Budget Issues

New Jersey Association of

State Colleges and Universities
committed to college opportunity for new jersey citizens

150 West State Street, Trenton, New Jersey 08608 609-989-1100 609-989-7017 fax njascu@njascu.org

FY 2009 Higher Education Budget

Governor's FY 2009 Budget Recommendation

The outcome of the Governor's recommended budget provisions continues to evolve as a result of ongoing legislative budget hearings and negotiations. At this time, specifics of the budget remain as originally stated in the March synopsis; although some components may be altered through legislative resolutions, which are now being drafted for consideration in both houses. The FY 2009 Budget Act is expected to be adopted by mid-June.

In its original form, the budget called for a decrease in direct state appropriations to the state colleges and universities of approximately $30 million or $262.7 million. On average, this denotes a 10.2% decrease for the nine state colleges and universities, and approximately the same for the three research institutions, independents and county colleges. Several budget resolutions have been drafted to restore amounts ranging from one-third to the entire operating fund decrease for the institutions. While the restorations have not yet been made public, ASCU did assist in the preparation of a resolution restoring the $30 million in state-provided operating aid.

The fluctuation in operating aid decreases among the state institutions of 9.9 to 11.2 percent is, as originally surmised, the result of the $7 million out-of-state tuition penalty ($22.7 million over four years). This penalty has, not surprisingly, the greatest impact for Rutgers ($5 million) as their out-of-state population is the largest among the state institutions. It is our understanding that this penalty is one of the variables in the budget most likely to be eliminated through the budget resolution process. FY 2009 represents the third of a four-year penalty program.

Funding of $38.5 million is recommended for the 12 senior public colleges and universities to support negotiated salary increases. We still await the detailed distribution of these funds, which is not anticipated until after the budget is passed and signed into law by the Governor. Last year's allocation would indicate that the nine colleges and universities would receive approximately 30 percent or $11 million of these funds. Under this scenario, the FY 2009 salary increased obligation of $22 million (COLA and increment) would be funded at about 50 percent, leaving $11 million unfunded for the nine.

The status of state authorized employee position counts, and the obligation for associated fringe benefits, has been in flux even prior to the introduction of the Governor's FY 2009 budget. Discussions with Treasury and OMB attempted to resolve the state's responsibility for these costs through a comparison of data provided by the institutions and the New Jersey Division of Pensions. While no official determination has been offered, there are indications that the number of positions will be increased by Treasury to more accurately reflect the growing needs of the institutions. Considering the substantial lag since the last adjustment, this is welcome news.

Two other major budget provisions are the limitation of TAG awards to the tuition level of Rutgers and instituting a family income maximum of $100,000 for STARS applicants. While the TAG award change would not have a major impact on our institutions, any variation to STARS would ultimately modify the incoming student population at our institutions, and consequently, affect the cost. Our position remains to limit the STARS grant to the amount the state is able to contribute. Currently, an ad-hoc committee has been formed to review structural revisions to the program and meetings are being planned throughout the summer.

	FY 2008 Adjusted Appropriations	FY 09 Recommended Appropriations	FY 08-09 $ Difference	FY 08-09 % Change
The College of New Jersey	$37,000,000	$33,300,000	-$3,700,000	-10.0%
Kean University	$42,500,000	$38,100,000	-$4,400,000	-10.4%
Montclair State University	$48,600,000	$43,700,000	-$4,900,000	-10.1%
New Jersey City University	$32,900,000	$29,500,000	-$3,400,000	-10.3%
Ramapo College of New Jersey	$20,500,000	$18,200,000	-$2,300,000	-11.2%
Richard Stockton College of NJ	$25,100,000	$22,600,000	-$2,500,000	-10.0%
Rowan University	$38,700,000	$34,700,000	-$4,000,000	-10.3%
Thomas Edison State College	$6,000,000	$5,400,000	-$600,000	-10.3%
William Paterson University	$41,300,000	$37,200,000	-$4,100,000	-9.9%
Total	$292,600,000	$262,700,000	-$29,900,000	-10.2%

Observations about the Effect of the FY 2009 State Budget Proposal
on State Colleges and Universities

	The spending plan would reduce state operating aid to the nine state colleges and universities by approximately 10 percent. In dollars, this would bump direct state college support back to about the same level, not adjusted for inflation, appropriated in FY 2000, when the colleges had 15,000 fewer undergraduates and tens of millions of dollars less in salary obligations. State support back then was about $5,300 per full-time undergraduate; the proposed budget would bring support down to $4,100 (again, no inflation adjusted).
	If implemented, the cut is arguably the biggest reduction -- over a three year time span -- in state support to state colleges and universities, in the history of American higher education. Timing of these cuts is particularly inopportune: the state is facing huge continued demand for higher education with about 100,000 high school graduates expected each year through 2017 (up from about 75,000 per year last decade).
	Funding is going in the wrong direction and is a large part of the reason tuition has been going up more than any of us would like. Funding has followed a downward zigzag over the past dozen years prior to this budget, with cuts to the state college direct appropriations sustained in these fiscal years prior to the current year: 1997, 2002, 2003, 2004, and 2007.
	The budget includes partial support for increased, mandatory salary costs generated by collective bargaining. We appreciate that some support for salary increases is provided, but note that besides cuts, the schools will once again have to deal with multi-million dollar shortfalls in this area. This year, the colleges had to grapple with an $11 million shortfall in this area.
	The institutions' leaders realize that the state is in dire fiscal straits. They will exercise their leadership to make sure institutions continue to fulfill their public missions while managing through this new round of cuts. We anticipate that they will be taking additional cost control measures, strategically cutting some programs or services less essential to core mission, launching efforts to secure revenues beyond student charges to help augment income, and as a last resort, increasing student tuition and fees. However, this will be tough challenge for a set of institutions that is the third most productive in the nation.
	Collectively, and through the Association, the colleges and universities will be pressing hard for the state to take further steps to deregulate institutions, grant them additional flexibility in areas such as facilities development and trustee selection, and allow them to manage workers compensation insurance on their own. It is paramount that the state grants this flexibility to the colleges so we can preserve college access and quality.
	We will also be communicating with our publics about the impact of the cuts, including current and prospective students and parents. We hope they and all concerned citizens will take a close look at what is happening to higher education and send a strong message to Trenton about the need for college access and quality.

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This page was last updated on Thursday, June 05, 2008