Budget Cuts

State budget cuts are front page headlines these days, no matter where you are in the country. Recently the Georgia General Assembly asked for 300 million dollars of more cuts from higher education. Each University or College have proposed their share of the total, but as you can see from the table below, some schools are cutting more than others. There are various reasons (funding levels, recent funding grants, mission, lobbying, etc.) for the differences but what I find more interesting is the process and the economics behind it.

When each University or College announces their proposed cuts, they have an incentive to propose cuts that are less than what they could stand. Each schools also has an incentive to propose cuts that appear devastating (UGA cutting 4-H, GCSU cutting so many faculty positions that it would put programs at risk for accreditation, etc.). If proposed cuts appear devastating to a school, the Board of Regents or General Assembly may be less likely to cut from those schools. There are many more dimensions to this process and this type of bargaining goes on every year, in any sector.

Last week it was also announced that tuition for public colleges and universities in Georgia may have to increase as much as 77%. I, for one, do not believe that tuition will increase that much for various reasons. First, it will bankrupt the popular HOPE scholarship, which is already in trouble financially. Second, it is an election year and no state politician will want any mention of these type of cuts showing up in campaign ads and the reasons go on and on. I think that this is also a part of the bargaining process and that the 77% figure is meant to get press and apply pressure. That announcement was probably made to allow officials to settle on a smaller tuition increase later. If you announce a possible 77% increase and settle for a 30% increase, it looks better politically and when it comes to budget issues, politics is everything.

University	Proposed Cut as a % of 2010 Budget
Georgia Tech	3.70%
Medical College of Georgia	4.04%
Fort Valley State University	4.59%
Savannah State University	4.87%
University of Georgia	5.12%
Gordon College	5.15%
Georgia Southwestern State University	5.23%
Valdosta State	5.27%
Georgia College and State University	5.31%
Albany State University	5.34%
Clayton State University	5.43%
Georgia State University	5.54%
Kennesaw State University	5.72%
Gainesville State College	5.75%
Georgia Southern University	5.78%
University of West Georgia	5.88%
North Georgia College and State University	5.90%
Southern Polytechnic State University	5.93%
Georgia Gwinnett College	6.14%
Dalton State College	6.24%
Abraham Baldwin Agricultural College	6.34%
Armstrong Atlantic State University	6.48%
Middle Georgia College	6.58%
Columbus State University	6.58%
Augusta State University	6.73%
Macon State College	6.99%
College of Coastal Georgia	8.06%

An executive summary of proposed reductions: http://www.usg.edu/fiscal_affairs/documents/executive_summary.pdf

The overall summary of institutional reductions: http://www.usg.edu/fiscal_affairs/documents/summary_of_reductions.pdf

-Brandon and Brad