Week In Review

State Capitol Week in Review

LITTLE ROCK – Budgets and spending are expected to be the dominant issues in state government in 2010.

Some of the most important budget decisions legislators face in 2010 and in the next decade will affect public colleges and universities.

On February 8 the legislature will convene in its first session devoted entirely to fiscal issues. Lawmakers will approve budgets for fiscal year 2011, which begins on July 1, 2010. Also, the legislature will set the amounts of lottery scholarships, since that is a spending issue. Some legislative leaders think scholarships can be as much as $5,000 a year for students in four-year universities and $2,500 a year for students in two-year colleges.

Until this year the legislature met every two years, but as a result of a constitutional amendment passed by voters in 2008 legislators now will meet yearly. The sessions in even-numbered years will be limited to budget and spending issues, although there is a way to file non-budget bills that requires an extraordinary majority.

The new lottery scholarships are meant to help students and their families afford the cost of college, which has risen dramatically in Arkansas in the past decade. Since 2000, the average cost of tuition and mandatory fees has risen 87 percent at Arkansas universities and 91 percent at two-year colleges.

The boards of public universities have often said that tuition increases have been necessary to make up for inadequacies in state funding. Ten years ago state aid represented 66 percent of their revenue and tuition accounted for 34 percent.

Now, state aid is 60 percent and tuition and fees represent 40 percent. A similar trend occurred in funding of two-year colleges, and in institutions of higher education throughout the south.

Arkansas universities claim that Amendment 33 to the state Constitution grants them authority to set tuition rates, and the legislature has not challenged that authority. On the other hand, the legislature has enacted restrictions on the use of tuition money and those restrictions were never challenged by the affected universities.

Amendment 33 has been interpreted as protecting the autonomy of universities in matters of educational policy. Although universities and colleges operate with a great deal of independence, the legislature has tried to maintain control of appropriations and budgetary matters. In some areas legislative oversight is difficult, such as when universities issue bonds and dedicate tuition and fees to paying off the bonds. Also, the state's authority to terminate an unproductive college degree program is rarely used.

In the coming decade, the new state lottery will infuse hundreds of millions of dollars into the Arkansas higher education system. Arkansas legislators will look to avoid any problems experienced in other states.

In South Carolina, whose lottery system is the model for ours, tuition at public universities spiked after lottery scholarships were created. One reason is that the South Carolina legislature began decreasing state appropriations for higher education when lottery scholarships became available. According to a respected South Carolina think tank, most scholarship recipients now have greater out-of-pocket expenses than students did 10 years ago, before the South Carolina lottery was introduced.