Image: UCLA students protest
David McNew/ Getty Images
University of California Los Angeles students protest education funding cuts and rising tuition rates last year. Fees at UCLA have increased 61 percent over the past five years.
By contributor
updated 3/22/2011 10:47:31 AM ET 2011-03-22T14:47:31

Wisconsin government workers aren’t the only ones feeling the pinch because of budget cuts. Governors of cash-strapped states are now putting public colleges on the chopping block.

Forty-three states have cut higher education since the start of the recession in December 2007, according to the Center on Budget and Policy Priorities. And many states are now considering more drastic measures such as closing departments or entire campuses, curtailing student enrollment and laying off staff — even tenured professors.

Tuition hikes are inevitable, so students will be paying more for more crowded classrooms and fewer services.

Nevada’s Board of Regents met March 11 to discuss the dire situation in the state's universities after a rough week. Hundreds of protestors gathered on the Las Vegas Strip to oppose school cuts earlier in the month, and Moody’s Investors Service identified the University of Nevada at Las Vegas as the most likely candidate to declare "financial exigency," similar to bankruptcy.

UNLV "is on the brink" of such a filing, says Edith Behr, vice president at Moody's and one of the authors of the report.

That would allow the university to lay off tenured faculty, a move that Chancellor Daniel Klaich, says is being considered.

Higher education an easy target
Nevada isn’t the only one hurting. California, Florida, Pennsylvania, Arizona and Illinois are among states where lawmakers will face tough decisions in coming months as the vast majority of federal stimulus money is set to run out by the end of the fiscal year and tax revenues are declining.

It is the third year in a row that states are experiencing budget pressures brought on by the recession. Many governors ran on campaigns promising not to raise taxes, so the only attractive option to make up budget shortfalls is to cut spending. While the majority of states have already made cuts to higher education, the next round of chopping will inflict more pain, experts believe.

"This year may well be the most difficult budget year since the start of the recession," says Phil Oliff, policy analyst at the Center on Budget and Policy Priorities, which focuses in issues affecting lower- and middle-income Americans. "More states are cutting higher education than we’ve documented in other areas."

One reason: Going after higher education tends to be the easiest target. "There is political opposition to cutting K through 12 education, and state laws sometimes prevent that," says Tracy Gordon, a fellow at the Brookings Institution. "But higher education is a more flexible area."

Up to two-thirds of the typical state budget goes toward education and health care costs, but when it comes to cutting, many constituents say hands off health care. Only 31 percent of people support cuts in funding for public colleges, according to a PEW Research Center Survey, but even fewer favor getting rid of health-care services (21 percent) or funding for K through 12 schools (18 percent).

In Nevada, the Board of Regents decided against closing or merging any colleges at the March 11 meeting, but hundreds of employees are likely to face layoffs once the state budget is finalized, probably in June.

Gov. Brian Sandoval has proposed shaving $162 million from Nevada's higher education budget over the next two years: from $558 million this year to $395 million in 2013. Nevada has been hit hard by the recession and housing crisis and has the nation's highest unemployment rate at 14.2 percent.

  1. More must-see stories
    1. The Hartford Courant, Political
      Wild Wall St.

      Has the market volatility got you nervous? These cartoons may give you a little comic relief.

    2. Cyber-thieves create fake Kelley Blue Book site
    3. US says Reebok toning shoes don't really
    4. Can you live on $9 an hour? Play the game

California isn't far behind, with the nation’s second-highest employment rate — 12.4 percent as of January, the most recent figures available. On the table is a proposed reduction of $1.4 billion from the state’s higher education budget.

The University of California system already has increased tuition by 32 percent over the past two years, and the Cal state system forced faculty and staff to take two furlough days a month last year for a 10 percent cut in hours and pay.

"Classes are getting bigger, and it takes longer to graduate," says Patrick Murphy, a political science professor at the private University of San Francisco, referring to cuts in the state's public university system. "That is raising the price without raising tuition."

Florida, which also faces high unemployment and foreclosures, is poised to absorb a roughly $320 million bite out of higher education next year or a 9 percent cut to public universities, even though schools have already laid off faculty.

Pennsylvania is on similarly shaky ground. Temple University notified 20 to 30 non-tenure-track professors that their jobs are at stake as Gov. Tom Corbett unveiled his latest budget, which had no new taxes, but plenty of cuts. He is hoping to slash $625 million, or 52 percent of state funds, for the 18 colleges that receive state money, including Temple and Lincoln universities.

Graham Spanier, president of Pennsylvania State University, was shocked by the magnitude of the proposed cuts, saying that if they happened, the school might have to close some of its smaller campuses. He told the Philadelphia Inquirer, "The proposal would be the single largest percentage state cut in the history of American public education."

A risky move
While UNLV is the only school that has publicly said declaring financial exigency is a possibility, the serious move remains a last resort.

"That would be the most-dire result and would allow us to shorten notices on contracts and lay off individuals and close programs with very abbreviated notice," says Klaich, the Nevada chancellor. "It's certainly not a place where anyone wants to be."

Behr of Moody's says public universities simply be using the threat of financial exigency as a tool to convince legislatures to give them more money or as a necessary way to reduce expenses faster.

But it's a risky move that could cause damage to a school's reputation.

Major Market Indices

"If [a school] declares financial exigency and it needs to take out bonds to pay for a parking garage or something, no one will lend them money at the same rate," says Tom Auxter, president of United Faculty of Florida, which represents 23,000 faculty members and university professionals. "That means things are so bad you can't pay all your bills."

But Behr adds: "If one school does it and many follow, and it's handled in a way that stakeholders understand and respect, then (financial exigency) could be a good avenue."

With all these higher education cuts, it's likely that public universities will have to change. Some campuses might consolidate and other schools might get rid of poorly performing programs.

"I hope that out of the crisis, there'll be new solutions, but I don't think that is happening," says Murphy, the University of San Francisco professor. "Instead schools will just get smaller and more expensive and more exclusive."

© 2013  Reprints


Discussion comments


Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 3.79%
$30K home equity loan FICO 4.99%
$75K home equity loan FICO 4.69%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.83%
Cash Back Cards 17.80%
Rewards Cards 17.18%