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National CrossTalk Fall 1999
News Editorial Other Voices Interview

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Kentucky’s Moderate Spending Cuts
Reduced higher education funding may jeopardize recent reforms

by William Trombley
Frankfort, Kentucky

These have been the days of wine and roses,” said James Votruba, president of Northern Kentucky University, referring to the last five years, when the state’s public colleges and universities have received strong support from the governor and the legislature. “There was plenty of money and we were encouraged to do new things—what more could a university president want?”Votruba asked.

Democratic Governor Paul Patton came into office in 1995 declaring that reform in postsecondary education would be his “number one priority,” and he has kept that promise.

More than $600 million in new money has been poured into public colleges and universities—an increase of more than 40 percent since Patton arrived. Enrollments have surged, especially in the two-year community and technical colleges. The percentage of high school graduates who go on to some kind of postsecondary education is increasing, and the dropout rate is falling.

The state’s staggeringly high adult illiteracy rate—about 40 percent—has begun to decline. A new, stronger Council on Postsecondary Education has begun to impose system-wide policies on what has been a series of campus fiefdoms, sometimes feuding with each other.

Tuition rates are rising six to seven percent a year, but Kentucky’s public institutions remain among the nation’s most affordable.

Enrollment in adult education classes increased by 12,000, or 23 percent, last year, and 5,500 students are enrolled in a new Kentucky Virtual University, taking classes mostly online.

External research funding has increased from $120 million to $170 million in the last three years.

But all of these gains are threatened by a slumping state economy, which has left a $533 million hole in Kentucky’s $7 billion operating budget for the current year, and is expected to reduce state expenditures for the next two years as well.

Governor Patton has struggled to make up the deficit without cutting education spending. As late as last October 26, he announced a two percent reduction for all state agencies except education, stating, “For too long we have under-invested in education.” However, by the middle of December the revenue gap had grown to such proportions that Patton had to slice higher education by two percent as well.

The governor also froze all state construction spending, including $270 million for higher education.

Although the two percent cut in higher education spending is much smaller than in many other states, it distresses Patton, who believes Kentucky’s colleges and universities are the keys to economic growth. “We’ve made a commitment to move forward in education and we’ve got to keep it,” the governor said in an interview. “Kentucky’s economic future depends on it.”

Most campus administrators believe they can cope with a two percent cut without sacrificing the momentum of reform.

“I think we can do it without losing the academic gains we’ve made,” said John Shumaker, president of the University of Louisville, one of the state’s two research institutions. “The reality is we have to be responsible citizens of the commonwealth. The governor has helped us through thick and thin—now it’s time for us to help him.”

Said Gordon Davies, president of the Council on Postsecondary Education, “these are good presidents, and a good president can find two percent in his budget. If he can’t, then he shouldn’t be president.”

  Budget Director Jim Ramsey is trying to maintain a high level of higher education spending while dealing with a $533 million deficit.
Lee Todd, the new president of the University of Kentucky, said he will make up the two percent (which amounts to about $6 million) with money he had hoped to put aside to increase lagging faculty and staff salaries and medical benefits.

Western Kentucky University will use extra tuition revenue generated by increased enrollment to plug the two percent hole, although President Gary Ransdell warned that a cut of more than two percent “would cause us some serious problems.”

As the economic skies began to darken last spring, Mike McCall, president of the 28-campus Kentucky Community and Technical College System, asked each campus president to put aside four percent of the operating budget, to compensate for expected reductions.

But many believe this year’s budget cuts, plus those to come, are bound to slow the pace of change. “The will is there and the intent is there but are the resources there?” asked historian George Herring, an authority on the Vietnam War who has taught at the University of Kentucky for 32 years.

Another question is whether legislators will accept Patton’s spending plan or will want to make deeper cuts in higher education.

“I think there is a climate of support for higher education, a common understanding that this is the key to Kentucky’s future,” said Crit Luallen, secretary to the cabinet and a principal Patton adviser. “The political challenge will be when advocates (for mental health, Medicaid and other state services that have been reduced) begin to testify, and members see how these cuts will affect their districts— will they still favor spending on higher education?”

So far, there has been bipartisan legislative support for the reforms. But that could be changing. “I sense, for the first time, that a lot of the support is more rhetorical than real,” University of Louisville President Shumaker said.

“Part of the legislature still hasn’t bought into it,” said attorney Norma Adams, vice chair of the Council on Postsecondary Education. “I wish we had another few years to see if most legislators could be brought along.”

Entering the last two years of his second term, the governor is more vulnerable politically.The two-year budget he presented to the General Assembly in late January is his last, and legislators will be freer to attack it without fear of retaliation.

Complicating Patton’s task is an ugly fight over redistricting between leaders of the House of Representatives, where Democrats hold almost two-thirds of the seats, and the state Senate, controlled by Republicans by a narrow 20-18 margin.

“It’s gotten pretty uncivil. They won’t even sit down and talk to each other,” said Council member Steve Barger, secretary-treasurer of the state carpenters’ union. “That’s going to have an impact on everything that happens this legislative session.”

Even the best known of Kentucky’s reforms—the “Bucks for Brains” incentive fund, which is intended to lift the University of Kentucky into the top 20 among the nation’s research universities and to transform the University of Louisville into a “premier, nationally recognized metropolitan research university”—could be in trouble.

In the last four years, the state has provided $230 million for “Bucks for Brains” (formally titled the Research Challenge Trust Fund), money that has been matched by the state’s two research institutions.This has enabled Louisville and the University of Kentucky to attract some top researchers, especially in engineering, medicine and science. The number of endowed chairs has increased from 48 to 134 at the two universities, endowed professorships from 58 to 203, and money for scholarships and graduate fellowships has increased substantially.

“Bucks for Brains” faculty members have brought $46 million in new research funding to the University of Kentucky in the last two years, according to President Lee Todd.

At the University of Louisville, externally funded research reached $40 million last year and the goal for the year 2010 is $200 million. “But this is just the beginning,” President Shumaker said.“We were so far behind that we’ve got to maintain this level of investment for another 15 years to make a real difference.”

“Bucks for Brains” also included $20 million to improve quality at the state’s six regional universities—Eastern Kentucky, Kentucky State, Morehead State, Murray State, Northern Kentucky and Western Kentucky—but some officials at the regional schools grumble that too much of the new money is going to “UK” and to Louisville.

Others have made good use of the extra money. For example,Western Kentucky University had no endowed professorships four years ago but now has 18. Northern Kentucky has added 55 full-time faculty members. “The bottom line is that, due to the reforms, we’re a substantially different institution than we were four years ago,” said Northern Kentucky University President James Votruba.

Kentucky Governor Paul Patton has made higher education his “number one priority” since taking office in 1995 but now faces severe budget challenges.  
Governor Patton had planned to spend another $120 million on “Bucks for Brains” next year but the tight budget has made that impossible. Now he hopes to persuade the General Assembly to approve bonds to finance the program but some legislators are balking.

“There’s some folks who don’t think postsecondary education is the place to spend the bucks,” Steve Barger said. The budget crisis “gives them more of a chance to be heard.”

In addition to “Bucks for Brains,” other incentive funds are intended to increase enrollment, retain already-enrolled students, improve campus technology capabilities and provide workforce training, among other goals.All of these are managed by the Council on Postsecondary Education, whose president, Gordon Davies, considers them crucial to the success of the reform efforts.

“The special funds provide money on the margin for change,” Davies has said. “They give us (the council) some leverage.”

So far, the results have been generally good.

Undergraduate enrollment at public institutions has risen by more than 19,000 in the last four years. Most of the increase has been in the newly formed Kentucky Community and Technical College System (KCTCS). The 1997 legislation implementing the postsecondary reforms called for an enrollment increase of 80,000 by the year 2020, and that goal now appears to be attainable.

The retention rate (the percentage of first-time freshmen who remain for a second year) has improved on some campuses (the University of Kentucky, Kentucky State and Western Kentucky), has fallen at Morehead State, and has remained about the same at Eastern Kentucky, Murray State, Northern Kentucky and the University of Louisville.

The Governor’s budget preserves $22 million in a special fund intended to increase enrollment and improve retention rates. “We didn’t want to lose momentum in those areas,” a Patton aide said.

Ninety-seven percent of Kentucky high school graduates now take the ACT (either the ACT or the SAT is required for admission to the state’s public universities) but their scores are below the national average. Kentucky also ranks below the national average in numbers of students who take Advanced Placement courses in high school and in the percentage of students who pass such courses.

This is because “we don’t have enough teachers who are qualified to teach AP classes,” said Sue Hodges Moore, executive vice president of the Council on Postsecondary Education.“That has been a real barrier.”

Stimulated by the “Bucks for Brains” money, The University of Louisville’s endowment has grown from $183 million to $503 million in recent years, the University of Kentucky’s from $300 million to $430 million. This has made it possible for the two universities to attract several highly regarded researchers and scholars.

Oncologist Donald Miller, director of the Brown Cancer Center at the University of Louisville, has brought 24 new faculty members and $9.5 million in research funding to Louisville since coming from the University of Alabama, Birmingham, in 1999.

Other outstanding faculty members Louisville has hired with “Bucks for Brains” money include Scott Whittemore, a spinal cord injury researcher; early childhood education expert Victoria Molfese; and urban affairs specialist Steven Bourassa.

Two years ago, Greg Gerhardt, an anatomy and neurobiology professor whose specialties include Parkinson’s Disease, left the University of Colorado for the University of Kentucky, bringing along his research group, $4 million in federal funding and a private company that manufactures and distributes technologies developed in Gerhardt’s lab.

As at Louisville, many of UK’s “Bucks for Brains” hires have been in engineering, medicine and the sciences but this year the university lured historian Ronald Formisano from the University of Florida with the offer of an endowed chair.

At the same time, average faculty salaries and benefits for both universities— Kentucky and Louisville—are well below the competition, and some excellent professors are said to be leaving the state.

“That is a big issue that we have to address,” said Dean Howard Gotch of UK’s College of Arts and Sciences. “Attracting good people is one thing but retaining them is another.”

The pace of reform picked up at the University of Kentucky when President Charles K.Wethington, who was opposed to most of the changes, was replaced seven months ago by Lee Todd, who holds a Ph.D. in electrical engineering from MIT, and once taught at UK, but has spent most of his career in the business world.

Todd was senior vice president of Lotus Development before taking the University of Kentucky job, and is an enthusiastic believer in utilizing Kentucky’s higher education resources to build a “new economy,” one built on knowledge and an educated citizenry, to replace the old, fading sources of revenue such as tobacco, coal mining and horse racing.

Todd also jettisoned the slogan “America’s Next Great University,” which the university had been using in recent years but which was offensive to many UK alumni.

Perhaps the most pleasant surprise has been the almost-instant success of the Kentucky Community and Technical College System (KCTCS), which came into being only five years ago after a fierce battle between Governor Patton and the University of Kentucky.

Prior to 1997, the state’s 14 community colleges were part of the university, while a state agency administered the 15 technical schools. Former UK President Wethington liked that arrangement because control of the community colleges extended the university’s political clout throughout the state.

But Patton and his education advisers thought the arrangement limited the potential of the two-year schools, and diverted attention from UK’s research mission. They proposed combining the community colleges and the technical schools into a single system.

The battle was fought in the legislature, with heavy lobbying by both sides. Some observers believe that if Patton had lost this argument, he might have lost the entire reform package. But he did not lose, and today 28 of the state’s 29 two-year schools are merged into KCTCS. Only Lexington Community College remains part of the University of Kentucky.

“The last vestiges of bitterness (over the governance change) have disappeared and KCTCS is booming,” said Walter Baker, a former state senator who is now a member of the Council on Postsecondary Education.

The 28 schools and colleges have been reorganized into 16 districts and “we’re beginning to see some economies of scale,” said system President Mike McCall. Several new degree programs have been started and there is greater cooperation between the technical schools and the community colleges, he said.

Although enrollment has jumped almost 39 percent since 1997, McCall has launched an advertising campaign to sell Kentuckians on the value of higher education in general and the two-year schools in particular.

“There is a systemic problem in this state,” he said.“We’ve got to get the word down to the family level that education has value.”

To implement the reforms, the 1997 legislation created the Kentucky Council on Postsecondary Education and gave the council powers that its predecessor agency lacked. The council’s Board of Trustees then selected Gordon Davies to run the agency. Davies, who was director of the Virginia State Council of Higher Education for 20 years, is one of the nation’s most respected figures in the tricky business of higher education coordination.

  Crit Luallen, secretary to the cabinet and a principal adviser to Governor Patton, believes there is a climate of support for higher education.
“There were some tensions at first,” Walter Baker observed, as Davies and the council began to impose some system-wide restraints on a group of campus presidents who were accustomed to considerable autonomy. “But now I think things have smoothed out.”

Davies has tried to keep the council and his 75-member staff focused on an “action agenda” that asks five questions: • Are more Kentuckians ready for postsecondary education? • Are more students enrolling? • Are more students advancing through the system? • Are we preparing Kentuckians for life and work? • Are Kentucky’s communities and economy benefiting?

Although Davies thinks the answer to all of these questions is yes, or at least a qualified yes, he believes there is much work still to be done: The adult illiteracy rate is still far too high; not enough high school students prepare for, and enter, college; of those who do enroll, too many drop out; of those who graduate from a two- or four-year campus, too many leave the state; not enough students are transferring from two-year to four-year campuses.

But he is pleased about “the sense of empowerment that I believe people in higher education now have about what we can do for the state of Kentucky.”

There is some criticism of Davies and the Council on Postsecondary Education for making too many rules and interfering too much in local campus affairs.

“Gordon has done a good job of defining the indicators of reform success and challenging the universities to meet agreed-upon goals and tying them to the budget,” said Robert Kustra, who was president of Eastern Kentucky University from 1998 to 2000. “But the other side of the coin is that there is far too much micromanagement and regulation. The council should be enablers, not restrictors.”

But Governor Patton and his top aides think Davies and the postsecondary council have done a fine job.

“We’re very pleased with the Council,” cabinet secretary Crit Luallen said.“We’ve made progress on every one of our key issues…There have been some bumps in the road—this is a tremendous change we’re making here—but Gordon and the Council have done a great job of keeping things on track.”

Some observers who think Kentucky’s higher education reforms will survive small budget cuts, even if they continue for two or three years, are less sure the changes will outlast the governorship of Paul Patton, who leaves office in December 2003. And they wonder about the effect of the departure of Gordon Davies, who is expected to leave when Patton does, if not before.

Some changes seem irreversible. It is unlikely that the community and technical colleges ever will be returned to the University of Kentucky. And the grand plan to use higher education to create a 21st century, information- and knowledgebased economy is almost certain to survive in some form.

“We have tried to get higher education to a point where the reforms will sustain themselves,” said Jim Ramsey, the state’s budget director. “I hope we’ve been successful.”

David Karem, the Democratic minority leader in the state senate, believes they have succeeded. “There will always be bickering among the campuses and there will always be fighting over how strong the (postsecondary) council should be,”Karem said, “but basic changes in what’s been done? No, I don’t think so.”

University of Louisville President John Shumaker is less certain.

“That’s a serious question,” he said. “We’ve made a great start but we can’t stop now—we’re still too far behind” most other states. “I’m afraid I see some danger of plateauing.”

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