A plan to fund higher education

John Neely Kennedy

Louisiana’s colleges and universities need money.  There’s a way to help them without raising taxes or tuition:  reduce spending on state government’s consulting contracts by 10% and dedicate the $528 million saved to higher education.

 When Mike Foster was governor, the state’s budget was $12 billion.  It was $19 billion under Governor Blanco.  Today it’s $25.3 billion.  Over this time, Louisiana’s population has grown little and inflation has been low.  This notwithstanding, funding for Louisiana post-secondary education has been cut to the bone.

Louisiana spent $1.6 billion from its general fund on higher education in 2008.  We had finally reached the southern average for the first time in 25 years. This year’s general fund spending for higher ed is $525 million-a breathtaking 67% reduction.  Even after taking into account tuition and fee increases on the backs of students and parents, total funding on higher ed is down $353 million.  State funding for higher education in Louisiana is down 17.6% this fiscal year alone (3/4s of the states have raised higher ed funding this year), the most dramatic reduction in America, according to the American Association of Colleges and Universities.  Frankly, I don’t know how our schools keep the lights on.

At the same time, the state is spending more than ever on consultants, many of whom are out-of-state, which means the dollars don’t even stay here.  According to the Legislative Auditor, Louisiana has 19,000 consulting contracts spread throughout state government.  Governor Jindal’s former top financial advisor testified before the Streamlining Government Commission that 14,000 of those consulting contracts are for $50,000 or more.  For 2005 to 2010, the Louisiana Department of Education alone spent $615 million on 5,499 consultants.  In 2012, total state spending on professional, personal and consulting contracts was $5.28 billion.

Why do we need to spend $94,000 in taxpayer money on a California consultant to “assist students to learn valuable social skills through organized play on their recess and lunch periods” (Contract #672113)?  Why spend $874,930 on a consultant to “provide ... assistance to disadvantaged business enterprise companies doing business with DOTD” (Contract #658942)?  Does DHH really need to pay someone $19,500 to “coordinate two Golden Glove Boxing tournaments” (Contract #710616)?  Does the Department of Education need to spend $250,000 in consulting fees to “provide valid and reliable data to parents to support informed school choice decisions” (Contract #674139)?  Why would any reasonable public official spend $57,100 to “inform and educate the Hispanic community ... of seatbelt usage” (Contract #708691), or give precious taxpayer dollars to the Hop 2 It Music Co., the Smile and Happiness Foundation or the Light City Church under any circumstances, but particularly when our colleges and universities and the kids they teach are falling behind the rest of America in a knowledge-based global economy?

Some think the way to help higher education is to raise tuition-again.  They are wrong.  Louisiana has a lower percentage of college graduates than any state except West Virginia.  We will not bridge this talent gap and catch up by raising (even more) the cost of a degree.  Besides, since 1985, college tuition in America is up 500%--more than health care or gas or the cost of a home.

There’s a better way.

In 2012, by a vote of 94-0, the Louisiana House of Representatives passed a bill (HB 327) by Rep. Dee Richard that would have directed every agency in state government to reduce its spending on consulting contracts by 10%.  The Senate Finance Committee killed the bill unanimously.  In 2013, the Louisiana House passed the same bill (now HB 73) by a vote of 86-0.  The Senate Finance Committee once more defeated the bill on a 4-4 vote.

 HB 73 needs to be reintroduced and passed.  According to the nonpartisan Legislative Fiscal Office, it would save $528 million annually, which should be dedicated specifically in the legislation to higher education.  That’s not enough, but it’s a start.

 There will be opposition.  Some will argue the bill will harm the state’s privatization efforts.  Not so.  HB 73 is about government waste, not whether a vital state service can be provided more efficiently by the private sector.  Some will accuse the legislature of micromanaging.  Not so.  HB 73 does not specify which contracts should be eliminated-that’s up to the agencies-or whether any should be eliminated at all.  An agency can meet its goal of reducing consultant spending by keeping all its contracts while negotiating lower prices.  Others will argue that every one of the state’s consulting contracts is necessary.  I don’t believe it, and I don’t think taxpayers do either.  Besides, some of our agency heads make as much as $400,000 a year.  If they can’t implement the reduction, I bet we can find someone who can.  Finally, the argument will be made that consulting contracts are funded with federal dollars.  Some are; many aren’t.  The answer is to reduce or eliminate the contracts using state money and ask the feds to give us permission to redirect the federal money for the nonsensical contracts to higher ed.  We shouldn’t be wasting American taxpayer dollars on frivolous, wasteful consulting contracts anyway.

The formula for a better Louisiana is simple:  real jobs for adults and a good education for our children.  We can’t have one without the other.

This plan will work.  The carnage in higher education must end..

 

John Neely Kennedy is the State Treasurer of Louisiana. He earned a bachelor of arts degree from Vanderbilt University in Nashville, Tennessee, in 1973, a Juris Doctor from the University of Virginia School of Law at Charlottesville in 1977, and an advanced law degree (B.C.L.) from the University of Oxford in 1979.

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