Lawmakers to Higher Ed: ‘Just Say No’

April 1, 2009

For release April 1 and thereafter (680 words)

Enough already. That’s the message lawmakers need to send Indiana’s public universities that have come to the legislature yet again seeking hundreds of millions of dollars in new capital projects.
   
Enough of the multi-million dollar remodeling jobs that commit citizens to paying debt service for decades. Enough of the state-of-the-art fitness centers that force students to pay higher fees, some for workout rooms they will never use. Enough of the “buildings race” in which universities compete to see who can have fancier facilities in an effort to lure more students.
   
This is not the year to amass more debt for projects that could be scaled back, deferred or scratched. We’re in a recession and Gov. Mitch Daniels has rightly urged a moratorium on new campus construction.
   
“A few years ago, $200 million in new capital was considered to be a high watermark,” notes Sen. Luke Kenley, R-Noblesville, chairman of the Senate Tax and Fiscal Policy Committee, which is scrutinizing the requests. “Now we’re talking about $700 million.”
   
In fact, state universities presented the legislature with more than $750 million worth of bonding ideas this session, an extravagant amount considering our current economic circumstance. Of those, academic projects accounted for $640 million to be financed largely through the sale of government bonds on which taxpayers cover the debt service. Of the remaining $114 million, the biggest chunk was for a $98 million fitness center at Purdue to be paid for by student fees.
   
While many of the proposals have merit, the real issue is whether — and when — Hoosiers can afford them. Declining state revenue collections have forced virtually all other government agencies to cut costs. Higher education should not be immune.
   
Yet the House packed almost all the university requests into its one-year spending plan. Rep. Peggy Welch, D-Bloomington, said House Democrats see them as a form of economic stimulus program. “We need to keep jobs and stimulate job creation. Capital projects are a way of building things that are needed.”
   
“The other side of the coin is what can you afford to pay for?” Kenley answers. He says the Senate intends to apply an analytical approach to all requests and will wait until new revenue forecast comes out in late April to see what the state can actually afford.
   
What would be reasonable in tough economic times? How about the modest recommendation of the Indiana Commission for Higher Education, which endorsed $60 million in new capital projects? Two are Ivy Tech Community College expansions in Warsaw ($10 million) and Anderson ($20 million), campuses with high enrollment growth in cities with high unemployment. Another $30 million is to renovate Indiana and Purdue life science labs, considered a focal point of Indiana’s economic development efforts.
   
One reason that higher ed wants to spend while the rest of the society cuts back is that colleges are largely immune from economic reality. “There’s more demand for their product than ever before and they’re busy out there selling their product,” notes Kenley.
   
Complicating the picture is the “delayed impact” approach Indiana uses in approving university capital expenditures. Lawmakers accept projects a full budget cycle before they have to appropriate funds, which means there’s no immediate consequence to their decisions. In the 2007 budget session, for example, the higher ed commission recommended $154 million worth of new capital projects while the legislature approved $538.6 million. In Washington D.C., they call this pork.
   
Long-term, the impact is enormous. Assuming no new capital projects added this year, lawmakers still need to appropriate $179 million for fiscal 2010 and $185 million for 2011 to cover debt service on projects in the pipeline. That equals 13 percent of the higher education operating appropriation, when the commission recommends debt service not exceed 10 percent.
   
It seems right to live up to past commitments and urgent priorities. But nothing more. Hoosier families are struggling mightily to come up with necessities including tuition dollars. Our colleges need to put away “wish lists” and focus on delivering the best education at the lowest price. The legislature should insist on it.

Andrea Neal is a teacher at St. Richard’s School in Indianapolis and adjunct scholar with the Indiana Policy Review Foundation. Contact her at aneal@inpolicy.org.

Related Articles: “Capped and Gowned CEOs” by Clarence Deitsch, Ph.D., and T. Norman Van Cott, Ph.D., March 9, 2009; and “The Cost of Indiana Colleges,” a five-part series by Andrea Neal, April 30, 2008.



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