HIGHER EDUCATION AND THE PROPOSED NJ STATE BUDGET

Once again, we are in budget season where there are few prospects of any major change in the long term trend of underfunding public higher education.

The higher education budget proposed by Governor Christie provides a 5.8% increase in funding to the senior public institutions for FY 2015, but this figure is deceptive because direct operating aid is actually set at the same level as FY 2014.  The increase consists of fringe benefit contributions.

Although this increase is welcome, it hardly makes up for the austere budgets in recent years.  In fact, State appropriations to our institutions have remained relatively flat after experiencing a sharp decline at the onset of the Great Recession in 2008.

Total student financial assistance would increase by 2.5% in the proposed budget, but tuition at our senior public institutions remains among the highest in the nation. Full-time undergraduate tuition and fees averaged $10, 634 in AY 2008-2009 and rose to $12, 481 in academic year 2012-2013 and approximately $12, 600 in AY 2013-2014 . This is an increase of 18.5% or an annual increase of 3.7%. The phrase used in a recent Star Ledger editorial to describe the cost of higher education in New Jersey is “grotesquely expensive.”

Overall New Jersey remains at the bottom of the list in terms of State support for higher education compared to income or compared to the total State budget.  Yet New Jersey is among the wealthiest States in the nation.

So what is the problem?

About 25 years ago, the State covered two thirds of the operating cost of public higher education at our institutions, with the remaining third coming from tuition revenue.  As cost shifting to students began, the Commission of Higher Education under the Whitman administration convened a task force that issued a report in 1995, recommending a return to that formula.  The report was ignored.

Since then the proportion of State support vs. tuition and private fundraising has more than flipped to the point where some of our institutions receive under 20% of their income from State funds.  At the same time the decentralized governing structure of public higher education aka “autonomy” has permitted college/university administrations to feather their own nests with high compensation packages, a proliferation of “managers” and ill-conceived building projects financed by irresponsible borrowing.

What is to be done?

When it comes to budget austerity, the public higher education sector is not alone.  Therefore, the Council has joined a broad based coalition called Better Choices For New Jersey, sponsored by the New Jersey Working Families Alliance.  It consists of public and private sector unions, student, social justice, environmental, housing, consumer advocacy and faith-based organizations.

It starts from the premise that New Jersey is a wealthy State that has the resources to meet our State’s pressing needs, if we re-order our priorities. During the current budget season and beyond,  the coalition is seeking to re-shape the public debate over how best to improve the quality of life in our State from the “cutting taxes and spending” model to a model that would raise  revenue to invest in essential public services.

New Jersey’s climb out of the Great Recession has been painfully slow compared to neighboring States.  Rather than taking responsibility for this slow growth, Governor Christie has blamed State budget woes on increases on the cost of pension payments, State health benefits and debt service.

In one sense he is correct because increases in these areas will absorb nearly all of the increases in revenues for next year, but of course these are problems of his own making.  It was the Governor himself who pushed through legislation to cut pensions, in exchange for making the actuarially required contributions, and to raise the employee contribution to the State Health Benefit Program, while at the same time cutting taxes for the wealthy and big business.  This year Christie smelled the coffee and dropped his proposal for yet another income tax cut to benefit the wealthy, but that is as far as he will go.  He admits to a certain extent that the State needs to invest in roads and bridges, cleaner energy, education etc. but claims that the money is simply not there.

Is Christie right?

The trademarks of the Christie administration:  Rising college tuition that pushes students into crippling debt, flat or reduced funding that causes increases in class size and the elimination of extra-curricular activities in our public schools, the neglect of our roads, bridges and public transit systems, the reduction of property tax rebates, taken separately or together do NOT make New Jersey a more attractive place to live, or for that matter to conduct business.

As Gordon MacInnes, President of New Jersey Policy Perspectives, a research institution allied with the Better Choices coalition, wrote in a Star Ledger column, “Instead of  focusing on the assets that made this State a real economic powerhouse—its location, convenient access to New York and Philadelphia, well-educated workforce, great public schools and two globally recognized research universities — New Jersey’s leaders have hammered on the notion that if we just cut taxes, everything will  turn out okay…In fact the only strategies used to spur job creation and stoke an economic recovery for the past four years have been corporate tax cuts and business subsidies.  Neither has worked.”  The truth is that so-called high tax states like California and New York are outperforming New Jersey. 

What the Better Choices coalition advocates is active consideration of new revenue sources, including  raising taxes on millionaires (those with over $400,000 in annual income, presumed to have assets well over one million dollars) and corporations — and by curtailing Christie’s policy of showering business with tax breaks, subsidies and incentives that have clearly not spurred economic growth.   Better Choices seeks to educate the Legislature that if tax increases are linked to essential public investments, voters will support them. 

Better Choices has met with Assembly Budget Chairperson Gary Schaer (D-36) and Senate Budget Chairperson Paul Sarlo (D-36). They both expressed strong opposition to the Governor’s budget priorities and appeared willing to explore additional revenue sources, especially if they were dedicated to a specific purpose. Better Choices followed up with a press conference in Trenton stressing the need to change the conversation about the budget from merely holding the line on austerity to finding ways to invest in our future.  

On a related topic, New Jersey Citizen Action adopted a resolution at it recent convention calling for closing corporate tax loopholes and unnecessary tax breaks to wealthy corporations and for supporting progressive tax policies, including restoration of the Earned Income Tax Credit for low income earners that Governor Christie reduced in 2010. 

The Better Choices for NJ website is under construction, but you can learn more from the New Jersey Working Families website at www.njworkingfamilies.org

We also urge you to contact your State legislators to explain that budget austerity is not the path to prosperity and that progress can be achieved by re-ordering our spending priorities and finding new revenue sources for public higher education and other essential public services.

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