University Times

Would capping state budget increases result in less support for higher education?

The heads of Pennsylvania’s state-related institutions, including Chancellor Mark A. Nordenberg, are concerned about the potential harmful effects of recent actions by the Pennsylvania legislature.

Both the House of Representatives and the Senate have enacted legislation dubbed the “Taxpayer’s Bill of Rights” (TABOR), although in different versions, Nordenberg reported at this week’s Senate Council meeting.

The differences would have to be resolved and a final bill signed by the governor before TABOR would go into effect.

The bills call for capping increases to the overall state budget using a formula that includes the average inflation rate, the average change in personal income levels and the average percentage change in the state’s population over three previous budget years.

University officials across the state are concerned that reduced higher education appropriations would be the likely outcome under capped budget ceilings, Nordenberg said Monday.

“Legislation of this type has taken different forms in different states,” Nordenberg said. “But essentially what it does is tie state spending to increases in personal income or to some other pre-established index or set of indices. Generally speaking, legislation of this type has had a destructive effect on higher education, [particularly] public higher education, wherever such laws have been enacted.”

The chancellor cited the University of Colorado (CU) as an example of an institution that has been harmed by similar state legislation.

As a result of the Colorado TABOR legislation, CU’s state appropriation has declined to 6 percent of its total budget, tuition has been increased by 50 percent over the past two years and the university has increased the percentage of undergraduate out-of-state students because CU needed the higher out-of-state tuition revenues, Nordenberg said.

A Nov. 1 state referendum in Colorado recently relaxed restrictions of the TABOR legislation, allowing the legislature to retain surplus funding rather than mandating that it be refunded to taxpayers.

“Ironically, on the very day that the Pennsylvania legislature was acting on forms of this legislation — and I use that plural term because the Senate and the House have enacted different versions — the voters of Colorado were voting 52 to 48 percent that they needed to relax the spending increases [limits] that had been in place in that state. They did that because of the harms that had flowed from the lack of legislative freedom, really, to invest in things that required investment.”

In an Oct. 31 letter to the Pennsylvania legislature signed by Nordenberg, Penn State President Graham B. Spanier and Temple President David Adamany, the state-related institutions’ leaders wrote, “The spending cap in the proposed legislation relies on a formula that does not reflect the reality of the pressures facing our institutions or our shared responsibility for ensuring that our institutions continue to provide accessible public education to Pennsylvanians.”

While the university leaders expressed support for enacting fiscally responsible state budgets, factors used in expenditure ceiling legislation such as rates of inflation, income and change in population “do not capture or correlate well with the real demands and needs for educational services from K-12 through higher education,” the leaders maintained.

Inevitably, the TABOR legislation can lead only to equally bad options, they stated. One option: The institutions can add to the projected tuition increases and thus harm students and families struggling to afford higher education.

“Or, if we simply absorb the cuts, the resulting program cuts would do untold damage to the scope, quality and reputation of our institutions’ academic programs, research and services,” they wrote. “Neither scenario is good for the people of the commonwealth, but one or the other will occur if a TABOR-constrained budget further reduces state support for public higher education.”

Nordenberg added at Senate Council, “This is something we’re following very carefully.”

Paul Supowitz, associate vice chancellor for commonwealth relations and a Pitt lobbyist, told the University Times that there are four bills, House Bills 2067 and 2082 and Senate Bills 4 and 884, that touch on TABOR legislation.

“HB 2067 and SB 884 call for an amendment to the state constitution, which ordinarily takes years to go through the process of enactment, because it would require a state referendum,” Supowitz said. The other two bills would require the two legislative houses to reconcile their versions followed by the approval of the governor.

According to Supowitz, Gov. Ed Rendell has not indicated his stand on the legislation. “He’s playing this one close to the vest so far,” Supowitz said.

In a statement released following the Nov. 1 action of Colorado voters to allow the legislature to return surplus money to the following year’s budget, CU President Hank Brown said, “All of us in higher education are grateful for the passage of this referendum…. The passage gives the state the resources to restore its funding for public higher education.”

According to the Nov. 3 Silver & Gold Record, CU’s faculty and staff newspaper, the CU Board of Regents expressed relief at the voters’ actions.

CU regent Michael Carrigan said the regents now can look at a “moderate” tuition increase for 2006-2007, rather than as much as a 32.2 percent increase that would have been required to compensate for budget cuts and mandated costs, the newspaper reported.

—Peter Hart