By Nick BeJeaux
Since 2008, Louisiana and her institutions have weathered the financial storm that has chipped away at their funding and quality, but the wind has taken a turn for the worst.
It has been reported that Louisiana State University and several of its satellite institutions have begun drawing up documents that, once filed, will place the state’s flagship universities and colleges in a state of financial exigency—the equivalent of bankruptcy.
By declaring exigency, a university is essentially stating that its finances are so eroded that it has become too difficult to maintain its operations. A University in Exigency is able to more easily close academic programs and terminate tenured faculty, but it has the added effect of making prospective students, faculty, and investors nervous. Though LSU hasn’t even filed for exigency yet, that nervousness is starting to hurt LSU.
According to a report from NOLA.com, investors are already pulling cash out of construction projects on LSU’s campus, meaning that work on a new dorm hall, family housing, and a student health center are indefinitely on hold. Also, Moody’s Investors, one of the top credit rating agencies in the country, has lowered LSU’s credit outlook, making it harder for LSU to get outside funding down the road.
LSU President F. King Alexander’s office released a statement late last week, according to which there are no plans at this time to file that paperwork; the university is merely preparing for the worst.
“Based on the current status of the budget debate, we have decided to begin contingency planning for exigency as many of our campuses may be impacted, as well as other campuses across the state,” he stated. “We know the worst-case scenario, we know the timeframe, and we know what’s at stake. We are optimistic that solutions to mitigate the devastation these budget cuts promise are forthcoming from our state legislators; however, we owe it to our students, faculty, and staff to be fully prepared for every possible outcome.”
DIG was unable to meet with Alexander in person or over the phone but Ernie Ballard, director of Media Relations, said that until HB 1—the budget for the entire state and all of its departments – goes through the Legislature, LSU is in the dark about whether or not it will have to file for exigency.
“We know what the worst-case scenario could be and have to prepare in case proposed solutions don’t work out,” he said. “But until the final budget is passed, we won’t have all of the ultimate answers.”
LSU Alexandria is taking similar steps as its Baton Rouge counterpart, having also drawn up the paperwork to declare exigency. In an interview with DIG, LSUA Chancellor Daniel Howard said that he’s optimistic about his university’s future, so long as it stays focused on the big picture.
“I’m hopeful that this is something that will certainly turn around,” he said. “As the state becomes more educated, I think we will attract a wider array of businesses to the state. Our economy is focused on a rather narrow pool of enterprises, and we’ll certainly get better as we attract a broader frame of business and an educated citizenry is how you do that.
“In the meantime there are some things that we need to continue to do, like stretch the resources that we are provided and use them optimally. We also need to continue to look at things like energy conservation and other things like that. Also, we need to try to bring in resources from across the state like contributions and continuing to draw in students. I think all of that will keep us on the path to a stable future.”