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Governor Jindal Announces Mid-Year Budget Reduction Plan to Help Protect Higher Education and Healthcare Funding

Press Release

Location: Baton Rouge, LA

Today, Governor Bobby Jindal announced a mid-year budget reduction plan that addresses the state's $251 million mid-year budget deficit while helping to protect higher education and healthcare funding. The plan announced today will result in a total reduction of about one percent of total means of financing for the state.

The Governor's constitutional authority enables him to make unilateral across-the-board reductions that would cover the shortfall, but under this scenario, healthcare and higher education would be largely unprotected versus making targeted reductions.

In order to help protect higher education and healthcare, Governor Jindal took a responsible approach by using his own authority to issue an Executive Order that addresses part of the shortfall and his administration also worked with the Joint Legislative Committee on the Budget (JLCB) to make targeted reductions by agency. The Governor's plan included a reduction of $38.2 million to statutory dedications, as well as a reduction of $66.2 million in general fund made available by passage of the TOPS fund constitutional amendment, for a total of $104.4 million in savings. This action not only fully funds TOPS, but it also protects higher education and healthcare from more than $104.4 million in reductions.

The Governor's plan funds the increased student count for the Minimum Foundation Program (MFP) for K-12 education. While the overall budget has been reduced by 26 percent since 2008, between FY08 and FY12, the total MFP has increased by $304.3 million from $3.12 billion to $3.43 billion, or 9.7 percent.

Governor Jindal said, "This is a responsible plan that balances the budget without raising taxes and protects higher education and healthcare. Like families and businesses across the state, we must live within our means and raising taxes would only push the burden on to our people.

"To eliminate the shortfall, we asked departments to identify targeted cost-savings 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 services and professional services. Additional savings were achieved as the result of the hiring freeze we implemented at the beginning of this fiscal year, which generated $15.7 million in savings."

While the Constitution allows 30 days for the Governor to eliminate a deficit, Governor Jindal took immediate action because if each department were allowed to continue making expenditures based on the current budget it would only mean more severe reductions in the future. The Governor's swift action in addressing past deficits has earned Louisiana stronger credit ratings. In February of this year, when the credit rating agencies improved Louisiana's credit ratings and assigned the state a "stable" outlook, one factor cited was, according to Fitch, Louisiana's "continued timely action to maintain budget balance" and, according to Moody's, "the state's speedy responses to downward revenue projections."

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