Georgia’s university system noted for cost-cutting efforts, but budget requested from Legislature still rising

By David Pendered

A New York credit rating agency has named Georgia as the state to watch for its efforts to control the spiraling cost of higher education.

Moody's Investors Service has tagged Georgia as a state to watch for the outcome of the consolidation of universities. Credit: Board of Regents

Moody’s Investors Service has tagged Georgia as a state to watch for the outcome of the consolidation of universities. This map shows the proposal for the first four mergers. Credit: Board of Regents

Moody’s Investors Service highlighted Georgia’s consolidation of universities as an example of a state’s attempt to improve the fiscal efficiency of its university system. Georgia was the only state singled out.

Moody’s report stands in contrast to the current debate over post-secondary education in Georgia’s gubernatorial campaign. Gov. Nathan Deal and Sen. Jason Carter appear to be focused on the role of lottery-funded HOPE scholarships in subsidizing the cost of advanced academic and technical education, rather than the system’s structural challenges.

Most recently, Deal announced a proposal to allow HOPE scholarships to pay for additional programs in technical schools. Carter characterized the plan as a hollow attempt to make up for previous cuts to the state’s Technical College System. The Legislature restored some of the funding cuts in 2013.

Moody’s report in July focused on the severe fiscal pressures facing the nation’s colleges and universities. The report extends the negative outlook Moody assigned the entire higher education sector in 2013.

Here’s what Moody’s said of Georgia:

  • “The outcome of recent consolidation efforts in Georgia could help create a roadmap for other states.”

This single sentence ended a paragraph that outlined some of the broad strokes college administrators could take to address their bottom line. The full paragraph reads:

  • Georgia spends more than half its annual budget on the "Educated Georgia" slice. Almost 17 percent of "Educated Georgia" goes to the University of Georgia. Credit: Governor's Budget Report, Fiscal Year 2015

    Georgia spends more than half its annual budget on the “Educated Georgia” slice. Almost 17 percent of “Educated Georgia” goes to the University of Georgia. Credit: Governor’s Budget Report, Fiscal Year 2015

    “Efficiency efforts will continue to be explored, and we expect ongoing discussions of shared services, partnerships, and other cost effective strategies to continue not only at individual universities but across the sector. Ultimately, states could explore more mergers or consolidations into systems in this environment. The outcome of recent consolidation efforts in Georgia could help create a roadmap for other states.”

The budget request approved last month by the Board of Regents suggests the anticipated cost savings have yet to appear in the bottom line.

The board adopted a budget that would increase spending by 2.5 percent, compared to the state appropriation to the university system for the fiscal year that began July 1. In addition to adopting a $1.99 billion funding request to operate the system, the regents adopted a separate $254.8 million funding request for capital improvements.

According to a statement the board released Sept. 9:

  • “The request will support the board’s focus on attracting and retaining students with an emphasis on college completion. Additionally, these funds provide funding for increases in health insurance, retirement programs, retiree benefits, and maintenance and operations funding for new and existing facilities.”
Moody's report shows a growing proportion of the nation's universities are losing full-time students, while the proportion of incoming students is dwindling. Credit: Moody's Investors Service

Moody’s report shows a growing proportion of the nation’s universities are losing full-time students (represented in green), while the proportion of incoming students is dwindling (represented in gold). Credit: Moody’s Investors Service

Georgia Chancellor Henry “Hank” Huckaby has guided the Board of Regents down the path of consolidation since his appointment in 2011.

Huckaby was heralded for his long career in state finance, which the board highlighted when it announced his selection as chancellor:

  • “He also has extensive experience in state finance, serving in the Governor’s Office of Planning and Budget, first as a senior policy coordinator from 1973-75, and then as its director, from 1991-95, where he was responsible for overseeing the state budget on behalf of the governor. He also served as the interim chief financial officer for then Gov. Sonny Perdue during Perdue’s transition period.”

The Board of Regents started the consolidation process by merging eight institutions into four. In late 2013, the board followed with the fifth consolidation, merging Southern Polytechnic State University into Kennesaw State University.

Mergers are not new to academia, though they are more common in the corporate world. A handful of other mergers were cited in a number of stories in 2013, when Georgia’s full embrace of consolidation captured attention at a time the impact of the recession on university systems was becoming more widely known.

David Pendered, Managing Editor, is an Atlanta journalist with more than 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow. David was born in Pennsylvania, grew up in North Carolina and is married to a fifth-generation Atlantan.

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