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Exploring the swamp of declining dollars with Mississippi colleges and universities

By Staff
Jan. 24, 2001
Mississippi's community colleges and universities find themselves in a deepening financial hole. A fiscal quagmire. Budget reductions are arriving in waves as state revenues lag projections. And more reductions appear likely.
Next year's state funding for higher education will certainly be substantially less than the current year. The only remaining question is, "How much less?" Legislative budget leaders are working with a low ball number while Gov. Musgrove is pitching a higher figure.
At the end of the day when the legislative session ends, community colleges and universities will find their appropriations somewhere between the low ball, a rock, and the high ball, a hard place.
Problem illustrated
A few numbers illustrate the problem. The state fiscal year runs July to June. Thus this school year is designated as FY 2001. By mid-year, state fund cuts totaling $8.9 million had hit community colleges. Addition cuts of over $7.5 million are anticipated. And that's in this year, FY 2001.
On top of these deep cuts, next year's prospects are grim. The FY2002 reductions proposed by the Joint Legislative Budget Committee from all funds total 20 percent. That's correct, one-fifth, more than $37.5 million.
Mississippi's public universities face a parallel scenario with total revenue losses reaching above $100 million.
Spending discipline is difficult for all government agencies. Especially agencies such as schools, community colleges and universities that are labor intensive. "Fixed" costs such as utility expense seem to escalate in tandem with declining revenues. And, of course, maintenance issues multiply as fund balances fall.
Fat' already cut
The courses of action available to colleges and universities are limited. The FY 2001 cuts have resulted in belt tightening at every institution. Whatever "fat" was present has already disappeared. With over 75 percent of college budgets dedicated to personnel, a number of jobs are clearly at risk.
Universities and colleges will, for the most part, attempt to smoke screen the impact on employees. Unfilled jobs and increased workloads will serve as short term budget balancing measures. Supply and equipment monies will evaporate. Maintenance will be deferred. Benefit costs will continue to rise.
The next step will be to increase tuition and other student charges. This choice pops the students and parents. Tuition increases of $200 a year will make up less than one-half of the funding cuts.
Students and parents will find themselves paying more for the same or even reduced service. Quality in education is not built quickly and does not usually erode rapidly. Less money today may not impact tomorrow's quality. But look out for the day after tomorrow and worry about the following weeks and months.
Sin' taxes
On top of tuition increases, the shadow of revenue enhancements, aka tax increases, looms. Neither elected officials nor university and community college folk want the onus of noting this unspeakable possibility. However, judging from advertisements being aired on behalf of Mississippi's gambling interests there are some folks who have figured this out.
Is deepening the state skim of gambling revenues likely? Or wise? Those who consider "gaming" the golden goose of prosperity think not. On the other hand, some of us have no problem with increasing entertainment taxes. Or if you prefer, sin taxes.
And from where I sit, folks who can afford the ten dollar slots can pony up a point or so more. Or do we have people playing the ten dollar machines who can not afford it?
In any case, tax increases which develop in crises situations tend to compound whatever inequities exist with total tax structures. Does an increase in the gaming tax seem like a quick fix? Sure. And a partial quick fix to boot.
Some blue sky economists have suggested the Mississippi economy will "bounce back quickly." I find that view somewhere between ridiculous and uninformed. A more rational view is our nation's economy is still at risk and that recovery will not be dramatic nor rapid. Sort of like turning a supertanker. Have we begun to turn yet? Let's hope so.
In any case state revenues will not grow rapidly enough to bring relief to our colleges and universities in the next fiscal year. In the meanwhile the coping mechanisms of these institutions will be sorely tested.
These current financial woes will lower quality and make higher education less affordable. Students will pay more and get less. And our universities and colleges will not rebound rapidly. The road back is simply longer than the road down. And both paths are very slippery.
The revenue decline may have hit bottom but higher education is in continuing free fall. Count on the landing being hard.
Bill Scaggs is president emeritus at Meridian Community College and a senior consulting editor for The Meridian Star. E-mail him at wscaggs@themeridianstar.com.