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Analysis of Governor’s Proposed FY2018 Budget

February 28, 2017

 

Summary

 

At 2 pm this afternoon, Gov. Christie delivered his FY2018 budget address. The FY2018 budget totals $36.201billion. Overall, the FY2018 budget would maintain higher education funding at a total of $2.2 billion.

 

Operating aid to each of the senior public colleges and universities would stay largely the same as in FY2017. As the attached page from the Budget in Brief indicates, the only institutional reductions represent one-time payments made in FY2017: $2.5 million to Rowan University for its Center for Research and Education in Advanced Transportation Engineering ($2 million), and new academic buildings operated by the Rowan University - Rutgers Camden Board of Governors ($500,000); and $1 million to Rutgers University for Rutgers-Camden’s School of Business facility.

 

With regard to the State’s major financial-aid programs, funding for Tuition Aid Grants would increase $15.7 million over FY2017, to a total of $419.4 million. Awards at all levels of need would increase 2 percent over FY2017 award levels, and the program is projected to support more than 68,000 students. The Educational Opportunity Fund’s grants and scholarships would be cut

$3.565 million (8.4 percent), slightly more than the $3.035 million added by the legislature to the EOF program in FY2017.

 

The entire Budget in Brief can be accessed here.

 

Text of Governor’s Address

 

The text of the governor’s address, available here, did not mention any new programs or spending for higher education. The one paragraph regarding higher education focused on the Christie administration’s past funding for higher education facilities. The governor said:

 

In 2013 we provided $1.3 billion in capital funding for 176 projects at 46 of our higher education institutions.  Last June, we provided an additional $180 million for 35 more projects targeting programs that boost technology, support the health sciences and renovate laboratories at learning institutions across the state.  Combined, that is a

$1.5 billion investment in our children's future, and in helping our State maintain its status as a highly educated center of industry. We are the first Administration in over 25 years to invest in expanding and modernizing our colleges and universities. Once again, keeping our promise to leave New Jersey better in 2017 than we found it in 2010 when we arrived. More seats at our colleges and universities. More modern classrooms and facilities. Better schools for our citizen. In higher education a much better New Jersey today than we inherited in 2010.

 

Other Higher Education Funding

 

County Colleges

The county colleges would receive $134.123 million in operating support in FY2018, the same as in FY2017.

 

Independent Colleges and Universities

 

The independent colleges and universities would receive $1 million in operating aid in in FY2018, the same as in FY2017.


Recovery Dorms Program


To support New Jersey’s college students suffering from drug addiction, the FY2018 budget would expand the Recovery Dorms program. The proposed budget would provide $1.5 million for recovery housing, which promotes a healthy living environment and supportive services to help students maintain sobriety and succeed in their college experience.

 

College Readiness Now

 

Funded at $1 million in fiscal years 2017 and 2018, this program helps students prepare for college-level coursework before they graduate from high school. Funding supports partnerships between the county colleges and 135 high schools throughout New Jersey.

 

Governor’s Urban Scholarship Program

 

The Governor’s Urban Scholarship Program would add a sixth class, and support an estimated

600 students, with an appropriation in FY2018 of $945,000.

 

The Governor’s Urban Scholarship Program provides a merit award of up to $1,000 annually to students living in one of New Jersey’s 14 high-need communities. To qualify, a student must be a resident of New Jersey for at least 12 consecutive months prior to high school graduation and upon

college enrollment and be in the top 5 percent of his or her class, have at least a 3.0 grade point average by the end of junior year of high school, and have a New Jersey Eligibility Index (NJEI) less than 10,500. The program provides a persistency award of $500 to students in their final term of the scholarship upon completing their associate’s or baccalaureate degree.

 

Seton Hall University’s Medical School

 

The Fiscal Year 2018 budget would provide $500,000 to Seton Hall University’s School of Health and Medical Sciences, down from $10 million in FY2017.

Debt Service on Building Our Future Bonds

 

The Fiscal Year 2018 budget would increase funding for debt service on the Building Our Future bonds by $17.341 million, from $32.943 million in FY2017 to $50.284 million.

 

NJ Lottery Proposed for Pension Funding, Raising Concerns for Higher Education Funding

 

The proposed Fiscal Year 2018 budget includes a $2.5 billion pension contribution, an increase of $647 million over Fiscal Year 2017’s contribution, but only half of what is actuarially required.

 

The governor proposed contributing the revenues from the New Jersey Lottery to the State’s pension system, which he indicated would significantly reduce the unfunded liability of the system and reduce the required amount of State payments into the system. The governor outlined his proposal in the following paragraphs from his budget address:

 

Following the lead of a number of private sector pension plans, one potential path to greater solvency is to make large transfers of assets into the pension fund. Such a scenario has the same effect as a cash infusion—the value of assets increases, thereby reducing the unfunded liability in our pension system.

 

In the case of New Jersey, we have one incredibly attractive asset that could be utilized in such a fashion—the State Lottery. This is a state-sponsored monopoly that spins off large amounts of cash. Today, though, we have no ability to recognize the significant value of that asset.

 

I am proposing to contribute the revenues from the Lottery to eligible pension plans. The contribution would have the immediate effect of reducing the unfunded liability of the pension system by approximately $13 billion, and would increase the funded ratio of the pension system by almost 15 percentage points in one fell swoop, from 49% to 64%. This would also significantly reduce the amount we have to pay into the pension system every year out of the general fund.

 

The governor’s proposal raises concerns over funding for higher education. In Fiscal Year 2015 (the most recent data available), revenues from the State Lottery paid for $667.273 million in higher education services, as indicated below from information on the State Lottery's website:

  

Program

Amount

Senior Public Institutions - Operating Aid

$385,845,000

Tuition Aid Grants

$222,511,000

Higher Education Capital Improvement Program - Debt Service

$21,619,000

Opportunity Program Grants (Part of EOF)

$14,405,000

Higher Education Facilities Trust Funds

$10,904,000

Supplementary Education Program Grants (Part of EOF)

$7,088,000

Student Tuition Assistance Reward Scholarships (NJSTARS)

$3,824,000

Aid to Independent Colleges and Universities

$554,000

Governor’s Urban Scholarship Program

$523,000

Total Higher Educational Services

$667,273,000


The New Jersey Lottery reported gross revenue of $3.29 billion in Fiscal Year 2016, returning $987 million to the State government after expenses and prize payouts. In addition to the higher education-related programs listed above, Lottery proceeds went to programs in the departments of Agriculture, Education, Human Services, and Military and Veterans Affairs. Some of the programs and institutions that receive Lottery funding include the School Nutrition Program, the Marie H. Katzenbach School for the Deaf, centers for the developmentally disabled, state psychiatric hospitals, and homes for New Jersey’s disabled veterans.

 

The New Jersey Constitution restricts the use of Lottery funds. Article IV, Section VII.2.C. states that “the entire net proceeds of any such lottery shall be for State institutions and State aid for education.” It is unclear whether the State pension system fits within the restricted use.

 


FY 2017 Budget

At about 10 p.m. on June 30, 2017, Governor Christie issued his line-item veto of the Fiscal Year 2017 state budget, which totals $34.5 billion. The governor line-item vetoed $292 million of funding proposed by the legislature, including $50 million for charity care to hospitals to help pay for uninsured patients, and $25 million for preschool education expansion. The full line-item veto message can be accessed here.

The governor’s press release on the budget highlighted the governor’s spending on higher education by stating:

Historic Higher Education Funding. Maintains the governor’s commitment to higher education in New Jersey. Overall, higher education funding is maintained at a total of $2.2 billion in fiscal year 2017. Among Governor Christie’s highest priorities has been strengthening New Jersey’s higher education community.

Several funding increases provided by the legislature for individual institutions of higher education were line-item vetoed by the governor, as detailed in the table below.

The governor also line-item vetoed language that would have targeted the $17.8 million increase in funding for the Tuition Aid Grant (TAG) program to students at public institutions of higher education. In the Educational Opportunity Fund (EOF), the governor reduced funding by $1.435 million below the legislature’s total amount of $43.822 million, but increased funding for EOF over FY 2016 by $1 million.

The governor’s line-item veto left intact $1.5 million for a Database of Higher Education Institutions Research added by the legislature to the budget.

Under Executive Order No. 209, the governor placed in reverse all funding added by the legislature to his proposed budget until the Plan Design Committees that oversee the State Health Benefits Plan identify $250 million in health benefits savings through revisions to the plan, such as increased use of mail-order drugs, and changes to co-pays for visits to emergency rooms. The $250 million in targeted savings includes $41 million attributed to the senior public colleges and universities through their employees. We will keep a close watch on this issue as the fiscal year unfolds.

Detailed analysis follows

NJASCU Analysis of Final Fiscal Year 2017Budget

Institutional Appropriations

State Colleges and Universities

Institution

FY17 Appropriations Act

Governor’s Line-Item Veto

Final FY 2017 Appropriation

Comparison to FY 2016

The College of New Jersey

$27,177,000

No changes

$27,177,000

Same: $27,177,000

Kean University

$30,469,000

No changes

$30,469,000

Same: $30,469,000

Montclair State University

$35,859,000

No changes

$35,859,000

Same: $35,859,000

New Jersey City University

$24,154,000

No changes

$24,154,000

Same: $24,154,000

Ramapo College

$14,953,000

No changes

$14,953,000

Same: $14,953,000

Stockton University

$22,391,000

Deleted $4 million for Atlantic City Campus

$18,391,000

Same: $18,391,000

Thomas Edison University

$3,292,000

No changes

$3,292,000

Same: $3,292,000

William Paterson University

$30,357,000

No changes

$30,357,000

Same: $30,357,000

Public Research Institutions

NJIT

$39,600,000

Deleted $4.16 million to develop NJIT Engineering Makerspace

$35,440,000

Same: $35,440,000

Rowan University

$95,483,000

·   Deleted $6 million to expand School of Osteopathic Medicine

·   Deleted $1.6 million from $2.1 million for new academic buildings, Rowan University – Rutgers Camden Board of Governors, leaving $500,000

·   Left intact $2 million for Center for Research and Education in Advanced Transportation Engineering

·   Left intact shift of 100 State-funded positions from Cooper Medical School to Rowan University, for a total of 1,649.

$87,883,000

Increase of $2.5 million from $85,383,000

Rutgers University – New Brunswick

$326,172,000

Deleted $250,000 for Citizenship Rutgers Immigration Law Project

$325,922,000

Same: $325,922,000

Rutgers University – Camden

$17,501,000

Left intact $1 million for new School of Business Facility

$17,501,000

Increase of $1 million from $16,501,000

Rutgers University – Newark

$30,630,000

No changes

$30,630,000

Same: $30,630,000

Agricultural Experiment Station

$20,931,000

No changes

$20,931,000

Same: $20,931,000

Rutgers University Total

$395,234,000

Net increase of $1 million

$394,984,000

Increase of $1 million from $393,984,000


 

Financial Aid Programs

Line Item

Appropriations Act

Governor’s Line-Item Veto

Comparison to FY 2016

Opportunity Program Grants

$29,054,000

Deleted $895,000, leaving total of $28,159,000

Increase of $583,000 from $27,576,000

Supplementary Education Program Grants

$14,768,000

Deleted $540,000, leaving total of $14,228,000

Increase of $417,000 from $13,811,000

EOF Total (two items above)

$43,822,000

Deleted $1,435,000, leaving total of $42,387,000

Increase of $1 million from $41,387,000

Tuition Aid Grants (TAG) Appropriations

$403,647,000

Left intact

Increase of $17.8 million from $385,830,000

TAG Language targeting increased funding to students at public institutions

“The Higher Education Student Assistance Authority shall use $17,817,000 to increase the value of grants awarded to all qualified applicants attending a public institution of higher education or to extend grant eligibility to all qualified applicants attending a public institution of higher education and classified in a New Jersey Eligibility Index category that was ineligible to receive a grant in the prior academic year, provided further, that the authority shall first use a portion of the $17,817,000 to avoid reducing the value of grants awarded to all qualified applicants attending an independent institution of higher education below the value of grants awarded in the prior fiscal year.”

Deleted

n/a

Other Higher Education Line Items

Database of Higher Education Institutions Research. Searchable database of research being conducted at higher education institutions, to be created and maintained by the Economic Development Authority, in collaboration with the Secretary of Higher Education, for use as an economic tool to attract and retain businesses in New Jersey.

$1,500,000

Left intact

New Item

Aid to Independent Colleges and Universities

 

$1,500,000

Deleted $500,000, leaving $1 million

Decrease of $500,000, from $1,500,000

REED Academy – Autism Services Pilot Program

$1,000,000

Reduced to $500,000

New item


FY 2016 Budget

Summary of FY 2016 Appropriations for the Senior Public Colleges and Universities

Under the Final FY 2016 budget, the operating support for each state college and university was cut between 7.1 percent and 7.3 percent.  The FY 2016 budget largely flattens out the inequitable cuts among the eight state colleges and universities that were initially proposed under the governor's draft budget -- cuts that ranged from 7.1 percent to 14.3 percent.  The public research institutions experienced a lower percentage decrease in the operating support, also indicated in the chart below.

FY 2016 TOTAL GRANTS-IN-AID APPROPRIATIONS FOR THE SENIOR PUBLIC COLLEGES AND UNIVERSITIES


Institution

FY2015

Governor’s Proposed FY2016 Budget

 Governor’s Proposed FY2016 $ Decrease

Proposed FY2016 % Decrease

FY2016 Appropriations Act w/ Governor’s Line-Item Veto

Amount Restored under FY2016 Appropriations Act

Final $ Decrease, FY2015-FY2016

 Final % Decrease, FY2015-FY2016

State Colleges and Universities

The College of New Jersey

$29,317,000

$26,888,000

$2,429,000

8.3%

$27,177,000

$289,000

$2,140,000

7.3%

Kean University

$32,837,000

$30,469,000

$2,368,000

7.2%

$30,469,000

$0

$2,368,000

7.2%

Montclair State University

$38,613,000

$35,859,000

$2,754,000

7.1%

$35,859,000

$0

$2,754,000

7.1%

New Jersey City University

$26,056,000

$23,598,000

$2,458,000

9.4%

$24,154,000

$556,000

$1,902,000

7.3%

Ramapo College

$16,130,000

$14,638,000

$1,492,000

9.2%

$14,953,000

$315,000

$1,177,000

7.3%

Stockton University

$19,839,000

$17,649,000

$2,190,000

11.0%

$18,391,000

$742,000

$1,448,000

7.3%

Thomas Edison State University

$3,551,000

$3,044,000

$507,000

14.3%

$3,292,000

$248,000

$259,000

7.3%

William Paterson University

$32,748,000

$29,996,000

$2,752,000

8.4%

$30,357,000

$361,000

$2,391,000

7.3%

State College Total

$199,091,000

$182,141,000

$16,950,000

8.5%

$184,652,000

$2,511,000

$14,439,000

7.3%

Public Research Institutions

Rowan University

$88,792,000

$85,383,000

$3,409,000

3.8%

$86,583,000

$1,200,000*

$2,209,000

2.5%

NJIT

$37,696,000

$35,440,000

$2,256,000

6.0%

$35,440,000

$0

$2,256,000

6.0%

Rutgers – New Brunswick

$338,545,000

$323,597,000

$14,948,000

4.4%

$325,922,000

$2,325,000

$12,623,000

3.7%

Rutgers – Camden

$17,140,000

$17,051,000

$89,000

0.5%

$16,501,000

-$550,000

$639,000

3.7%

Rutgers – Newark

$31,816,000

$31,640,000

$176,000

0.6%

$30,630,000

-$1,010,000

$1,186,000

3.7%

Agricultural Experiment Station

$21,742,000

$21,696,000

$46,000

0.2%

$20,931,000

-$765,000

$811,000

3.7%

Rutgers University Total

$409,243,000

$393,984,000

$15,259,000

3.7%

$393,984,000

$0

$15,259,000

3.7%

Public Research Total

$535,731,000

$514,807,000

$20,924,000

3.9%

$516,007,000

$1,200,000

$19,724,000

3.7%

Senior Public Total

$734,822,000

$696,948,000

$37,874,000

5.2%

$700,659,000

$3,711,000

$34,163,000

4.65%

* (Center for Research & Education in Advanced Transportation Engineering)


NEW!  Summary of FY 2016 Appropriations for the Senior Public Colleges and Universities



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