Even as anticipated state-based revenues, a little from the general
fund but most of it coming from dedicated sources, increase somewhat, the drop
in federal funds, courtesy of the changing of the Medicaid disbursement
formula, totals even more meaning a budget about a billion bucks smaller, or
roughly 4 percent reduction. Naturally, the two areas seeing the most dramatic
changes are those whose funding makes up the vast majority of discretionary
general fund spending, health care and higher education – but in very different
ways.
Higher education sees a stunning over 70 percent drop in general fund
revenue, although when all means of financing are included it’s only about 7
percent (year-to-year; most of that already has been cut). Still, this
represents a tectonic movement in the philosophy behind funding, for it
represents the first overall drop in years – at $2.7 billion total funding is
about the same as it was in the last
year of Gov. Kathleen Blanco’s administration – with a massive shift in state
sources. In Blanco’s last year, the general fund contributed $1 billion more
than now, and self-generated funding (mainly tuition) and statutory dedication
(some
revenue from funds dedicated to higher education but mostly fund sweeps
from funds unrelated to higher education) have added back in half of that each.
From general fund money comprising nearly half of all spending on higher
education six years ago, it’s now only about a tenth. As a point of reference,
this means using as an example my home institution, Louisiana State University
Shreveport will be asked to derive about 70 percent of its revenue from tuition
and fees.
One
procedural change bears noting. The entire table of organization for higher
education, which used to be apportioned out to each of the four systems and
then on to each school, on a budgetary basis has been moved to the Board of
Regents. This centralizes fiscal powers under the Regents and is a way of increasing
their coordination and power over spending decisions at the expense of the
systems and schools, which is a substitute for combining all systems into one.
Also notable is that of the two state hospitals now providing health care
education that will stay state-run, one, Lallie Kemp, is being tabbed
to pick up much prisoner health care, leaving the other, Louisiana State
University Health Sciences Center – Shreveport, in the position of what appears
to be the centerpiece of state medical education.
The reduction that has come about will be at the cost of some 846 jobs,
or about 4 percent of all that had existed in higher education (all currently unfilled).
While these represent over 8 percent of a total of over 10,000 expected to be
eliminated, that is dwarfed by the elimination of over 95 percent of all jobs
in health care (including those that had been classified in higher education)
as eight charity hospitals expect to be under nongovernment management by the
beginning of the fiscal year (although apparently 90 percent of jobs rolling
off will reappear under the new management). But because of ever-escalating
demands, state-sourced spending in the area will be up about $570 million, so
even with the slightly-higher federal funds drop overall spending barely is
down. Some minor programmatic reductions needed making to achieve this balance,
and provides still more confirmation
to the wisdom of the state’s declining of expanding Medicaid enrollment and
its initial costs and paying to have its own health care exchange.
Being that is a presumed fiscal-only session, by the budget’s
appearance Jindal appears to eschew resurrecting at least a couple of other
areas that could provide large cost savings. It gives no indication of reform
efforts to reduce the gravy
train of compensation the typical state employee receives by asking them to
pay their fair share for generous retirement benefits. As a result, the
unfunded accrued liability marches higher, now estimated to mean an extra $772
million of funds paid out to cover it this year (and could have been considerably
higher without the large positional cuts.) Nor does make any attempt to privatize
more prison operations, even as other indications are state prison populations
will continue to decline with a greater effort, reflected in the budget, to use
alternatives to incarceration. Those trends lead to closures instead, but the
budget doesn’t foresee any of this on tap while recognizing considerable
savings from the closures.
Some less savory tactics remain. Apparently, $47 million in asset sales
will be used as well as $4.6 million from a settlement, all of which are
nonrecurring, to pay for recurring expenditures. Some overdue tactics got
employed, such as ratcheting down Department
of Economic Development spending some 28 percent by further reducing and shedding
some low-priority programs that served as little more than as corporate welfare
or bribery to get businesses to locate and expand in the state.
But in the abbreviated session on the way, the Jindal Administration’s
success in putting this forward anywhere close to its present appearance will
hinge on three things. One is that a major component of the budget assumptions is
the change in philosophy of state direct provision of indigent health care, yet
only five
of the administrative arrangements have been negotiated. The Administration
must ensure that, at least by the end of April, the other three have been
announced or it becomes politically difficult to defend a budget built on the
basis where in just two months nongovernment administrators take over
completely.
Another is a funds sweep needed in the neighborhood of $425 million to
fund higher education, which may run into objections from the Louisiana Budget Reform Campaign. While
it has many good
and practical ideas to bring sanity to the budgeting process, the group has
an odd fixation on wiping out for budgetary use the portion of what is
colloquially called “one-time
money” that comes from recurring and predictable sources, instead of
reforming the process that creates these idle funds and thus would make them
available for priority budget planning. If that idea gains traction, then
serious shortfalls could result unless cuts that are not particularly
politically painful get made.
Finally, the budget has no connection to the Jindal
plan to swap income taxes for sales tax rate hikes and broadening,
including associated changes in tax exceptions. While the stated
revenue-neutral goal does mean no revenue changes, what gets presented, and
certainly no later than the early part of the session, must be convincing enough
to demonstrate this neutrality. Otherwise, more cutting may have to occur.
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