Belt-tightening to continue for Missouri higher education

Operating capital available for Missouri higher education continues to shrink, reflecting slumping state and national economic performance.

Funds available for Missouri's 10, four-year institutions and 13 community colleges have been reduced 10 percent between fiscal years 2002 and 2003, said Joe Martin, associate commissioner for the Missouri Department of Higher Education. There are 149,868 full-time equivalent students enrolled throughout the state.

According to House Bill No. 1103, Department of Higher Education moneys available for fiscal year 2003, running July 1, 2002, to June 30, 2003, are approximately $1.1 billion. Of these funds, $876 million comes from general revenue, such as sales and income taxes, $6.7 million comes from federal funds and $214 million comes from other funds.

"For comparison purposes, in fiscal year 02, the general revenue that was appropriated to higher education was a little more than $975 million," Martin said. The $100 million reduction reflects the constraints on our state budgets, he added. "Everything indicates the state's financial picture will remain tight."

Missouri is in the midst of a "serious financial challenge right now," said Quentin Wilson, commissioner for the department. Since higher education derives funds from the discretionary budget in the state, "it is very vulnerable to reductions."

Wilson said that it's been about 50 years since the state has faced a year-to-year reduction in income.

Loss of Missouri sales tax receipts due to Internet purchases on which state sales tax isn't paid, a large reduction in corporate income taxes and a sluggish national economy were reasons behind Missouri's tremendous revenue drop, Wilson said.

Missouri is not alone

Missouri shares company with numerous other states in its fiscal malaise. Wilson's comments are similar to a November 2002 report titled "The Fiscal Survey of States." It was prepared by the National Governor's Association and the National Association of State Budget Officers.

"Fiscal year 2002 sales tax collections were 3.2 (percent) lower than originally budgeted, personal income taxes were off by 12.8 (percent), and corporate income taxes were 21.5 (percent) lower than estimated originally," the report said.

Only so much to work with

Of the roughly $2 billion of general revenue Missouri typically has available to fund programs like mental health, social services and correction programs, about half that amount usually goes toward higher education, Martin said.

When educational institutions are hard-pressed for funds, building and facility maintenance and repair are often the first items to get slashed, Martin said. While a short-term remedy, it has long-term consequences as it reduces the life of buildings.

For most schools, the primary sources of revenue are state funding and tuition and fees, Martin said.

When state-funded dollars are short, schools may opt to hike student costs or reduce expenditures by consolidating programs, leaving vacant positions unfilled, or promoting early retirement programs to achieve cost efficiency, Martin added.