As our friend and former State Budget Officer Stephen Winham recently said when Moody’s and Standard & Poor’s recently moved Louisiana’s credit outlook from stable to negative, the bond rating agencies are finally waking up to what the rest of us have seen coming for some time now.
Now Moody’s has gone on record as saying what Gov. Bobby refuses to acknowledge: Louisiana’s public universities are not equipped to absorb additional credit stress expected with an anticipated cuts of yet another $300 million.
State Treasurer John Kennedy agrees while Joseph Rallo, barely acclimated to his new office after being chosen last October as the state’s eighth commissioner of higher education, tried to remain optimistic in the face of the latest announcement by Moody’s that the state’s colleges and universities are now in danger of having their credit ratings reduced if the legislature does not finally grow a set and stand up to Gov. Bobby.
“Moody’s is putting us on notice that it will reduce the credit ratings…if the legislature continues to cut higher ed funding,” Kennedy said. “We’ve cut our college campuses by $700 million since 2008. We’ve made deeper cuts than any other state. Enough is enough.”
Rallo told LouisianaVoice that it is not a matter of not having the revenue available to fund higher education, but rather it is an issue of allocation of funding. He said Moody’s is holding off taking the step of actually downgrading high education’s credit rating until June in order to see what the legislature will do to resolve the funding problem.
The problem at this point is twofold: Gov. Bobby refuses to take steps to increase revenue and legislators lack sufficient backbone to face Bobby down for fear of losing precious projects in their districts by veto. The legislature always blinks first.
Therefore, if Bobby won’t take steps to increase funding (he’s a party to that no-tax pledge the tea partiers forced down the throats of legislators and congressmen who had no taste for facing up to real problems and finding real solutions when self-serving rhetoric and pandering could get them re-elected), then the only alternative is to cut and cut again and then cut some more.
What these tea partiers and their ilk, including Gov. Bobby, refuse to admit in their manic pursuit of free market economics, is that corporate welfare (read lucrative tax breaks) costs this country many times what individual welfare costs and corporate fraud costs the nation billions upon billions more than the roughly 1 percent in documented welfare fraud (see details of the 2008 Wall Street bailout for verification). Corporations and corporate executives pay far fewer taxes, percentage-wise, than do middle- and low-income taxpayers in this country. Those are the cold, indisputable hard facts. To claim otherwise is to throw up that same tired old argument that the middle- and low-income are a drag on the nation’s economy while the super-rich produce wealth and jobs, thank you very much.
But Gov. Bobby would much rather continue doling out tax breaks that cost the state billions of dollars with little or no return than to take the necessary steps to pull the state out of the financial quagmire in which it currently finds itself and thus allow college to be affordable to the middle class and for the working poor of this state to have access to health care.
And legislators are a party to the scheme and must share the blame. Let’s consider some projects in the districts of four key legislators from the 2014 legislative session:
- Appropriations Committee Chairman Rep. Jim Fannin: $13 million in projects, including the Jackson Parish Riding Arena and Livestock Pavilion ($195,000 last year, $1.4 million in Priority 2 and $1.6 million in Priority 5 funding;
- Senate President John Alario: $121 million in projects for Jefferson Parish;
- House Speaker Chuck Kleckley: $107 million in projects in Calcasieu Parish;
- Senate Finance Committee Chairman Jack Donahue: $60 million in projects in St. Tammany Parish.
And then there are these little projects we found in last year’s capital outlay bill:
- City Parish Golf Complex improvements (Orleans)—$9.1 million;
- Junior Golf Training Facilities (Caddo)—$445,000;
- Golf Course Development (Calcasieu)—$1.6 million;
- Zephyrs Baseball facilities repair (Jefferson)—$1.5 million;
- Professional Sports facilities improvements (Jefferson, Orleans)—$18.4 million;
- New Orleans Sports Arena improvements (Orleans)—$41.5 million;
- Bayou Segnette Recreation Complex (Jefferson)—$5.5 million;
- Improvements to New Orleans Superdome—$6 million;
- Recreational complex (Iberia)—$100,000;
- Baseball stadium improvements (East Baton Rouge)—$1.4 million (Baton Rouge has no baseball team);
- Improvements to amusement area, tennis center improvements (Orleans)—$1.2 million;
- Repairs to Strand Theatre (Caddo)—$950,000;
- Various community centers (statewide)—$11 million;
- Various hall of fame projects (statewide)—$15 million.
One can just follow the money to see why legislators become shrinking violets when Gov. Bobby is holding that veto pen. Sure, there will be all manner of posturing, bluster and harangue but in the end, they always end up going along with whatever the governor wants.
And the governor wants what the American Legislative Exchange Council (ALEC) wants and ALEC wants to take the state out of state universities.
And Louisiana isn’t alone.
If you don’t believe that, just take a look at what is going on in Wisconsin, Illinois, Arizona and Kansas. http://neatoday.org/2015/02/19/cuts-to-higher-education-taking-public-public-universities/
- Louisiana: Tuition costs have increased 90 percent since Gov. Bobby took office;
- Arizona: Tuition has more than tripled while state funding has decreased by $3,500 per student;
- Wisconsin: Like Louisiana, $2 billion tax cuts have resulted in $300 million in cuts to higher education that could eliminate the schools of nursing, law, business, pharmacy and veterinary medicine at the University of Wisconsin-Madison even as Gov. Scott Walker lobbies for $220 million in public donations to the Milwaukee Bucks to build a new team arena;
- Illinois is losing $2.1 billion in tax revenues because of lawmakers’ refusal to extend taxes that are expiring even as colleges are facing a $400 million cut;
- Kansas is projecting a loss of $5 billion in revenues because of reckless tax cuts and higher education, not surprisingly, is on the chopping block.
It’s not a coincidence, it’s a pattern. And what would one suppose these five states have in common besides this disturbing trend in higher education funding?
Republican governors who feel they owe their allegiance not to the voters of their states, oddly enough, but to ALEC and the Koch brothers who insist on defunding state colleges and universities in the hopes they will be forced to become private universities.
That, of course, will drive tuition up even further, necessitating much larger student loans and greater profits to lending institutions and Wall Street. It also will make a college education assessable only to the wealthy while relegating the rest of society to low paying jobs in the service sector in the absence of manufacturing jobs that have all been moved offshore.
Louisiana, says Moody’s latest assessment, has had the steepest declines in state funding in the nation from 2009 through 2014.
“As the state tries to close its widening budget gap, Louisiana public universities will face additional reductions in state appropriations,” the assessment said. “After five years of the deepest cuts to public higher education in the nation and significant expense reductions, these universities are ill-equipped to face additional credit stress.”
Moody’s said the timing and magnitude of budget cuts, the ability of universities to quickly align expenses with revenue, and the degree of financial cushion to absorb operating volatility “will factor into our assessment of ratings and outlooks for individual universities.
“Currently, Louisiana public university credit quality is lower than the median A1 nationally, reflecting historically weak state funding, anemic operating performance and limited liquidity,” the report said.
So while legislators wring their hands and gnash their teeth over the hard decisions they’re going to have to make this year, just remember no one held a gun to their heads and made them drop those golf courses and baseball parks into the Capital Outlay bill last year. And the year before that. And the year before that.
And remember that Gov. Bobby and ALEC do not (boldface that: Do Not) have the survival of our universities as public institutions as a priority item. If they are ultimately forced to become private colleges, that will be perfectly fine with them.
With all due respect to Dr. Rallo, we shouldn’t expect too much from this governor in the way of meaningful solutions to a problem that has persisted since he became governor more than seven years ago—long before the latest decline in oil prices which he conveniently uses as a scapegoat for Louisiana’s fiscal ills.
The late Wiley Hilburn, who headed up the journalism program at Louisiana Tech University, once told us that Bobby visited the Ruston campus when he was Commissioner of Higher Education under former Gov. Mike Foster, ostensibly to get an overview of university operations. Instead he spent his entire visit in Hilburn’s office playing computer games.
Perhaps that’s what Louisiana’s public colleges and universities are to Gov. Bobby—a game with students serving only as action figures for his personal enjoyment.
It certainly appears that that’s all this state is to him.
The same tea party you bash thinks that Jindal is a joke. Don’t let political lines define you. The same guy that owns Moody’s pays a lower percentage in taxes than his secretary. Everyone should have a problem with that.
Oh this tea party?
http://www.huffingtonpost.com/eric-zuesse/final-proof-the-tea-party_b_4136722.html
Tuition costs have increased 90 percent since Gov. Bobby took office
Okay, someone please explain this one to me. Tuition has gone up, yet if a student is from Louisiana and has the g.p.a. they can be eligible for the T.O.P.S. program which covers their tuition or a large part, correct? And the T.O.P.S. program is funded by the state, correct? So the state is going to be paying for the tuition increases that are levied by the universities, correct?
I honestly don’t know how T.O.P.S. works because I don’t have kids and didn’t attend university in Louisiana, so can someone explain this for me?
Fredster, here’s a link to the TOPS brochure:
Click to access TOPS_OPH_brochure_8-11.pdf
Look at the table on page 2 for a quick overview.
TOPS pays tuition (and bonus awards for more highly achieving students) so the cost of the TOPS program rises as tuition rises. The important consideration is that not all students are eligible for TOPS and not all retain their TOPS scholarships after the initial award.
so the cost of the TOPS program rises as tuition rises
And the TOPS program is funded by the state, right?
I understand that it definitely helps the student so long as they stay eligible, but the state is still on the hook for the cost, right? So the TOPS funds will help the universities balance their books so-to-speak, but the state is still liable for the costs of the program.
I’m not against the program in the least; anything that will help a young person get a leg up is worth it.
TOPS is only for 4 years, even if you qualify. So TOPS does not help grad schools or professional schools, such as the LSU Law School. The legislature has pushed Law School tuition for out of state students to over $40,000. This is more than it costs to educate a student at the law school, and much more than our better ranked competitors, such as Arkansas, Alabama, and Georgia. The Law School is being priced out of the market and would do much better if it could cut tuition to match the market.
Good point Ed.
http://wrkf.org/post/higher-education-s-waiting-game
Fredster, just heard this story on WRKF. Note, in particular, the following:
“The current year’s budget allocates $830-million for state colleges and universities. Higher Education Commissioner Joseph Rallo says that number also includes TOPS funding.
“Take TOPS out of our budget, because it makes our budget look a lot larger—when, as you know, it isn’t,” Rallo says.
Let’s do the math. Louisiana is spending $250-million on TOPS this year. Subtract that from $830-million, and you’re left with $580-million. Now take $500-million away from that…”
[The last $500 million is the potential cut in state general fund for higher education next year].
Oh my Lord, that’s incredible.
And that is even more incredible. My head is just reeling at numbers like these Stephen.
I gasped when I heard that this morning.
http://www.lsureveille.com/daily/university-prepares-to-have-state-funding-slashed-in-half/article_7096c0b6-bd6a-11e4-826e-3f6c699d5b21.html
Man, your titles for your articles really suck. Nobody is even going to read articles with these titles!!!How about “Moody’s Warns Bobby Jindal’s Education Cuts Damaging States Colleges and Universities”??!. Acknowledge please. If not I will have to discontinue my subscription because the articles will remain largely unread by the public.
I’m sure Tom is crushed by your comment. 😦
Well, you are in Louisiana. Take a look at what is going on in Kansas. I fled AZ because of what I could see with ALEC and the businesses. How corrupt it all was. It is corrupt everywhere. Would like to find a safe place to land, but that is next to impossible. There is a war going on between Good and Evil, Positive Energy over Negative Energy. It is all over the world.
So, as long as you keep fighting amongst yourselves and cannot really look at how prices are going up all over, how people everywhere are losing their homes, how we are becoming a land of renters, how the homeless population is increasing, schools are closing to many…There is no hope.
I am liberal. So was Jesus if you read the Bible and His words. He speaks of what is going on. So do other faiths. So did George Orwell and Aldous Huxley.
Check out all the false advertising on the television. Reverse Mortgages…that is a joke and one of the people who are advertising this once ran for President. You have the highest incarceration rate in the nation. Why is that? Quotas to keep the investors intact. Now they are in the land deals, prepaid debit and credit cards because they messed it up so bad they have to figure out a way to get your money back. Both the Dems and Reps are involved in ALEC. However, Americans, just sit back and talk.
You can’t even get the Civil Rights people on the same page. If it wasn’t so sad it would be laughable.
People don’t read anymore. However, all it will take is one nation to get really angry and then it will be over. It is time to start to love each other and start to help each other. It is time to become tolerant. Middle class America is getting crushed and all you have to do is look at the people who talk about God. Really…you are persecuting thousands of people in the US alone and you say you know God. I don’t think so.
The Governor will cut higher education again and the system presidents will thank him for not cutting more as they always do.
Don’t lose sight of the Fall elections.
Identify those Legislators and others who have helped and enabled Bobby.
Then, work against them, help their opponents, and vote them out of office.
Call them now, and tell them how you feel, what you are going to do to oust them, and that you, your family and friends will never support or vote for them again.
Right now, before the Legislative Session starts.
Koch college of Louisiana (pick state). Remember movie Kingpin, hapless lead characters name (Munson ) became synonymous with screwed it up. How about politicians who do the same being labeled as having “Jindaled it”?
First there was “teagued” for those whom Gov. Bobby has fired (in honor, of course, of Tommy and Melody Teague) and now this reader has coined the phrase “jindaled it” in honor of any politician who screws up.
I like it.
A lot.
Not only are they taking the state out of our colleges but our students. Most high school graduates in our state now no longer qualify for admission. So they are downsized. And they are NOT going to our underdeveloped and defunded community colleges. Our students are bolting. Ask why colleges in Mississippi are offering TOPS equivalent scholarships for OUR students.
Tulane started out as the University of Louisiana. It went private in the 1880s because of state budget problems. Looks like LSU may be going the same way.
Why did booby starve the Charity system financially? By cutting funding he was able to destroy it. What happened to OGB when he drained the reserve. Privatization. He’s draining the public school system of drastically finances by diverting their money to charter schools. For what reason do u think? Privatization. Financially he’s bringing the higher ed system to it’s knees.
Are u starting to see an obvious pattern? One of the objectives of the ALEC agenda is to get states out of the higher ed business then privatizing them. Now do u begin to see what’s really going on with higher ed here? I was told this a few years ago. I brushed it off as ridiculous. The more I observe booby’s past actions and the results, the more it makes sense.
[…] Voice’s excellent article on Moody’s warning that our state higher education cannot absorb further cuts argues that, […]
Come on yall, read Tom and read Stephen Brill’s “America’s Bitter Pill” about Obamacare. and then look at us , All communication is based on FEAR, IGNORANCE,& PREJUDICE,Jindal/Teepell/Vitter are masters at exploiting our inborn traits, big money gonna win every dam time. I will never, never give up on my favorite scripture. faith, hope and love, (I sure as hell don’t like them)ron Thompson