Today, Governor Bobby Jindal took action on budget reductions to address the state's $165.5 million mid-year budget deficit while helping to protect higher education and healthcare funding.
The Governor implemented his statutorily provided unilateral authorities to eliminate the deficit, using a combination of his authority to reduce general fund by up to 3 percent of total appropriation by budget unit and his authority to order expenditure freezes.
However, while the Governor's authority enables him to make across-the-board reductions to address the deficit, under this scenario higher education and healthcare would be largely unprotected. Instead, Governor Jindal protected higher education and healthcare by taking a responsible approach to issue executive orders that make targeted reductions by agency. While the state budget has been reduced by roughly $9 billion dollars, or 26 percent, since 2008, total funding for higher education has been reduced by roughly $220 million, or 7 percent.
To eliminate the deficit, departments were asked to identify targeted cost-saving measures to cut spending while protecting critical services. For many departments, these savings came as a result of reducing operational expenses in travel, supplies, acquisitions, operational and professional services, contracts, streamlining programs, as well as finding general fund savings by utilizing other sources of funding. In addition, savings of $19.7 million were achieved as a result of the hiring freeze implemented earlier in the fiscal year.
The Governor's plan also funds the increased student counts for the Minimum Foundation Program (MFP) for K-12 education as well as for TOPS scholarships. Taking into account the new dollars committed to the MFP in this plan, total MFP funding will have increased by over $325 million, or 10.5 percent, since Governor Jindal entered office.
Governor Jindal said, "In order to protect higher education and health care funding, we looked agency by agency to make strategic reductions that continue our mission of making government more efficient and less expensive for taxpayers. Most importantly, we are continuing our goal of fostering an environment in Louisiana where businesses can invest and create opportunities for our people."
While the Constitution allows 30 days for the Governor to eliminate a deficit, Governor Jindal took immediate action because if departments continued making expenditures based on the current budget it would only mean more severe reductions in the future. The governor's swift action addressing past shortfalls has earned Louisiana favorable assessments from credit rating agencies, as Fitch has positively noted Louisiana's "continued timely action to maintain budget balance," while Moody's has cited "the state's speedy responses to downward revenue projections."