Louisiana State University eyes bankruptcy as deep budget slash looms

Louisiana State University officials have begun the process of filing for bankruptcy amid deep cuts in state funding for the school. The filing is a tactic that aims to ensure LSU’s survival but could mean canceling academic programs, laying off tenured teachers and raising tuition.

The state legislature is still discussing the cuts to higher education and has 39 days left to decide on the extent of the reductions. But current proposals by lawmakers would see an 82 percent decrease in funding, according to LSU’s student newspaper, The Reveille. The university’s plan for cutting costs is also known as “financial exigency,” the business equivalent of filing personal bankruptcy.

“Based on the current status of the budget debate, we have decided to begin contingency planning for exigency as many of our campuses may be impacted, as well as other campuses across the state. We know the worst-case scenario, we know the timeframe and we know what’s at stake,” LSU President F. King Alexander said in an email circulated to students on Wednesday, the paper reported.

In February, The Associated Press reported that internal LSU documents described major cuts to the school’s academic programs as a consequence of the drop in funding. The state is trying to fill a $1.6 billion budget shortfall, and for LSU 1,400 jobs, 1,500 courses, 28 academic programs and even the accreditation of several campuses would all be on the chopping block.

Louisiana Gov. Bobby Jindal's state budget proposal includes a mix of cuts and uncertain financing for higher education in the fiscal year that begins July 1, to help close the shortfall. In the worst-case scenario, colleges face a reduction of up to $600 million next year.

Meanwhile, in state capital Baton Rouge, lawmakers on Wednesday considered ways of letting public colleges raise their own tuition and fee rates, hoping to help campuses threatened with hefty budget cuts from the state.

The state House and Senate education committees approved without objection several bills that would remove the Louisiana Legislature from the process of setting tuition and fees, leaving those decisions instead to the college system management boards.

The proposals in the statehouse bills vary. Some apply only to graduate programs or only to fees. One requires a portion of any fee hikes to be set aside for needs-based aid for students.

"Money is extinct. It's not even there at the campuses. But all of us know how important our universities, our community and technical college system are to the future of our state," said Rep. Chris Broadwater, R-Hammond, sponsor of a bill to let schools raise fees without legislative approval.

He described the bill as "my proposal to provide them a reasonable lifeline."

In the House committee, several lawmakers expressed worries about the impact of continued tuition and fee increases on students and their families, and whether they could price some students out entirely.

"When our kids go to college this fall, they're going to pay 90 percent more than they did in 2008 for tuition," said Rep. John Bel Edwards, D-Amite.

Despite his concerns, Edwards let the bill go forward for discussion on the House floor.

Al Jazeera and The Associated Press