Monday, Feb. 1, 2016

Monday, Feb. 1, 2016

"Cutting Class"; ALICE in Louisiana; The budget crisis, explained; and House lineup could spell trouble for Edwards.

“Cutting Class”
The Advocate wrapped up its eight-part series on higher education with a look to the future, where Mark Ballard predicts that Louisiana’s budget struggles will make it difficult for Gov. John Bel Edwards to honor his pledge to restore some of the state support that’s been cut over the past seven years.

Just breaking even on higher education funding may be a tall order for the new governor, who needs to come up with at least another $750 million just to keep state government running through June 30, the end of the fiscal year. A $1.9 billion gap between predicted revenues and expenses looms for the fiscal year that begins July 1. In short, the budget crisis probably will prevent ambitious changes to higher education in the near future.

Beyond the budget, the governor could also face resistance if he follows a recommendation from his transition team to invest more money in need-based aid for low-income students at the expense of the popular TOPS program.

The committee’s report opined that Louisiana’s investment in merit-based aid – chiefly through TOPS – is “grossly disproportionate” to the state’s investment in need-based aid, which primarily comes through the Go Grant program. The average Southern state puts about 40 percent of its scholarship money into need-based programs. Louisiana, by comparison, spends roughly $10 on TOPS for every $1 it spends on Go Grants. The committee recommended rebalancing that ratio by “substantially increasing funding” for Go Grants.
To show why the TOPS program has become politically sacrosanct, The Advocate’s Tim Boone looks at the private construction boom that’s happening near LSU’s main campus – a phenomenon credited in part to the state paying full tuition for thousands of middling students from well-off families who in years past would have paid for their children to attend the state’s flagship university.

Wes Rogers, chief executive officer of Landmark Properties Inc., said TOPS was something that was considered before building The Standard at Baton Rouge, a $50.6 million complex that opened during the summer. The 287-unit complex takes up a 4.5-acre block bordered by West Chimes, Aster, Iowa and Alaska streets. Rogers said TOPS was not the biggest determining factor in Athens, Georgia-based Landmark going ahead with The Standard. “Students have more disposable income, so they can pay more in rents,” he said. “The rents are a little higher than they would be if not for TOPS.”

ALICE in Louisiana
The Nola.com/Times-Picayune editorial board read through the ground-breaking ALICE report, released last week by the Louisiana Association of United Ways, and embraces its recommendations for improving the lives of our state’s working poor. The report found that almost 700,000 Louisiana households – four in 10 – struggle to meet basic needs even though its members have jobs and often live above the federal poverty line.
The power in the report is that it allows communities and state leaders to be smart about solutions. “Many of the social problems in our region have the same root cause – poverty,” the United Way of Southeast Louisiana said in a press release. “We’ve put our stake in the ground. We want businesses and individuals to join us in developing strategies and partnerships to educate and empower people to help lift them out of poverty.” The report, which is sponsored by Entergy, outlines short-term strategies: Food pantries, utility assistance, emergency housing repairs and child care subsidies. Those services can help stabilize families, and donations and grants are important to keep them going. Long term, there is a need for more affordable housing, better childcare and broader health care coverage. The Medicaid expansion that Gov. John Bel Edwards approved his first day in office could make a huge difference for the families in the ALICE report. The Legislature approved a comprehensive plan to expand pre-k and childcare and raise standards, but the changes haven’t been fully funded. That needs to happen.
The budget crisis, explained
Budget shortfalls are nothing new in state government. But many observers say this year’s crisis is the worst that Louisiana has seen since the “oil bust” of the mid-1980s. Gov. John Bel Edwards is warning that deep cuts will have to be made to healthcare and higher education programs unless legislators agree to raise new revenues. The AP’s Melinda Deslatte tries to cut through the fog:

The problem is governors and lawmakers over the years have boxed themselves in about how and where they can make cuts. They’ve protected some budget areas over others, agreeing to dedicate certain revenue to specific items and shielding some types of spending from deep reductions. And lawmakers so far have been reluctant to undo those protections. The bottom line? Public colleges and certain types of public health care services for the elderly and disabled are two of the least protected areas of the state budget. When cuts are needed, they are most vulnerable to the slashing. With the latest threat of cuts, the Edwards administration asked Louisiana’s four public college systems and the state health department to devise budget-cutting scenarios. Higher education’s target was $131 million. Health care got the same number. As expected, the proposals are grim – and clearly that’s the point, to try to rally support for Edwards’ tax plans.
The venerable Public Affairs Research Council offers a much deeper look at the crisis – including a list of proposed spending controls – in a new report that puts much of the blame on former Gov. Bobby Jindal and his legislative enablers.
In larger amounts each legislative session, Louisiana budget crafters have borrowed and utilized financial resources that were not available to them in subsequent years. As a PAR commentary said in April 2015, the state’s executive budget “would very likely still leave the state short by hundreds of millions of dollars. The result could be a mixture of mid-year budget cuts, cash flow problems and a year-end deficit. The governor [Jindal] will be in office only until January 2016, and so the real impact of these shortcomings will fall upon the next governor and legislators elected this fall.” That was not fortune-telling. It was simply the logical outcome of the state’s actions.
House lineup could spell trouble for Edwards
The committee assignments unveiled late Thursday by House Speaker Taylor Barras of New Iberia could spell trouble for Gov. John Bel Edwards as he heads into a crucial special session later this month where legislators will be asked to sign off on a host of revenue increases to cope with Louisiana’s budget shortfalls. The inimitable Jim Beam of the Lake Charles American-Press notes that the Senate appears to be friendlier turf for the new governor.
Money bills have to originate in the House, and (Reps. Cameron) Henry and (Neil) Abramson will enjoy tremendous power. Most bills are heard by committees, but chairmen can refuse to schedule hearings on legislation they don’t like. Some members of committees are also influenced by the views of their chairmen, and Henry figures to be about as anti-tax as they come. Rep. Gene Reynolds, D-Minden, is his party’s leader in the House and he thinks Democrats fared better under former Republican Gov. Bobby Jindal. “Anything coming out of Appropriations is a rubber stamp for the Republicans,” he told The Advocate. “I think this bipartisan thing they were talking about has gone by the wayside.” (Senate President John) Alario agrees. “I grew up through the system of crossing party lines,” Alario told The Times-Picayune. “We ought to not draw the line in the sand. I’m hoping Louisiana won’t head that way, but I’m afraid it is getting closer and closer to it. “They have a different set of politics in the House than we do. It’s a lot more partisan over there than we are.”

LBP is hiring!
The Louisiana Budget Project is looking for a bright, motivated professional who wants to make a difference in Louisiana’s challenging policy environment. The senior policy analyst will lead our work on health care and tax reform. Click here for a full job description or email Jan Moller at jan@labudget.org for more information.

Number of the Day:
$44,244 – Annual income required for a family of four in Louisiana (two adults, one infant, one preschooler) to afford basic necessities and live above the ALICE threshold (Source: ALICE report, Louisiana Association of United Ways)