In Kentucky, AG Threatens to Sue Governor Over Budget Cuts

by | April 4, 2016

By Beth Musgrave

Kentucky Attorney General Andy Beshear on Friday said that Gov. Matt Bevin should rescind his ordered mid-year cuts to university budgets within seven days, or face litigation.

Bevin's order for immediate 4.5 percent cuts in state funding for public universities left university presidents scrambling to manage the cuts Friday morning and caused wide political ripples as the state legislature came down to the wire. The state's community college system said the cuts could lead to layoffs and higher tuition for students.

Beshear, at a Capitol news conference late Friday afternoon, said Bevin's cutting of appropriated funding of colleges, universities and community colleges was outside the governor's authority. He said state law requires a declared shortfall in the budget before cuts can be made.

Bevin should withdraw his university cuts, Beshear said. If the governor does not comply within seven days, Beshear said he would sue the governor in Franklin Circuit Court.

Bevin is "confident, with confirmation from our general counsel and the budget office, that we are on firm legal grounds.

"Today's threatened actions by the attorney general are premature. We must wait and see what legislative action occurs on the budget before a final determination is made regarding budget allotments," Bevin's spokeswoman Jessica Ditto said.

The Democratic attorney general, who is the son of former Gov. Steve Beshear, said his comments were not political. He said it is his responsibility to defend state law.

Earlier Friday, House Speaker Greg Stumbo said he doesn't think Bevin's university cuts are legal. Stumbo said the Democratic House lacks standing to sue, but he thought a university or possibly a student could sue and be successful. Stumbo said the only time a governor can cut the budget is when there's a revenue shortfall and that Bevin has "set a dangerous precedent."

"I think the only time that the governor can not appropriate what the General Assembly directed is when there is a budget shortfall," Stumbo said, citing a Kentucky law (KRS 48.600) dealing with budget cuts. Universities "definitely have standing and in my opinion will win that lawsuit," he said.

Stumbo, D-Prestonsburg, said that if left unchallenged, a governor could cut any agency or an appropriation to a "county, or a city government or a mayor" that the governor didn't like.

Bevin issued a statement defending the cuts Friday morning:

"Our pension system is on the brink of insolvency. We have more than $35 billion in pension obligations," his statement said. "It takes leadership from all stewards of taxpayer dollars to keep our commitments to our teachers and state workers. I appreciate our university presidents who recognize the magnitude of this challenge and are willing to participate and contribute to the solution.

"Once we get our fiscal house in order, Kentucky will be in a much stronger position to make additional investments in higher education."

Bevin later told reporters that Stumbo "knows that I have legal authority" to cut university budgets. He said reaction from most university presidents shows they are ready to deal with the cuts.

On Thursday, Bevin, a Republican, ordered the immediate 4.5 percent cuts in state funding for all public universities and colleges for the current budget year, which ends June 30. Bevin's move came on the same day that House and Senate budget negotiators announced that they had come to an impasse on a two-year spending plan. House leaders said they walked away from negotiations because the Republican-led Senate continued to want to cut higher education. Senate leaders countered that they were willing to negotiate and proposed minimizing some of the state university cuts.

Stumbo said Friday that there has been no progress on efforts by the Democratic-controlled House and Republican-controlled Senate on reaching a compromise budget. Friday was the 59th day of this year's legislative session, which cannot last longer than 60 days. The session must end by midnight April 15.

Stumbo said he thinks that the governor never wanted a budget and would prefer to fight with Democrats.

Bevin said that is not true and predicted that the state will have a budget within two weeks. If not, he added, Stumbo is to blame.

University presidents, meanwhile, tried to determine how to manage the 4.5 percent cut to their state allocations with less than three months left in the fiscal year.

The Kentucky Community and Technical College System had moved some money from its reserves earlier this year in anticipation of the cuts, KCTCS officials said earlier Friday. The community-college trustees voted in March to move $8.6 million from its reserves into its operating account.

"The KCTCS Board of Regents has anticipated and planned for a potential 4.5 percent state appropriation cut since the governor announced his budget proposals in January," KCTCS President Jay Box said. "With three-fourths of the current budget year completed, it would be impossible for the colleges and other KCTCS operating units to balance their budgets without having access to emergency funds."

But KCTCS said "these deep cuts on top of the cuts received over the last seven years, and a tuition shortfall due to declining enrollment, mean people will lose jobs and programs will be eliminated.

"KCTCS is also the only public, postsecondary institution that froze tuition this year, and we continue to be the most affordable. However, this cut to the state appropriation will increase the need to raise tuition, which directly impact the thousands of students who access higher education through the 16 colleges."

Officials at Kentucky State University, which has struggled in recent years with money problems, declined to comment Friday on Bevin's cuts, university spokeswoman Diane Hawkins said. She also declined to say how much the university would be cut.

In February, KSU President Raymond Burse warned that any cuts over the next two years could be disastrous to the Frankfort-based school. About 30 percent of the university's budget comes from the state, Burse said.

"Kentucky State cannot withstand what is being proposed in the budget," Burse wrote in the February letter to faculty, staff, students and alumni. "If the budget as proposed is enacted, our options would be to declare financial exigency and/or prepare a closure plan."

The University of Louisville released an email saying that the school "understands the critical issue facing the General Assembly is to implement a plan that resolves the pension shortfall.

"U of L will respond to the gubernatorial directive of a 4.5 percent reduction in the fourth quarter, as we have responded to the 14 budget cuts over the past decade, by working with our faculty and staff to pursue plans that minimize the burden on our students.

"Our employees are disappointed with this news, but we will work to galvanize support for developing new fund sources that assure our faculty, students and staff have the resources to achieve our strategic goals."

In a campuswide email, Eastern Kentucky University President Michael Benson said the cuts will cost EKU about $3.1 million. The university will try to tap existing funds to make up for the shortfall, Benson said.

"As we anticipated such a move might happen, our management team has utilized reserves and sequestered away other funds to meet this immediate reduction," Benson said.

"We urge every single person across campus to be extra vigilant in the coming weeks and months to be as careful as possible with state funds and be even more mindful of existing budgets."

Jay Blanton, a spokesman for the University of Kentucky, said the 4.5 percent will mean a cut of $12.6 million to the state's flagship university.

"Gov. Bevin announced this measure in January, so we anticipated it," Blanton said Thursday."We will be working over the next few months to implement this reduction within the context of our current-year budget. It is too early to speculate on the specific measures we will take."

Morehead State University had already announced furloughs for staff in anticipation of a current-year state cut to funding. Officials at Morehead State said the cuts mean that MSU's fourth-quarter allocation was reduced by $1.95 million.

Bevin had proposed the 4.5 percent cuts to most state agencies and 9 percent cuts to universities and other state agencies in each of the next two fiscal years. House leaders had restored the 4.5 percent cut in the current year. The Senate budget largely remained silent on the current-year cuts.

Bevin and the Senate want to use the money to shore up the state's grossly underfunded public pension systems, which have a combined unfunded liability of more than $30 billion.

About 15 people gathered at midday Friday between the Capitol and Annex for a hastily arranged protest in response to the higher-education cuts.

They stood on the sidewalk, several holding signs such as "Cuts + Fees = No Degrees" and "Bevin is a schoolyard bully!" Some were students but others were not.

The protesters were associated with the state Democratic Party, which helped get out the word about the event.

Clint Morris, president of the Kentucky Young Democrats, said he and others are concerned the cuts will drive up tuition costs and make college inaccessible to more people.

"It's just sad that in our state the cost of pursuing one's dreams keep going up," Morris said.

Herald-Leader staff writer Bill Estep contributed to this article.

(c)2016 the Lexington Herald-Leader (Lexington, Ky.)