BRADENTON, Fla. - Louisiana, grappling with a $1.6 billion budget deficit that could hit its colleges and universities, has already cut state higher education funding by more than all but one other state.
Louisiana slashed state funding for higher education by 42% between 2008 and 2015, according to a study the Center on Budget Priorities and Policies released Wednesday. Only Arizona's level of cuts was higher at 47%.
Nationwide, the CBPP study found that on average states cut higher education by about 20% largely in response to declining revenues during the recession.
"Cuts to colleges and universities definitely placed financial pressure on schools across the country," said fiscal policy analyst Michael Mitchell, co-author of the study.
Only Alaska, Wyoming, and North Dakota are spending more per student on higher education today than before the recession.
In the Southeast, all 11 states - including Louisiana - were among the worst 26, with larger budget cuts than the national average between 2008 and 2015.
"Our findings indicate for the state of Louisiana, the cuts have been severe — increasing costs to students and jeopardizing access and affordability," Mitchell said during a conference call with reporters on Tuesday. "Dollar for dollar, no state has cut higher education more deeply than the state of Louisiana."
Since 2008, Louisiana has cut per-student funding by $4,941 - more than any other state in the country, the study said.
"I know in Louisiana there's been a conversation around declaring financial exigency," Mitchell told The Bond Buyer.
Colleges and universities can use financial exigency in times when revenues are insufficient to support their budgets. The declaration allows them to cut tenured faculty and other expenses in order to balance the budget.
Anticipating a new round of state budget cuts in fiscal 2016, Louisiana State University recently announced that it is exploring various actions to reduce its budget, including the possibility of declaring financial exigency.
Uncertainty over state funding led LSU in April to withdraw a bond deal it had already priced.
In February, Moody's Investors Service said that after five years of some of nation's deepest funding cuts, Louisiana's public universities were "ill-equipped to face additional credit stress."
In recent years, other institutions have already made significant cuts in response to declining state support, according to the CBPP, a nonpartisan research organization with a focus on "policies designed both to reduce poverty and inequality."
The Arizona university system has cut more than 2,100 positions; consolidated or eliminated 182 colleges, schools, programs, and departments; and closed eight extension campuses, Mitchell said.
The University of North Carolina at Chapel Hill eliminated 493 positions; cut 16,000 course seats; increased class sizes; and eliminated two distance education centers.
The University System of Georgia merged Southern Polytechnic State University with Kennesaw State University, marking the fifth consolidation within the system.
Continuing reductions in state support were a factor when Moody's Investors Service and Standard & Poor's placed negative outlooks on the higher education sector this year.
"Slowed revenue growth coupled with mounting expenses will contribute to weaker operating performance in fiscal year 2015," Moody's analyst Kimberly Tuby said in an outlook report.
While conditions will remain challenging, Tuby said there are signs of stability, including overall strong student demand and stronger balance sheets.
The CBPP study found that public colleges and universities across the country have increased tuition to make up for state spending cuts. Since 2008, the annual tuition at four-year public colleges has risen by $2,068 or 29% after adjusting for inflation, the study said.
In Arizona, published tuition at four-year schools was up more than 80% over the study period, while in California, Florida, Georgia, Hawaii, and Louisiana the published tuition was up more than 60%.
Rising tuition makes it difficult for students to afford college, though studies still show that people with college degrees tend to get better-paying jobs, according to the CBPP study.
The study also found that many states, to boost their economies following the recession, employed strategies such as offering tax cuts and tax breaks, while reducing funding for higher education.
"Tax cuts are often sold as a recipe for economic growth," the study said. "Strengthening state investment in higher education will require state policymakers to make the right tax and budget choices over the coming years.
"At the very least, states must avoid shortsighted tax cuts, which would make it much harder for them to invest in higher education, strengthen the skills of their workforce, and compete for — or even create — the jobs of the future," the study concluded.
The state's funding policies have been disappointing, Jan Moller, director of the nonprofit Louisiana Budget Project, said during the CBPP conference call on Tuesday.
"If you look at the states that are doing well, the states that have increased funding [for colleges and universities] have benefited in recent years from an energy boom," he said. "North Dakota, Alaska, and Wyoming are all energy-dependent states and they've taken advantage of the relatively good times in that industry to invest in the things that matter for long term economic success, mainly higher education."
Louisiana has "sacrificed the financial stability of our colleges and universities for the short-term elixir of tax cuts and tax breaks for large industry," Moller said.
In the past year, declining oil prices are now largely responsible for the $1.6 billion budget deficit that Louisiana now faces.
In an effort to generate $600 million in new revenue, the House last week passed 10 bills that would raise taxes and repeal existing tax credit programs.
The House Appropriations Committee then earmarked most of the funding from bills to the higher education budget in order to maintain funding at current levels.
Moller said that commitment is encouraging.
The bills, however, could face headwinds from Gov. Bobby Jindal, who has indicated that he will veto any attempt to raise taxes.
Additionally, the Louisiana Association of Business and Industry has said that four of the House bills did not pass by the two-thirds supermajorities required by the state constitution. The group has warned state officials that those bills could be challenged in court.
"It's clear to me the constitution requires a two-thirds vote to increase taxes," State Treasurer John Kennedy told the Monroe Chamber of Commerce on Tuesday. "If somebody files suit challenging [the bills], he or she would win in court."
Kennedy, who has taught constitutional law at Louisiana State University the past 10 years, said the Legislature should do a cost-benefit analysis of the state's existing tax exemptions, and abolish those that do not work.