APRIL 30, 2010 -- State budget projections have become so dire that some influential legislators are openly discussing a plan in which public universities and colleges could take a step toward privatization.
Faced with a projected $1 billion shortfall for the 2011-12 General Fund budget, House Ways and Means chairman Dan Cooper (R-Piedmont) confirmed this week that he’d met and discussed the plan with representatives from three different schools; Coastal Carolina, the Citadel, and his alma mater, Clemson University.
The outline of the nascent plan is this: in exchange for “regulatory relief,” the schools would agree to give up significant chunks of state funding. “Regulatory relief” is the buzz-phrase for allowing schools more latitude when making programmatic and building decisions.
State money is tight and getting tighter. This week after a marathon, night-long session, the Senate approved a budget package for the 2010-11 fiscal year that dropped the total General Fund amount to just over $5 billion, down from a projected $7 billion in 2008-09.
The Senate’s version of the state budget, which still needs to clear the House and Gov. Mark Sanford, includes cuts of about $100 million from higher education.
Public higher education has already suffered big cuts in recent years. Since 2008, legislators have reduced public support by a whopping 44 percent. In real dollars, a Clemson official this week said the university had taken a $75 million hit alone over the past two years in state funding reductions.
Not first flirtation with privatization
Cooper’s idea is not the first time public institutions have considered going private. The Citadel looked into the idea in the mid-90s, according to Fred Sheheen, former head of the state’s Commission on Higher Education.
SIDEBAR:
HOW SC VIEWS HIGHER ED
High college tuition for South Carolina students is endemic of the higher education funding paradigm that has dominated the state in modern history, according to former S.C. Commission of Higher Education executive director Fred Sheheen.
He said South Carolina has traditionally viewed higher education as an individual benefit, while our neighbor to the north, North Carolina, has viewed it as a public benefit.
Historically, South Carolina’s public colleges have among the highest tuition costs in the Southeast, while also having one of the lowest per capita income levels. North Carolina has roughly the opposite, according to Sheheen, with relatively low tuitions and higher per capita income levels.
“I’m worried that increased tuitions could price more and more kids from our state out of higher education,” said Sheheen.
Rep. Phil Owens (R-Easley), who chairs the Education Committee in the House, said the issue is further complicated because some in the state legislature view higher education as an economic development tool, while others view it as a “core” service of government.
Owens said many of the legislative fights in the past over education funding have been about striking the right balance between the two perspectives.
Sen. John Courson (R-Columbia) said the legislature could free up some higher ed dollars by overhauling its K-12 funding structure.
|
Back then faced with the possibility of admitting its first-ever female cadet, Sheheen, father of gubernatorial candidate state Sen. Vincent Sheheen (R-Camden), said there was a groundswell of support to take the military school private.
But, several factors doomed the effort, Sheheen said. One, the school would have had to raise millions and millions of dollars every year just to offset the loss in state funds. And two, the school would have had to reimburse the state for the buildings. “And I don’t think the state would want to sell off its facilities,” Sheheen said this week.
Something has to be done
The state legislature is going to have to do something next year, according to Ways and Means chair Cooper. Federal stimulus money will dry up. Medicaid rolls are expanded. State tax collections are still flat.
“If the economy is rebounding in time to replace some of the lost funding, well, we’re not seeing it show up in our numbers,” said Cooper, whose committee has the first crack at writing the state budget every year.
With options like raising taxes and hoping for another federal stimulus bill to help stabilize state budgets, Cooper has floated the “trial balloon” of further cuts to the state’s biggest budget eaters: K-12 education, higher education, corrections and Medicaid. Compounding the financial crunch is the amount of money the state has committed to other categories of spending, such as debt retirement, offsetting homestead exemptions and support of local governments.
Swapping freedom for cash may be more attractive to some state schools, Cooper said, that receive a smaller portion of their budget from state General Fund support, “like Coastal Carolina, but for Clemson at 12 percent, it may not be as attractive.”
Decision kind of made by circumstances
According to Cathy Sams, the chief public affairs officer for Clemson, her institution is faced with a tough decision that, in some respects, has already been made by circumstances.
“The situation is that, in general, we have already been relinquishing the money anyway, but not receiving the regulatory relief,” said Sams. She said her school received roughly 12 percent of its total budget from the state, but added that parts of the school had a separate budget and were self-supporting.
“We see what’s going on with the money; we see the Board of Economic Advisors’ projections,” said Sams. “But there are real costs to running this [school].”
Sams said one way Clemson could benefit from the swap would be in the number of hoops the school had to jump through to have a building project. She said if oversight was trimmed from six hoops to two or three, then the savings could be passed on to supporting educational programs and professors, which make up the majority of the school’s spending.
She added there was a direct correlation between state funding and tuition. And more cuts could easily spell higher tuition next year for many schools.
Citadel spokesman Jeff Perez said his school was “working hard to make up for losses in the state appropriation, and we welcome the opportunity to discuss any regulatory reform proposals. We need the flexibility to cut costs, generate new revenues and be a good steward of state tax dollars."
Requests for comment from Coastal Carolina were not returned.
Crystal ball: Already high tuitions are going to go up more. The budget plan that made it out of the Senate this year did not directly address a looming $1 billion shortfall for next year. Additionally, its budget mapped how more and more reliance for funding core services -- like the courts -- will fall on increased fines and fees. Will schools go private? Probably not, but there will be some loosening of state reins as the state’s pocketbook gets thinner and thinner.