With two specific exceptions, higher education budgets will be subject to the state spending reductions that Gov. Brad Little’s staff outlined last month.
As previously reported, the K-12 public school budgets will be protected and exempt from cuts.
On Oct. 29, Little’s chief of staff Zach Hauge sent a memo to all state agency directors announcing the Division of Financial Management is implementing 1 percent rescission to the current 2019-20 budget and a 2 percent base reduction to the upcoming 2020-21 budget.
DFM Administrator Alex Adams said Tuesday the spending reductions will not apply to the Idaho Opportunity Scholarship program or the graduate medical education program.
“The governor has made significant investments in the Opportunity Scholarship; that will be held harmless,” Adams told Idaho Education News.
Little will also protect the graduate medical education program. Little wants to continue to invest in medical residencies because of Idaho’s low number of physicians per capita.
“For the university budgets themselves, the expectation is they will follow the memo (instituting spending reductions),” Adams said.
It wasn’t immediately clear Tuesday how higher education spending reductions could affect tuition costs. State Board of Education members, led by President Debbie Critchfield, have said they want to limit or avoid further tuition increases at Idaho’s colleges and universities. When asked about how tuition rates might be impacted by spending reductions, Adams said he did not want to get ahead of Little’s State of the State address, which is scheduled for Jan. 6.
Overall, the budget reductions are expected to reduce general fund spending by more than $54 million over the course of two fiscal years. A 1 percent rescission would cut spending by about $18 million during the current budget year, Adams estimated. A two percent base reduction would save a little more than $36 million from the 2020-21 budget, Adams estimated.
To compare, Superintendent of Public Instruction Sherri Ybarra unveiled her 2020-21 budget request in September. She is seeking a 5.3 percent increase in funding for K-12 education next year, which corresponds to $100.8 million in new spending.
The spending reset for other government agencies is a proactive move, Adams stressed, and not the result of a budget deficit.
When the legislative session ended, state officials forecasted a year-ending budget balance of $173.8 million. Now, based on updated revenue figures, the estimated ending balance has been reduced to $68.5 million, according to DFM’s latest monthly general fund revenue report. Add to the mix that several state agencies, including Health and Welfare and the Department of Correction will be submitting supplemental budget requests.
“There was considerable uncertainty going into the budget year, and I think the governor knew that from the outset and I think the Legislature knew that from the outset,” Adams said. “Looking at the trends in what we are seeing, I think the governor knew it was time to call for a spending reset.”
Little’s main goal is to reduce spending to get it in line with revenue trajectories and preserve a structurally balanced budget, Adams said. Little is also interested in building up savings accounts, such as the Budget Stabilization Fund or the Public Education Stabilization Fund.
“He’s going to look pretty closely at restoring rainy day funds so we are well-positioned, beyond that I don’t want to get out ahead of the State of the State.” Adams said.
Although Little is asking state agencies to trim spending from the current year’s budget, the news was not likely a surprise to state officials. Prior to the Oct. 29 memo, Hauge sent a memo to all agency directors on Sept. 9 asking them to put together a plan to hold back 5 percent of the current 2019-20 year’s funding as a contingency. At that time, Hauge asked agency directors to share their plans with a DFM analyst during the week of Sept. 30, according to a copy of the memo obtained by Idaho EdNews.
Little announced the spending reductions in late October as opposed to waiting until January’s State of the State address to give agencies as much time as possible to adjust their budgets while minimizing the impact on services to Idahoans.
“He was the lieutenant governor during last recession and he saw how painful it was when agencies, late in the year, had to come up with cuts with about 48 hours’ notice,” Adams said. “What we are trying do is give agencies as much lead time as possible.”
Last week, Rep. Wendy Horman, the Idaho Falls Republican who serves as a vice chair of the Joint Finance-Appropriations Committee, said Little’s approach to spending reductions makes sense.
“Asking agencies to look into this now will certainly make our job easier,” Horman said Nov. 7. “When we get to town a lot of the homework will have been done so we can reduce spending from base programming.”
