NJASCU: Higher Education Budget

Higher Education Budget

Level Funding for State Colleges/Universities; Little Growth for Student Aid Amid High Demand

The recently enacted higher education budget for Fiscal Year 2012 provides level funding for the nine state colleges and universities. The spending plan provides the nine state colleges and universities with $243.6 million - the same as FY 2011 direct funding (and about the same amount they received in 1995 when they were educating thousands fewer students). This "level-funding" is helping institutions to keep tuition increases modest.

The original Christie proposal increased funding for New Jersey's key student aid program that reaches many low- and middle-income students: the Tuition Aid Grant (TAG) program. However, in a last-minute line item veto, the Governor eliminated that increase, along with additional funds for the program added on by the Legislature in its final version of the budget bill. As a result of flat funding at roughly $294 million, these highly in-demand, need-based aid grants will be rationed.

Two other conditional veto items are expected to have an effect on college finances and have added pressure on boards to increase tuition.

The Governor scrapped budget language which would have eliminated the requirement that state colleges themselves (and students, indirectly, through tuition increases) bear half the cost of NJSTARS II scholarships (maximum value $6,000-$7,000). This move will cost state colleges/universities about $5 million.

Also, in the final version of the budget was an unexpected elimination of state funding for college employee fringe benefits for 5% of employees -- translating into 400 positions and a cost of $10-12 million.

For that reason, NJASCU's CEO, Darryl G. Greer, called the final budget disappointing.

Effect of the FY 2012 State Budget

In very brief summary, major provisions of the State Budget Act affecting state colleges/universities, as signed into law by the Governor with a veto message, is as follows:

1.	Direct state appropriations for the state colleges and universities remain flat, unchanged from FY 2011, with the exception of Rowan University, which received an additional $2.7 million related to development of its medical school. Direct funding for other public institutions remains essentially flat, as well. Funding for the nine state colleges and universities is just over $246 million, about the same amount of money they received in 1995, even though the institutions educate 35% more students than they did at that time.

2.	Each state college/university, as well as Rutgers, NJIT and UMDNJ, as a result of the Governor’s veto, received roughly a 5% reduction on the number of state-funded employee positions. The potential effect on the state colleges is about 400 positions (1,200 for all senior institutions). This could translate into a $10-12 million loss of state-funded fringe benefits at ASCU colleges, which must be made up by the institutions.

	In the long-term, this is a major policy loss for the institutions in that, for the first time, the state is explicitly shifting responsibility for paying for fringe benefits to the colleges.

3.	The state's basic student financial aid program (TAG) remains flat at roughly $294 million. The effect of the Governor's veto is a loss of about $46 million, $25 million of which was in the Governor's original budget recommendations.

	No growth in TAG funding creates a significant problem for college affordability. About 1/3 of all New Jersey college students receive some TAG support. The program has been oversubscribed for years, meaning that monies are already rationed. Not only do fewer students than should be the case receive a TAG grant, but also maximum grant awards are reduced under a formula administered by the Higher Education Student Assistance Authority to reduce the amount of the grant award for the eligible population.

4.	Budget language governing STARS II scholarships originally proposed by the Administration and revised by the legislature was eliminated. This outcome results in senior colleges and universities continuing to pay up to one-half of the scholarships provided for (maximum $6,000-$7,000, one-half contributed by the colleges) for scholarships for students transferring from two-year colleges. This will cost state colleges/universities about $5 million. The original proposal would have significantly reduced the obligation on the state colleges and universities, who do not support the program as an effective policy measure, but are required to help fund the scholarships.