FRANKFORT — House Speaker Greg Stumbo outlined Friday portions of his plan to absorb the University of Pikeville into the state university system, although the bill remains under wraps as he explores legal issues and woos allies.
Stumbo, D-Prestonsburg, said there are some minor legal questions that must be resolved before the legislation is filed, probably by early next week.
The plan to take over the private, four-year university would rely on $6 million from a multicounty coal severance fund in its first year and $13 million in its second year and the following 10 years, Stumbo said.
Money for the university's operations would come only from the state's tax on the mining and processing of minerals in the 12 counties surrounding the University of Pikeville, Stumbo said.
There have been concerns in Western Kentucky that using money from the pot of coal-severance money to pay for Pikeville University would leave less for projects in the western coalfields. Right now, all coal counties compete for grants from the same multicounty pot.
Stumbo said Friday that the bill would separate severance money from the state's two coalfields so receipts from coal operations in Western Kentucky would remain in the fund for use by those counties.
The financial details of how the University of Pike ville will be absorbed into the state's four-year university system has been a key question in Frankfort in the opening days of this year's General Assembly.
Some legislators, county judge executives and others have raised questions about the financial feasibility of adding another four-year university to the state system, which might face spending cuts in the upcoming two-year budget.
State support of public universities has dropped by 11.5 percent since 2007, according to the Council on Postsecondary Education. Meanwhile, tuition has increased dramatically.
Stumbo and former Gov. Paul Patton, president of the University of Pikeville, have spent much of the last week trying to gain support for the initiative, which they said could transform Eastern Kentucky, long plagued with high unemployment and poverty.
If approved this year, the coal severance money would lower tuition at the private school from approximately $17,000 for fall 2012 to $7,000, making it more affordable for middle-income students to attend, Stumbo said.
Pikeville would deed its properties over to the state for free. According to information from the University of Pikeville, the replacement value of the land and buildings would be about $170 million.
This effort could transform far Eastern Kentucky, Stumbo said.
"One of the things that Eastern Kentucky, the deep mountains, don't have is a true middle class," Stumbo said. "We have people who do very well. We have people who live in poverty. We have people in middle-income situations, but not a lot."
Gov. Steve Beshear announced last week that he would hire a consultant to determine how much it would cost to add the four-year university to the system. The study is expected to take six to eight weeks.
Some lawmakers expressed reservations about the plan this week.
Senate Majority Leader Robert Stivers, R-Manchester, met with Patton on Wednesday.
Stivers said that because coal severance money depends on both price and production, the amount of money brought in can fluctuate. If one or both went down, it could put a large obligation on the state's General Fund.
"That gets great concern when you're talking about the current needs in higher education and K-12," he said.
In addition, Stivers said, he's concerned about the far eastern position of Pikeville.
"If you're going to spend that kind of money, is Pikeville the appropriate place because it's so far east?" he asked. "Or would Bell or Breathitt or Leslie or a more centralized area be better?"
Rep. Arnold Simpson, D-Covington, applauded Beshear for planning a thorough study of the issue. But Simpson, who chairs a budget subcommittee on higher education, said there are concerns about what would happen if there is not enough coal severance money generated to meet Pikeville's needs.
"What happens to the base funding?" Simpson asked.
Stumbo said Friday that the enabling legislation would not require the state to use General Fund dollars if coal severance money falls short.
He said proponents of the plan have studied the past 10 years of the coal severance fund.
"That fund can ... fund that proposal and not get into the General Fund or any other monies," Stumbo said.
Others are concerned that studies project that Eastern Kentucky's coal production will decline significantly over the next few years. But Stumbo said there is enough money generated from other mineral resources — such as natural gas extraction — to sustain Pikeville over time.
Senate Education Chairman Ken Winters, R-Murray, said he favors the governor's request for a study regarding Pikeville, but that it should be broader.
"If we are going to do a study, we need to do something comprehensive to take a look at what all our public and other institutions are doing, where we have capacity, what are our needs, identify any hot spots we should be dealing with," he said.
Some county judge-executives also have said that taking money out of coal severance funds for Pikeville would result in less money for other well-deserved projects.
For instance, Knott County and other local governments are seeking money from the fund for a regional animal shelter and a golf course, Knott County Judge-Executive Randy Thompson said.
However, Thompson said he supports using coal-severance money for Pikeville because the need for a state-supported, four-year university in far Eastern Kentucky outweighs other needs.
"East Kentucky deserves a four-year institution," said Thompson, a Republican. "I've always complained that Eastern Kentucky University is not in Eastern Kentucky."
Current law calls for the state to take $19 million off the top of annual severance-tax receipts before dividing the remaining money among the state and counties.
However, Rep. Keith Hall, a Democrat from Pike County, has filed a bill to end the $19 million set-aside for a workers' compensation fund.
Some local officials said that if that deduction ends, the counties could get a share of that money.
"Obviously, that would soften the blow," said Richard Tanner, head of the Kentucky Coal County Coalition.