Gov. Sam Brownback cut funding for higher education Tuesday, resulting in a $4.9 million cut to K-State. The $4.9 million is part of the total $17 million cut announced through a press release from the governor’s office.
According to the press release, the cut was due to the state revenues coming in $53 million below the projected revenues for February.
The $17 million comes from a 3 percent cut to the Regents’ universities. Breeze Richardson, director of communications for the Kansas Board of Regents, said in an email that the regents decided Wednesday morning the 3 percent cut would be applied equally across the affected institutions.
Cindy Bontrager, K-State vice president for administration and finance, said the 3 percent cut equates to a 1.5 percent cut for all K-State departments. This is because the university’s revenue is about half from the state and half from tuition and fees.
The cut comes a little more than a week after K-State President Kirk Schulz announced a 2 percent cut to the university’s budget through a Feb. 19 K-State Today press release. Bontrager said the 2 percent cut and the 1.5 percent cut will be combined.
Jeff Morris, K-State vice president for communications and marketing, said the cut will be passed on to the individual colleges and departments at the university. Bontrager said this process is used to provide the department heads with flexibility.
A cut at this point in the school year is especially challenging because most of the money is already committed, Morris said. Construction contracts have already been signed, faculty and staff have already been hired, classes have already begun and much of the research is funded through grants.
“The biggest issue really is going to be morale honestly,” Morris said. “How do we continue to move ahead … the challenge is, how do we continue to provide the best education for our students? How do we continue to grow and move Kansas State forward?”
In addition to the reduced financial support from the state, Morris said an additional difficulty is the cap on tuition and fees increases of 2 percent plus the Consumer Price Index, which is currently 3.6 percent.
“Obviously we are always concerned about the cost to our students,” Bontrager said. “And that’s what happens when we get these state cuts. In order to maintain quality, we look at where we can generate revenue, in addition to where we can find efficiencies and save and reduce our expenses. It is definitely becoming more of a challenge.”
Bontrager said the cap was part of the state budget agreement in June 2015. As part of that budget, state funding to universities was not cut in exchange for the cap on tuition and fees. Now, the governor has cut the state’s funding, but the cap is still in place.
“It certainly is a tough time for higher education in the state of Kansas,” Tom Phillips, state representative, R-Manhattan, said. “By putting this cap on tuition, it really ties the hands of the administration at universities to figure out the best ways to educate our students.”
Morris said it would be possible to have private donations cover the cost of the cuts, but it would be difficult because donations are a one-time source of revenue while budgets have to be planned in advance.
“At some point we have to have flexibility to sort of control our destiny, whether that’s through increased state support or allowing us to work with the students to set tuition,” Morris said. “I think that’s how we’re going to get the best solution moving forward.”
Taxes and revenues
The governor’s press release stated the drop in revenues was “the result of lower than expected corporate sales and individual income taxes.”
The problem was not the result of any flaw in the projection system, according to both Shawn Sullivan, Kansas budget director, and John Carlin, visiting professor of leadership at K-State and former Kansas governor.
Both said the revenue projection system is good, stemming from its nonpartisan nature. Sullivan said the projections have been overly optimistic for the past two years.
“The real problem is, the scary thing is, this was a result of February decline,” Carlin said. “What about March, April, May and beyond? The closer you are to the end of the fiscal year, the more painful the cuts are. You don’t have that much time. And it has a more dramatic effect.”
Carlin and Sullivan both said the inaccurate projections were the result of a dip in the agricultural sector of the economy. Carlin, however, also said the governor’s tax cuts make revenue projections more difficult.
“It gets more difficult for the projecting to be accurate when you make major changes in the tax structure,” Carlin said. “And when you cut the balances so low, you don’t have any room to handle slight dips.”
Carlin said ideally the state would have carryover reserve balances to cover budget shortfalls.
“Seventeen million dollars is a chunk of change,” Carlin said.
Tom Hawk, state senator, D-Manhattan, said a $6 million balance was predicted in the budget that passed before the Kansas Legislature’s weeklong turnaround. With February revenues coming in lower than predicted, Kansas is “in the hole about $50 million.” A law passed last year granted the governor authority to make allotments or cuts if revenues come in too low, Hawk said.
“We don’t have enough revenue to fund the essential services of government, and I believe the governor is mismanaging the whole budget and tax process, along with the members of his party that have been supporting him,” Hawk said.
Phillips said he predicts next year’s budgeting process will be even more challenging than this year. Budgeting for next year needs to begin during the current legislative session, considering likely difficulties, Phillips said.
“Even if we change tax policies during this session, it’s not going to generate revenue quickly enough to solve our immediate crisis,” Phillips said. “If we’re going to begin anticipating revenue for next year, now is the time to adjust policies so that the revenue can begin flowing in tax forms for next year.”
Hawk said due to Brownback’s trickle-down economic tactics when it comes to taxing, the state has “given up” around $700 million or $800 million per year, which could have been used as “recovery money” after the recession of 2008-10. Last year’s raise in sales tax was the largest tax increase in Kansas history, and research shows this has caused many Kansans to opt for shopping out-of-state or online instead of shopping locally, Hawk said.
“Until we face the real problem — the governor has got to do that and he refuses to do that — we’re stuck,” Hawk said. “And students at K-State will suffer for that, as well as other universities, among other things.”
While the revenue shortfall for February was over $50 million, the cut was only $17 million, and it only affected higher education.
Sullivan said the $17 million was only the first step in addressing the situation, and the governor’s office is working with legislators to determine the next steps. He said the cut to universities was announced now to give the universities more time to adjust to the cut.
He said the reason only higher education was included stems from the June 2015 budget. As part of that budget, everything was cut 4 percent except for K-12 and higher education, Sullivan said. Because of the ongoing legal issues surrounding K-12 funding, higher education was the option chosen.
Sullivan said the funding could be restored only if future revenues came in much higher than projections. He gave the restoration of cuts a 0 percent chance.
“These cuts are real,” Carlin said. “It really impacts the operation of the university.”
When asked, Sullivan provided three suggestions for how universities can adjust to the cut.
“I think they are probably going to take a look at the reserves that they have, number one,” Sullivan said. “Number two, I think that they’re going have to look at all non-critical spending. Number three, in the long term, if they can run more efficiently.”
Sullivan said many other states are going through similar issues with their budgets.
“Budget adjustments are always going to happen … it’s just a part of reality for relying on state government funding that is subject to ebbs and flows of state revenue,” Sullivan said. “I can’t say that there is anything that can be done to prevent this from ever happening again.”
Carlin said students should become more involved with the political process because it directly affects them.
“I think it’s important that students ask questions, learn, understand these issues and for God’s sake, participate in the process,” Carlin said. “Young people participate less than any other age group, and you should be the most concerned because you’ll have more impact on your lives than a bunch of old people.”