Kentucky's colleges and universities would take a budgetary blow in Gov. Steve Beshear's two-year financial proposal, with a 2.5 percent cut to operating funds that is only slightly softened with new funding for buildings and research.
Beshear said the choice to cut higher education was the most difficult made in the budget process, as it will have been cut 17 percent since 2008.
"This is one of those hard choices and it's not a good choice but it's the best choice we have," Beshear said during a media briefing Tuesday afternoon.
The Council on Postsecondary Education, the agency that oversees higher education, had asked for an 8 percent increase in operating funds to offset years of cuts, and CPE President Bob King was clearly disappointed.
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"These reductions put more pressure on tuition, which impacts our students and their families, and risks limiting the development of Kentucky's 21st century workforce," King said. "Since the quality of our workforce is key to economic development, without new revenues or changed priorities, the state is undercutting its ability to be globally competitive in the future."
Tuition has increased and even doubled at many state institutions since 2008, when state and national economies cratered.
Beshear's budget does include more money for buildings.
The state would provide about $520 million in General Fund bonds for university projects, including $45 million toward a new science research building at the University of Kentucky, $35 million toward renovation of UK's law school, and $66 million for a science building at Eastern Kentucky University.
Beshear also proposed to give universities the authority to issue more than $700 million in agency bonds, which the universities would pay back themselves.
UK is seeking approval for about $385 million in agency bonds, including $45 million for a new parking garage, $160 million to enlarge the main student center and $150 million for continued improvements at the UK medical center.
UK also would receive the bulk of $50 million in Bucks for Brains money, a program that has not been funded since 2010. The program allows universities to match state funds with private donations to create endowed professorships and raise money for research facilities. UK would receive about $33 million, while the University of Louisville would get $17 million. Another $10 million would be divided among the regional universities.
"The projects proposed by the governor would enable us to continue the revitalization of our campus in ways that promise incredible transformation for our teaching, research, service, and health care missions," UK President Eli Capilouto said in a statement. "And, yet, there is no way to sugarcoat it. On top of $50 million in recurring cuts since 2008, additional reductions in our general fund budget of approximately $7.1 million — the budget we use to pay the bulk of salaries for teaching and staff — would make our work more difficult."
If lawmakers approve Beshear's proposal, it would force UK to make "difficult decisions" regarding tuition increases and "further cost-cutting measures," Capilouto said.
Beshear's proposed budget also included a proposal that he said was brought forward by leaders of the Kentucky Community and Technical College. The budget would provide $145 million in agency bond authorization for building projects at each regional campus. The bonds would fund 75 percent of the projects, with local funding making up the other 25 percent.
For example, the budget proposes to give $18 million in agency bonds to the Bluegrass Community and Technical College to expand at is new Newtown Campus. Other projects include $21 million to the Southeast Community and Technical College to renovate its Middlesboro campus, $15 million for an arts and humanities building at Somerset Community College, and $21 million for a Maysville Community and Technical College building in Rowan County.
Beshear's budget would also provide full funding for the Kentucky Educational Excellence Scholarships, the state's merit-based college grants based on high school grades. Funding would remain flat for the need-based aid program known as the College Access Program, which annually runs out of money. In 2011, nearly 90,000 students who qualified were turned away from the program.