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THE MISSOURI BUDGET
AND IMPLICATIONS FOR HIGHER EDUCATION
Paul Wagner, Deputy Commissioner
• Overview of Missouri’s state budget
• Nature of the federal stimulus package
• The state’s current balance sheet
• The outlook for higher education budgets
• Challenges for Southeast Missouri State
Don’t we have $23 billion dollars?
Yes, but . . . $7.8 billion are federal funds for dedicated purposes (Medicaid, K-12, public safety).
$7.5 billion are “other funds” for dedicated purposes, such as the conservation sales tax, gas taxes, gaming proceeds.
So that leaves us with about $7.8 billion of general revenue – discretionary dollars.
Where does the $7.8 billion go?
The Current Situation
• The State finished FY 2009 about $550 million below FY 2008.
• FY 2010 collections are expected to be down another 6.5%, $480m below FY 2009.
• So if it weren’t for the stimulus money, we would be around $1 billion in the hole.
• The projected growth for FY 2011 (3.6%) will still leave the State $775 million behind FY 2008.
What about federal stimulus funds?
Stimulus v. Stabilization
Stimulus – direct grants and competitive opportunities
Stabilization – “free money” for states to preserve programs and services (and FMAP)
How reliant are we on stabilization money?
• There is currently about $1.2 billion in the FY 2010 operating budget.
• About $775 million is in the regular operating budget – mostly supporting on-going programs/services like higher education.
• The remainder is primarily in the capital improvements budget – one-time expenditures.
FY 2010 Spending of “Education” Stabilization Funds
Reduce State Funding to FY 2006 level, then backfill to FY 2009 level with stabilization funds:
$104,786,639 Higher Education Institutions$479,413,871 K-12 Foundation Formula $584,200,510 TOTAL
$188,971,825 FY 2011 Remaining FBS Funds
But really, what kind of shape is the state budget in now?
What are the implications for higher education funding?
FY 2011 Potential Scenario$961,515,803 FY 2010 Higher Education - base funding
-$104,786,639 less FBS funding used in FY 2010
$856,729,164 Base GR funding for FY 2011 (FY 06 level - cannot go below)
$35,680,807 plus Higher Education's proportion of remaining FBS money (18.5%)
$892,409,971 equals FY 2011 "no increase" base for Higher Education Institutions
-$69,105,832 shortfall from FY 2010 level (-7.2% )
What about FY 2012 and beyond?
• Without some other intervention – we’ll finally be forced to live within our means.
• Any withholdings or FY 2011 cuts will have to become permanent, and other major reductions will have to take place.
• The business of state government will have to fundamentally change.
How to approach the problem?
• Hancock II
• Missouri’s political culture
• The Governor’s approach
• Letters from the Budget Director
• The Governor’s actions
Challenges for Southeast Missouri State
• Unfunded FTE growth
• Existing demographics
• Emerging demographics
• Regional relationships – cooperation or competition
Advantages for Southeast Missouri State
• Entrepreneurial focus
• Flexibility and responsiveness
• Broad mission
• ________________________
QUESTIONS3515 Amazonas Drive
Jefferson City, MO 65109Phone: (573) 751-2361
Fax: (573) 751-6635Info. Center: (800) 473-6757