THE MISSOURI BUDGET

AND IMPLICATIONS FOR HIGHER EDUCATION

Paul Wagner, Deputy Commissioner

• Overview of Missouri’s state budget

• Nature of the federal stimulus package

• The state’s current balance sheet

• The outlook for higher education budgets

• Challenges for Southeast Missouri State

Don’t we have $23 billion dollars?

Yes, but . . . $7.8 billion are federal funds for dedicated purposes (Medicaid, K-12, public safety).

$7.5 billion are “other funds” for dedicated purposes, such as the conservation sales tax, gas taxes, gaming proceeds.

So that leaves us with about $7.8 billion of general revenue – discretionary dollars.

Where does the $7.8 billion go?

The Current Situation

• The State finished FY 2009 about $550 million below FY 2008.

• FY 2010 collections are expected to be down another 6.5%, $480m below FY 2009.

• So if it weren’t for the stimulus money, we would be around $1 billion in the hole.

• The projected growth for FY 2011 (3.6%) will still leave the State $775 million behind FY 2008.

What about federal stimulus funds?

Stimulus v. Stabilization

Stimulus – direct grants and competitive opportunities

Stabilization – “free money” for states to preserve programs and services (and FMAP)

How reliant are we on stabilization money?

• There is currently about $1.2 billion in the FY 2010 operating budget.

• About $775 million is in the regular operating budget – mostly supporting on-going programs/services like higher education.

• The remainder is primarily in the capital improvements budget – one-time expenditures.

FY 2010 Spending of “Education” Stabilization Funds

Reduce State Funding to FY 2006 level, then backfill to FY 2009 level with stabilization funds:

$104,786,639 Higher Education Institutions$479,413,871 K-12 Foundation Formula $584,200,510 TOTAL

$188,971,825 FY 2011 Remaining FBS Funds

But really, what kind of shape is the state budget in now?

What are the implications for higher education funding?

FY 2011 Potential Scenario$961,515,803 FY 2010 Higher Education - base funding

-$104,786,639 less FBS funding used in FY 2010

$856,729,164 Base GR funding for FY 2011 (FY 06 level - cannot go below)

$35,680,807 plus Higher Education's proportion of remaining FBS money (18.5%)

$892,409,971 equals FY 2011 "no increase" base for Higher Education Institutions

-$69,105,832 shortfall from FY 2010 level (-7.2% )

What about FY 2012 and beyond?

• Without some other intervention – we’ll finally be forced to live within our means.

• Any withholdings or FY 2011 cuts will have to become permanent, and other major reductions will have to take place.

• The business of state government will have to fundamentally change.

How to approach the problem?

• Hancock II

• Missouri’s political culture

• The Governor’s approach

• Letters from the Budget Director

• The Governor’s actions

Challenges for Southeast Missouri State

• Unfunded FTE growth

• Existing demographics

• Emerging demographics

• Regional relationships – cooperation or competition

Advantages for Southeast Missouri State

• Entrepreneurial focus

• Flexibility and responsiveness

• Broad mission

• ________________________

QUESTIONS3515 Amazonas Drive

Jefferson City, MO 65109Phone: (573) 751-2361

Fax: (573) 751-6635Info. Center: (800) 473-6757

info@dhe.mo.govwww.dhe.mo.gov