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W.Va. colleges may take unexpected financial hit up to $35 million

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By Brad McElhinny, WV MetroNews

CHARLESTON, W.Va. — The law of unintended consequences means West Virginia colleges may be on the hook for up to $35 million in unanticipated expenses.

That’s because of two promises made during Gov. Jim Justice’s State of the State address.

The governor promised pay raises for state employees. There’s money to cover state employees who work for agencies funded by general revenue. But for agencies funded through special revenue such as fees, like colleges, the money available for raises gets murkier.

West Virginia’s higher education system anticipates a $20,348,146 shortfall for the raises.

The governor has also promised $100 million to bolster the Public Employees Insurance Agency. Again, that’s general revenue. Agencies like colleges that are funded largely by other means anticipate having to have to backfill millions of dollars, pushing the full amount to $150 million.

Justice cast that as a marvel of budgeting.

“But in addition — in addition, just think about this:  Dave Hardy, our Secretary of Revenue and his great disciples, they have found a way that really and truly, we can dedicate not 100 percent of that as required, but only $105,000,000 will earn us $150,000,000 that we can dedicate to PEIA today,” the governor saidlast week.

“So that’s not what we’re going to do.  We’re not going to do $100,000,000; we’re going to do $150,000,000. And you know what we’re going to do?  We’re not going to take one dime of that from the budgets, the upcoming budgets.”

Yet the higher education system anticipates a $14,808,235 cost for the PEIA revenue assessment.

Altogether, a funding problem is on the horizon.

“A big cut is what it looks like,” Delegate Daryl Cowles, R-Morgan, said after a higher education budget presentation to the House Finance Committee.

“A surcharge and unfunded pay raises that’ll hit higher education to the tune of $33 million to $35 million. That’s effectively a cut to higher ed.”

West Virginia University, as the state’s largest institution, would face the biggest effect.

Higher education officials have calculated that WVU could face a $12,499,042 shortfall for the raises plus a cost of $8,756,924 for the PEIA surcharge.

Marshall University would be next with a $2,594,040 shortfall for raises and a $2,114,292 cost for the PEIA surcharge.

Fairmont State is next with a $586,782 shortfall for raises and a $474,742 cost for the PEIA surcharge.

Delegate Larry Rowe, holding a spreadsheet of the costs, said he is worried.

“I’m alarmed by this sheet,” said Rowe, D-Kanawha. “I don’t know how these institutions can do these raises if we don’t give them some help.”

The colleges might not wind up paying those full amounts for raises if they determine they just can’t.

“We certainly appreciate and we feel all of our employees deserve increases just like teachers and our state workers and our troopers and our correctional officers,” said interim higher education chancellor Carolyn Long.

But, Long said, only a portion of the money for salaries may be available. That very well could put colleges in a bind, she said.

“So it becomes a balancing act, and we want our faculty and our staffs to understand that,” Long said. “It’s not that we don’t want to give them the full amount, but we would have to dip into other areas to do that.”

Long made a budget presentation for the state’s four-year colleges. After several years of cuts to the system, Long was requesting a flat base budget.

“The cuts that have been made the past several years have been somewhat devastating to some colleges,” she said. “Maybe we can start now reinvesting into the state and into some of our colleges. We still have some real problems financially.”

She did ask for an additional $13.5 million to reflect a new funding model, $10 million for deferred maintenance and $1.3 million to match the federal dollars for West Virginia State’s land grant.

Not reflected in the budget request was $10 million that West Virginia’s regional four-year institutions have discussed as part of the Blue Ribbon Commission on Higher Education.

That money is meant to help make up for the cuts of the past few years.

It was first suggested by Marshall University President Jerome Gilbert, although Marshall and WVU would not be among the colleges receiving portions of that money.

Gilbert, who spoke at the Capitol during Marshall University Day, suggested the $10 million request will be made when the Blue Ribbon Commission files its completed report.

“I felt like we needed to sort of level the playing field,” Gilbert said. “A lot of those institutions had gotten behind in the funding, and I felt like we needed an injection of money into those institutions to put them on fair ground with the rest of us.”

Cowles said he had looked forward to considering that $10 million in funding, which he described as the Marshall plan, as well as a funding model for the higher education system.

Instead, he was feeling disappointed.

“We started talking about higher ed funding and Blue Ribbon Commissions and the Marshall plan and some way to get more money into higher ed,” he said.

“And because we’re trying to do this PEIA surcharge and unfunded employee raises in special revenue it’s going to be a hit, it looks like, to higher ed.”