The irony wasn’t lost on some Capitol veterans that a University System of Georgia chancellor who presided over some of the deepest budget cuts in state history as governor is now leading the opposition to $66 million in spending reductions lawmakers approved for state schools.
Lawmakers said they made the cut last week because of declining enrollment at some schools. They also say the cut — in a $3.2 billion appropriation for colleges and universities — can easily be made up using leftover money schools are allowed to keep at the end of each fiscal year. That’s something University System officials dispute.
Such debates should be familiar to Chancellor Sonny Perdue, who was governor from 2003 to 2011 when the University System faced hundreds of millions of dollars in spending cuts during two fiscal recessions. Those reductions helped lead to a doubling of tuition at some schools by the end of his tenure and skyrocketing costs for the HOPE scholarship program.
“He was a very bold governor,” said Rep. Alan Powell, R-Hartwell, who has served in the chamber since 1991. “He got blood out of a lot of state agencies.”
But those were also different times. While there are predictions of an impending recession, state tax collections have been on a roll for three years, producing record surpluses.
Former House Appropriations Chairman Ben Harbin, who led the budget committee during the Great Recession, said Perdue and lawmakers didn’t have many options in the late 2000s.
Credit: Jason Getz jgetz@ajc.com
Credit: Jason Getz jgetz@ajc.com
“The difference is (Perdue) had an economy thrust on him that was so bad, he didn’t have a choice,” Harbin said. “That was thrust upon us by the worst economy since the Great Depression, and we had to make tough decisions.
“We showed you could survive cuts.”
Quick reaction
The morning after the General Assembly passed the state’s $32.4 billion budget for the coming fiscal year — which begins July 1 — Perdue’s office sent out a press release blasting the $66 million cut to the University System.
The University System said the cut added to the pain of $71 million in other revenue losses due to recent declines in enrollment at 20 schools, most of which are smaller, regional colleges.
“This is an incredibly disappointing outcome, given the work done over the years by our state leaders to elevate higher education and send Georgia on a path to ascension,” Perdue said. “It will have a significant impact on institutions and the services that students and families depend on to advance their prosperity and help Georgia succeed.”
The cut represented just over half the $105 million approved a few weeks earlier by Gov. Brian Kemp and lawmakers for a new electronic medical records system for the Medical College of Georgia, part of Augusta University. Senate leaders had questioned that cost, approved amid talks for the Wellstar Health System to partner with the AU Health System. The Wellstar deal was approved two days after the 2023 General Assembly session ended.
The Senate had proposed trimming $105 million from the University System budget. The House negotiated the smaller, $66 million cut.
Senate Appropriations Chairman Blake Tillery, R-Vidalia, urged the University System to limit any damage from the cut by dipping into $504 million in “carry forward” funding left over in college budgets.
Credit: Natrice Miller / Natrice.Miller@
Credit: Natrice Miller / Natrice.Miller@
Tillery said the University System receives what amounts to a block grant from the state, and the Board of Regents can spend it “any way they want.”
But the University System countered that 82% of those leftover funds are concentrated at six schools, including the state’s four top-tier research universities. It said those funds are retained at individual schools and can’t be moved around.
The University System listed the potential impact of the $66 million reduction by school, ranging from nearly $12 million at the University of Georgia — which has one of the largest “carry forward” fund balances — to $208,000 at Atlanta Metropolitan State College.
During recessions, college enrollments often increase, which could mean higher costs for the system. However, the enrollment-based state formula for funding colleges typically lags behind that growth.
Officials at individual schools have spoken out against the cuts. In a guest column, Nicholas Barry Creel, an assistant professor of business law and ethics at Georgia College & State University, urged Kemp to veto the cut — which his staff said he can’t do. Creel said the cuts will set back the state’s respected higher education system and lead to larger class sizes for students.
“To call the current financial picture of Georgia’s public institutions of higher learning bleak would be an understatement,” he wrote. “Without significant and rapid action by the governor, most of the 26 member schools of the University System of Georgia will soon be forced to rely on drastic measures that will leave our students worse off and our state less competitive.”
Much of the same sentiment was present during the early and late years of Perdue’s tenure as governor. A fiscal recession — declining revenue and rising costs — was already ongoing when Perdue became governor in 2003. He immediately had to call for tens of millions of dollars in “austerity cuts” to state university funding.
Those austerity cuts also hit K-12 schools and persisted for years.
“We certainly must do more with less, but that is what being good stewards of taxpayers’ resources is all about,” Perdue told lawmakers in 2003.
Credit: undefined
Credit: undefined
When the Great Recession hit, the cuts got bigger — hundreds of millions of dollars worth. According to the Office of Planning and Budget Records, state spending on universities went from $2.14 billion in fiscal 2008 to $1.65 billion in 2010.
Those years coincided with huge increases in student tuition and fees, approved by the Board of Regents, to soften the blow of the state funding losses. Harbin said universities became an easy target for lawmakers in tough times because, unlike other state services, colleges can raise money through student tuition and fees.
Earlier this year, Perdue showed members of the General Assembly’s two Appropriations committees a chart of how the state’s share of the cost of educating a student has declined since fiscal 2001. At the time, the state covered about 75% of the cost, and tuition accounted for the rest. Perdue pointed to the state’s share during the years 2002-2012.
“I don’t know who the governor was in here when that occurred,” he said jokingly as he pointed to a precipitous drop in state funding from fiscal 2009 to fiscal 2012, when the state’s share reached 47%. “You can see somebody didn’t like higher education, obviously. But you all know what happened with the greatest recession we’ve had since World War II.”
It took years for the system to build back state funding, but as a percentage of the cost, it’s still way below what it was before Perdue took office.
In 2010, things were bad enough House and Senate higher education budget writers held a news conference to say new cuts could reach $600 million and that the Board of Regents should consider cutting salaries of the system’s highest-paid employees, including professors and college presidents.
Perdue called it “scare tactics and fearmongering,” and, in the end, the cuts never approached $600 million.
Still, one of the legacies of that era continued until 2022: a special “institutional fee” students had to pay. The cost depended on the school — it was $1,000 a year at Georgia Tech.
Sen. Nan Orrock, D-Atlanta, a longtime member of the Senate Appropriations Committee, said Perdue “has certainly emerged as the great defender of higher education now that he is in his new role as chancellor.”
“He’s on a totally different message now,” she said.
Tillery said he understands the system’s reaction to the $66 million cut, but he added that it amounts to 2% of university funding from the state.
“I’ve never met an agency who wanted their budget to be cut, but my duty is to the taxpayers who paid the funds to the state in the first place,” TIllery said. “I don’t think we should keep taxes higher so (the University System) can stockpile more. But if others disagree, they certainly have levers and capital they can use to do so.”
Powell said he thinks Perdue “needs to remember it is a legislative process.”
“He is the chancellor, he is not the governor anymore,” Powell said. “I think he needs to remember he is the hired head of the University System.”
Powell said some of the dire warnings about what will happen to University System schools because of the spending cuts are overblown.
“I don’t think the University System has ever really suffered,” he said.
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