropriations to LSU campuses.

LSU museums, student services and general campus upkeep will all suffer more because the academic core must be protected, Martin said.

He said about 80 percent of LSU’s budget is in personnel and that it is “demoralizing” to let anyone go. Most layoffs would be staff and some instructors and part-time faculty, but not tenure-track faculty, yet, he said. The main LSU campus employs nearly 3,300 people.

“It’s very difficult to face the prospect that some of these good people will not be with us,” Martin said.

Martin’s budget proposal was submitted to the LSU System office Thursday evening. The system office will review and approve the budget.

LSU’s budget plans do not include anticipated 5 percent tuition increases and possible fee increases that could cushion some of the cuts, he said.

Find the rest of the story here.

Jindal Chooses Chicken Pluckin' Over Higher Education

Added fund uses urged

State needs money for ongoing projects

Wednesday, April 01, 2009

By Jan Moller

Capital bureau

BATON ROUGE -- A $415 million incentive fund designed to land large-scale economic development projects could be more than half depleted before the state lands a major deal, if Gov. Bobby Jindal's administration has its way.

With the state's ability to borrow constrained by falling revenues and shaky credit markets, the administration is proposing to use its Mega-Project Development Fund to finance four projects that have already been inked, including two in the New Orleans area.

There's more

J.R. Ball in the Baton Rouge Business Report

Two cents: Colleges trump chickens

Call me crazy—many have said much worse—but if the Jindal administration can rationalize tapping the state's mega-fund for $50 million to purchase a closed chicken plant, then how can it not also use the economic development fund to save higher education? No offense to the 1,300 workers and suppliers impacted by the plant closure in Farmerville, but the health and vitality of our community and technical colleges and our four-year universities is of far more vital importance to the long-term economic health of Louisiana. Without question, there's a need to overhaul and streamline higher education and how the systems are managed and funded, but until that happens (and we hope soon) the administration can't sit back and watch many of the gains made by LSU and others get reversed in one fiscal cycle. If Gov. Bobby Jindal truly embraces the concept of a knowledge-based economy, then he absolutely must find a way to minimize the fiscal hit on higher education -- even if it means raiding LED's sacred mega-fund. Send comments to editors@businessreport.com. —JR Ball