09 May 2011

Committee action, May 9: HB 537

HB 537 would merge Southern University New Orleans and the University of New Orleans. Already having discussed the policy aspects in the House Education Committee, the House Appropriations Committee now was to deal with the financial aspects.

Author and Speaker Jim Tucker outlined costs over the next two fiscal years, which would be less than $3.15 million, after which there would be no costs but would assume no savings as the same amounts of money were expected to be allocated to the universities whether merged. Commissioner of Administration Paul Rainwater said these costs were to the system in which the merged entity would exist, the University of Louisiana’s, to defray its costs to not have to dip into its other operating funds, which otherwise would be legally required.

Chairman Jim Fannin asked about the nature of the costs. Tucker answered in fact savings, not costs, were likely even if not acknowledged. Rep. Walt Leger asked how any federal dollars for HBCUs were allocated. Commissioner of Higher Education Jim Purcell said in his experience that this did not have to cost the merged institution these funds, but Leger said he wanted to know whether the Legislature dealt with this money. Commissioner of Administration Paul Rainwater said not as they were restricted funds.

Leger asked about personnel actions. Tucker thought layoffs would be minimal and mostly mooted through attrition, and not much in the way of faculty or administrators, but that these calls were left up to the UL System. That system’s Pres. Randy Moffett said he thought Tucker correct in his assessment and no plans were in place to eliminate personnel, but that if position eliminations occurred there would be costs. Leger said this needed to be kept in mind.

He also asked about facilities. Tucker said they should be used, just reallocated such as Delgado Community College assuming control of them, which carried almost no costs. Leger asked about continuing nonfunctional assets and what would happen to any dollars for their repair. Rainwater said these dollars were assigned to buildings regardless of ownership. Leger also expressed frustration that software would have to standardized, a problem not just in this effort, but across all universities. He asked about source of transition funds. Purcell said there were federal block grants funds that could fund much of it that have been used in similar ways for other projects.

Rep. Pat Smith argued that the witnesses must agree that HBCU funds would be lost and that they disagreed with the estimation of some costs. Tucker said the former was not the case, and Purcell said in his experience, with the latter those costs were too high. Smith also asked whether costs were underestimated because of the dissimilar nature of the institutions, but Purcell did not think so. Tucker clarified the timeline was first to have the schools go into ULS, then the merger. Smith also disputed whether costs of software would not be higher. Purcell also noted while grant monies might be redirected, they should not be lost. Smith wondered about any costs of standardizing health care systems; Rainwater thought they should be minimal. Smith remarked that all of these costs better be, because if this went through and Rainwater wanted more money later, she would try to stop him, and she thought costs were way underestimated to ensure passage. Tucker entirely disagreed and said if anything, the fiscal note probably overestimated, but would be in the ballpark.

A trio of Southern University System employees testified with a bunch of cautionary anecdotal quotes that, in their estimation, suggested expenses may be higher. They also wondered whether a merged institution would be eligible for low cost loans for housing and other federal funds in the millions of dollars. They thought software conversions also would cost in the millions. They also claimed new building would have to happen, costs in the tens of millions of dollars.

Rep. Patrick Williams asked whether these estimates had been incorporated into the fiscal note. They replied they had and agreed with it that some things could not be estimated. He asked about the impact of withdrawal from the SU System, and they noted per campus costs would increase. Smith then asked this of an LSU System representative who agreed there were a lot of unknowns.

Tucker closed by saying the bill presented a best practices approach that held costs down, that the note overestimated them, and questioned the testimony of the SUS people by saying they were not starting from scratch. Fannin moved for favorable passage, but a substitute motion by Rep. Charmaine Stiaes was to defer. That was defeated 5-16, and then on Fannin’s motion it succeeded 17-4 after Williams mistakenly had voted “yes.”

I thought that was the first thing you learned in law school.
Tucker, when Leger admitted that he didn’t know the answer to a question, with Tucker noting one should never ask questions that you didn’t already know the answer to.

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