Higher Education

Kentucky’s final budget proposal includes cuts to higher education


Following three weeks of budget bargaining sessions and with a potential government shutdown looming, Kentucky lawmakers finalized a $22 billion, two-year operating budget that makes across-the-board cuts to shore up the state’s pension fund, and trims higher education funding.


The budget agreement was announced by House Speaker Greg Stumbo and Senate President Robert Stivers shortly before 3 a.m., after lawmakers debated through the night. Stumbo and Stivers, a Democrat and Republican, respectively, said the budget is expected to pass the House and Senate without controversy. “It is an adequate and effective blend, I believe, of the priorities contained in both the governor’s recommendation, the House budget and the Senate budget,” Stumbo told reporters.


As Louisville NPR News affiliate WFPL reported, the budget agreement directs $1 billion into funding the state’s pension systems. According to Sen. Chris McDaniel, chair of the Senate Appropriations Committee, this is the highest amount of funding Kentucky pensions have ever received. Gov. Matt Bevin had previously made creating a permanent fund for state pensions one of his main budget priorities. “For the first time in decades, we can say that Kentucky is investing in our pension system in a meaningful way,” Bevin said in a statement. “We look forward to reviewing the details of the compromise and its final passage.”


Higher education takes a cut
As The Courier-Journal reported, Bevin’s original budget proposal called for financing the pensions by making a 9 percent cut in funding for public colleges and universities and most state agencies. While the House immediately rejected the cut to higher education, the Senate included the 9 percent funding reduction in its budget – creating one of the major sticking points in the budget debate.


Announcing the budget, Stivers and Stumbo said the final budget proposal involves a compromise of a 4.5 percent funding cut for public universities and community colleges. Kentucky State University, the smallest in the system, was exempted from the cut.

“The proposed cuts come after Bevin recently issued a 4.5 percent cut for universities in the current fiscal year.”

These spending reductions come after Bevin recently issued a 4.5 percent cut for universities in the current fiscal year, which runs until July 1. As ABC News reported, Attorney General Andy Beshear filed a lawsuit against the first round of cuts, citing “blatant violations” and calling the governor’s decree an “unconstitutional and illegal order.” Bevin’s order removed around $41 million in funding for the state’s public colleges and universities for the last three months of their fiscal year budget.


“This is not political,” Beshear told reporters at a news conference. “It’s not Democrats versus Republicans. It’s not about upcoming or future elections. It’s not Bevin versus Beshear. It’s not even about pensions versus higher education. It’s about the law and my duty as attorney general to enforce it.”


At the budget announcement, Stivers and Stumbo said the finalized proposal did not take into account the current 4.5 percent cuts as lawmakers were waiting to see the result of Beshear’s lawsuit. According to The Courier-Journal, Stivers and Stumbo did not answer all reporters’ questions as to how the 4.5 percent cuts in the proposed budget would be laid out, but they did say K-12 schools will not lose their support programs, including preschool, textbook funding, safety and extended school services. However, the pair did say the House’s “Work Ready” scholarship, a priority of its budget, would need to be modified. The program, which would offer free tuition for qualifying students attending public colleges and universities, was projected to cost about $25 million over the next two years. Stumbo also said the budget will include a shift to some performance-based funding for higher education.


How Questica can help
Many higher education institutions already operate on tight margins, which means fluctuations in state funding can create budgetary challenges. Colleges and universities must find a way to provide quality academic instruction to their students, cover salaries and benefits for their staff and faculty, and take on capital improvements that allow for positive growth. In order to balance these many diverse economic needs in the face of reduced state support, institutions need comprehensive budgeting tools that can inform their financial planning.


Through Questica’s higher education budgeting platforms, schools can gain granular insight into their funding and revenue streams. The web-based platform streamlines data from multiple sources and eliminates the need for inefficient spreadsheets. Colleges and universities are able to easily and accurately analyze expenses related to operating budgets and capital projects, while also identifying funding gaps.


Through its Salary/Position Planning module, Questica feeds accurate calculations of expenses associated with staff salaries and benefits into future year budgets and forecasts. This gives higher education institutions the ability to accurately forecast all costs associated with positions and employees over an unlimited number of years. For schools adapting to performance-based funding models, Questica’s Performance module can provide a comprehensive system for tracking performance data that will inform lawmakers’ decisions. The Performance module can also help colleges and universities to set and obtain their own institutional goals and objectives.


Public colleges and universities facing changes in state funding should contact Questica to learn how comprehensive web-based budgeting tools can help with sound financial planning.