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Mid-Year Budget Cut

TO:  Nicholls State University Faculty and Staff

FR:  Stephen T. Hulbert, President

A few days before the Christmas holidays, the Louisiana Revenue Estimating Committee determined that there would be a revenue shortfall for the current fiscal year that ends on June 30, 2012.  The amount of the shortfall was determined to be approximately $251 million, or approximately 1% of the state general fund budget of $25 billion.  The governor’s office and the state legislature addressed this shortfall with a combination of spending cuts and moving some unspent funds.  The amount of the actual reduction was approximately $144 million or a little over ½ of 1% of the general fund.

Because most state funds are dedicated to specific areas, either constitutionally or legislatively, the largest cuts, as always, affect higher education and health care, the two unprotected areas funded under the general fund.  It was determined that funding to health care would be reduced by about $25 million (about 18% of the overall cut) and $50 million would be cut from higher education (about 35% of the overall reduction).  The remainder of the cuts was spread over the other state agencies.

The initial estimates from the division of administration were that health care would be cut about $101 million and higher education would be cut about $105 million.  Through the efforts of the governor’s office and the legislature it was decided to use unspent funds from other areas to reduce the amount of the cuts to health care and higher education.  Both health care and higher education are appreciative of the efforts to reduce the impact on their entities.

The overall cut to higher education is a little over 5% of state general funds rather than the initial estimates of over 10%!  All of this is to be accomplished in the last half of the fiscal year.

The cut to Nicholls State was approximately $1.14 million or 5.1% of its state general fund of $22.3 million.  With these new figures the state funding to Nicholls State since 2008 has decreased from $35.8 million to $22.3 million or about 38%.  These funds include statutory dedication funding of about $1.1 million each year. With tuition going up about 10% a year, the self-generated funding (mostly tuition and fees) to Nicholls has increased over the same period from $20.8 million to $31.5 million (approximately 51%).  This means the total funding has only decreased slightly from $56.6 million in 2008 to $53.8 million in 2012.  However since the cost of insurance and retirement benefits have greatly increased (by approximately $3.3 million) over the same time frame, the “usable funds” have decreased by over $6.1 million.  The percentage difference in state funding and self-generated funding has gone from 63% state and 37% self-generated in 2008 to 41% state and 59% self-generated in 2012 – reversing the primary funding to higher education from state funding to self-generated funding in just four years.

Nicholls administration has approached this latest reduction with the following parameters:

  1. No layoffs – the faculty and staff have been reduced by about 100 persons over the last 4 years;
  2. No furloughs – the faculty and staff have not seen pay increases for 4 years, and;
  3. Protect the core of the institution (academics) as much as possible.

With these parameters in mind for the remainder of the fiscal year, the reduction will be handled by a freeze on positions, except for those critical to the core of the institution.  There will be cuts to travel, supplies, student labor, the number of scholarships awarded, and operating services.  Reductions will also include the budgets of those areas that receive funding from the state general fund such as athletics, the dyslexia center, and the women and government center by the same percentage reduction as the overall reduction to the university’s state general fund.

Because there was no time during the holidays to get input from the various entities, an attempt was made to be as fair as possible to all.  The cuts were handled with a formula to determine the budgets in the various operating categories.  The new budget in the areas of travel, supplies, student labor, etc. was determined by a formula which took into consideration the funds already encumbered, the funds remaining and a minimum and a maximum budget for the remainder of the year.

Obviously, these cuts have affected the institution greatly.  Because of the continuous reductions and threat of further reductions, morale is down – making it difficult to maintain faculty and staff.  Everyone has been doing more with less for 4 years.

However, because of dedicated faculty and staff and a willingness to look at other ways to work smarter, the core of Nicholls remains strong and the institution will survive and flourish even though the funding for Nicholls State and all of Louisiana higher education institutions remains well below that of our peer institutions in other states.

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