Departing education leader decries funding shortfall

Joseph Rallo, the state’s departing higher education leader, said Thursday that parents and students should “feel outraged” that lawmakers failed for a second time to raise enough revenue to fully fund TOPS and avoid significant cuts at universities.
The Legislature passed a budget Monday that would slash funding for TOPS scholarships by 30 percent, or $85 million, and cut operating funds for universities, which had already declined substantially over the last decade, by $96 million.
“I am leaving after three and half years, and nothing has gotten better. Nothing,” said Rallo, who was a top official at universities in Texas and Illinois before becoming Louisiana’s commissioner of higher education in 2015.
“I think it is a very unfortunate position for the state, for the parents, for the students, and at the end of the day, for the economy,” he said in a series of interviews.
Rallo described the cut in TOPS as a broken promise to students who had worked hard throughout their high school careers.
“We are now in the first week of June,” he said. “Students have made choices, and they have a TOPS promise that they have worked for four years on. They have met their side of the bargain, and now the state hasn’t.”
He said he was hopeful that TOPS funding would be restored in a third special session that Gov. John Bel Edwards plans to call later this month. Edwards said he will push House Republicans to agree to revenue increases to avert most of the cuts that were made across the state budget.
Rallo indicated that he was more concerned about the potential $96 million cuts in the higher education budget. He said funds that go directly to the universities have already been cut substantially under the Jindal administration.
He said many legislators have a misconception that if they fund TOPS, they have funded higher education. In reality, without providing more money for universities to cover their expenses, some will be forced to drop some of the programs and classes needed to make Louisiana more competitive economically.
“If a young person walks out with a degree and they don’t have the types of classes and the quality they need, then it’s just a piece of paper,” Rallo said. “It doesn’t allow them to compete with other students, and that’s what this is about.”
He said he also has been frustrated that many lawmakers view attending college as a “personal good” for the students rather than as a “public good” that helps strengthen the state’s economy as a whole.
“People can bury their head in the sand if they want, but our economy is changing,” he said. “I think all of us want something better for our families and our kids, and that revolves around higher education. So whatever you call it, whatever name you give to it-- training, education-- you got to invest.”
Some House Republicans voted against any sales-tax extensions in the first two special sessions this year, saying in part that the state needs to reduce taxes to attract more industry.
However, Rallo questioned if large industries would come to the state if it does not create a larger pool of well-educated workers, particularly in the engineering and technology fields that now provide some of the highest-paying jobs.
“One of the ways this state attracts businesses is by saying that we have some of the lowest salaries in the country,” Rallo explained. “In my way of thinking, that is not the way to attract businesses of the future.”
“Personal income tax accounts for about 30 percent of the state revenue,” he said. “Why not put more money into higher education so that more people will graduate, take high-paying jobs and pay more in taxes? That conversation has fallen on deaf ears.”
Rallo has already stepped down as the state’s commissioner of higher education but has stayed temporarily as a senior adviser since his successor has not started yet.
Lawmakers say higher education and health services often bear the brunt of budget cuts because they are the largest areas in the state budget where the funds are not dedicated by law.
Rallo said legislative support for higher education also depends heavily on location. He said said the primary advocates are legislators who have universities in their districts.
“For the vast majority, the dividing line is, do I have an institution in my district? Or nearby my district? Then I am going to support it. If don’t, then I probably won’t,” Rallo explained. “People tend to stand where they sit.”
He said that higher education also has been hurt by being the only part of state government that has to fund the retirement costs of its employees rather than relying on a statewide system.
Louisiana’s higher education budget was $1.5 billion in 2008, with $300 million in mandated costs for the retirement programs. Now, higher education receives only $800 million in state appropriations and faces $600 million in mandated costs, leaving only about $200 million to distribute among 35 schools.
These mandated costs have become so large that six universities-- LSU Alexandria, Grambling State University, Louisiana Tech, Nicholls State University, McNeese State University and Southeastern University--now give more money back to the state for the retirement programs than they receive in appropriations to cover their operations.
Rallo has frequently criticized the relatively low academic requirements and the four-year degree completion rate of only 32 percent for students on TOPS scholarships. He has tried to push for adult education programs and suggested ways to restructure higher education funding.
But his largest complaint is that nothing has changed. Looking back on the tumultuous end of the special session Monday, he said he felt like that he had seen it all before.
“It was very sad,” he said. “I was sitting there, as I have been for three-and-a-half years, having gone through 10 sessions. Ten sessions with not a different outcome is a sad statement.”
“I defy anyone to tell me of anything that has happened in these legislative sessions that has made any long-term changes,” he added. “Nothing has happened. But everyone is grumpy.”