Budget cuts to higher ed result in creative funding opportunities for UL

Megan Wyatt, Daily Advertiser, March 30, 2014

 

Public colleges and universities nationwide have been forced by state and national funding cuts to change their business models.

That means higher tuition and fees for students, faculty and staff layoffs and changes in academic offerings that do not return well on investment.

In 2008, Louisiana universities on average received 65 to 70 percent of their funding from the state and raised the other 30 to 35 percent of the operating budget themselves. Those figures have been reversed in only a few years time.

To survive, public colleges and universities have had to increase tuition and fees to make up the difference. But they’ve also found more creative ways of finding revenue.

They have redesigned their institutions to better align with those of private businesses. They have scrutinized their academic offerings, eliminating courses and entire programs that cost the institution money, instead investing in those that come with state incentive funds. They have partnered with private businesses to conduct lucrative research.

The University of Louisiana at Lafayette is a prime example.

“Pre-2008, the pencil probably wasn’t sharpened to that degree,” said Jerry Luke LeBlanc, vice president for finance and administration for UL. “But this is a new reality.”

Becoming more entrepreneurial

In 2008, UL began identifying all costs to ensure that incoming revenue covered all expenses, LeBlanc said.

Auxiliary operations of the university, which include services such as KRVS Radio Acadie and the university’s continuing education program, had to become individual business units.

“The personnel for KRVS used to be covered by the general operations of the university,” LeBlanc said. “Now, they’re covered by the revenue generated by the station. That happened within the last three years.”

That is one simple example that represents many individual program realignments to maximize the market capabilities of the university, LeBlanc said.

South Louisiana Community College has undergone a similar process, especially after combining the community college with Acadiana Technical College in 2012.

“When we became a comprehensive community college, we consolidated human resources, finance and administration, among other offices,” said Christine Payton, public relations director for SLCC. “This allows the college to be more efficient and see a cost savings.”

Still, both UL and SLCC are growing their campuses with major construction projects to accommodate more students and program demands.

According to LeBlanc, it is important to remember that the operating budget does not fund these projects.

“A lot of people think we’re taking away from academics to build these buildings. The housing units are a business unto themselves,” LeBlanc said. “No general operating funds are going toward those buildings. Student self-assessed fees — something students voted to invest in — go into payment of a lot of these construction projects.”

The academic re-evaluation

In recent years, UL has had to identify courses that cost more than student interest could justify.

Some courses had to be eliminated. Others had to be completely revamped. New courses needed to be added based on private-sector investment.

“In 2008, when we started seeing the first reductions to higher education, we adopted a focused approach,” LeBlanc said. “We were intent on protecting the academic core to preserve the educational experience for the student.

“The first question that is presented in any discussion is: ‘Does this change the academic core?’ and then everything else follows that kind of prime directive.”

Students in majors targeted for elimination will be allowed to finish. They are not, however, enrolling new students.

At SLCC, rethinking the way programs are funded, especially technical ones that cost more than lecture-based ones, was essential.

The college began offering continuing education courses that are not for credit to provide an additional revenue source.

It partnered with the Lafayette Economic Development Authority and area hospitals to fund the creation of a registered nursing program to meet economic demand.

“We continually evaluate our program offerings to be sure we are giving our students options for viable jobs,” Payton said. “Budget cuts in recent years definitely made us take a close look at our offerings.”

Private-public partnerships

Partnerships between public universities and private businesses can be seen across Louisiana.

Nicholls State created a career concentration in marine science for finance majors with financial backing from the marine industry. Louisiana State University is able to encourage more computer science graduates through private investment from IBM.

These kinds of partnerships have always existed, but not to the same degree, UL System President Sandra Woodley said.

“We have a great amount of expertise in our faculty and institutions,” Woodley said. “They have been able to package that knowledge to bring in revenue.”

According to Ramesh Kolluru, vice president for research at UL, public-private partnerships are what have allowed the university to grow during the past five years.

UL received $11.8 million in private research funding for the 2011-2012 school year, and that number increased to $20.2 million for the 2012-2013 school year, Kolluru said.

“We’ve done more and more,” he said. “And it has positioned us very strongly not only to survive but to grow during these extraordinarily challenging times. It has allowed us to insulate ourselves from the budget cuts and has allowed us to grow.”

One of the biggest partnerships comes from pharmaceutical corporation Pfizer with the university’s New Iberia Research Center, one of the largest non-primate research centers in the nation.

Another major revenue source for the university comes from companies such as Microsoft and Johnson & Johnson investing in UL’s computing and informatics program.

The university’s research motto, “Research for a reason,” directly reflects the changing business of public universities.

Kolluru said private research funding is much higher at UL than the national average, where about 7 to 10 percent of research funds come from private industry. UL receives about 37 percent of its research funds from private industry.

“In many ways, our story is that at UL Lafayette we have an extraordinary approach for working with private industries that has positioned us to not be negatively impacted like other universities are by declining budgets,” Kolluru said.

Moving forward

Although public universities have found ways to fund themselves through changing their business models, creative funding cannot sustain higher education facilities forever.

“We have to be able to stop the budget cuts,” Woodley said. “We have to be able to keep our tuition revenue to reinvest in our programs.”

But the re-evaluation is useful, Woodley said.

“Through the pain of the budget cuts, institutions have been forced to be more efficient. It forces us to look at the priorities and what is at our core mission and to redesign our programs and curriculum to take advantage of it,” Woodley said.

“I think the institutions will have to continue to function differently than they did five years ago. But what I do anticipate is that that this Legislature and this government will continue to invest in Louisiana for competitiveness, and I think we’re on the right track.”