Week In Review

State Capitol Week in Review

LITTLE ROCK – State employees will not get pay raises when the new fiscal year begins on July 1.

State employee pay raises traditionally have taken effect at the beginning of the state fiscal year, which runs from July 1 to June 30. After July 1, the state will be in Fiscal Year 2011.

Budget officials hope that if the economy improves and state revenue increases, a raise may be possible about half way through the fiscal year.

In Fiscal Year 2010 the state had to trim its budget by $206 million. Also, the state tapped into a rainy day fund for about $25 million to avoid cuts in services.

The salary freeze will apply to faculty and staff at state-supported colleges and universities. Institutions of higher education have some autonomy under Amendment 33 to the state Constitution, and several institutions had already approved pay increases for faculty and staff earlier this year. However, when the state's top budget official sent out a memo freezing salaries at current levels, the institutions decided to forego their planned raises.

The memo suspends merit pay increases as well as cost of living increases. The governor's proposed budget for Fiscal Year 2011, which was approved by the legislature in the fiscal session in February, did not include funding for any raises for state employees.

University officials are trying to raise faculty salaries in Arkansas to make them more competitive with those in other Southern states. According to the Southern Regional Education Board (SREB), faculty salaries at four-year universities in Arkansas are the lowest among its 16 member states. The average professor's salary in Arkansas was $60,500 last year. In the 16 states within the SREB the average was $71,300 and nationwide it was $73,500.

Enrollment is expected to increase dramatically, in large part because the fall semester of 2010 will be the first in which Arkansas students receive lottery scholarships. Last year the Department of Higher Education received about 15,000 applications for scholarships from high school graduates. This year the department has received 58,000.

The process has been streamlined. Instead of searching out and applying for all the 21 different scholarships offered by the state, a student can now apply one time through the Higher Education Department's YOUniversal Scholarship Application. The process informs students of all the scholarships for which they are eligible.

The director of the Higher Education Department told Arkansas Business that the popularity of the lottery scholarships has increased the number of applications by qualified students.

This could create a financial strain on the Higher Education Department's reserve funds. A state senator with expertise in scholarships called it a good problem for Arkansas, because we don't want to build up a reserve fund. It's preferable for scholarship money to flow to students and help them afford a college education, he said.

A House member told Arkansas Business that she grew concerned two years ago when only $1 million in scholarships for low-income students was awarded by the department even though the legislature had appropriated $11 million. The legislature has since broadened eligibility criteria so more students can qualify for the scholarships.