February 11, 2013

Testimony: State Budget for Higher Education Funding

Source: NYSUT Legislation

Testimony of Andrew Pallotta, Executive Vice President, New York State United Teachers, to the Senate Finance Committee, John DeFrancisco, Chair, and Assembly Ways and Means Committee, Herman D. Farrell, Jr., Chair, on the Proposed 2013-14 Executive Budget for Higher Education, February 11, 2013.

Senator DeFrancisco, Assemblyman Farrell, honorable members of the Legislature and distinguished staff, I am Andrew Pallotta, Executive Vice President of New York State United Teachers (NYSUT). NYSUT represents more than 600,000 teachers, school-related professionals, academic and professional faculty in higher education, professionals in education, in health care and retirees statewide.

Thank you for the opportunity to testify today on the proposed 2013-14 Executive Budget for Higher Education. My testimony represents the concerns of over 75,000 faculty and professional staff who work in colleges and universities across New York State. These include the members of United University Professions at the State University of New York, the Professional Staff Congress of the City University of New York and the faculty and staff at nearly all the SUNY community colleges in this state.

I am joined today by Dr. Phillip Smith, President of United University Professions (UUP), and by Dr. Steven London, First Vice President of the Professional Staff Congress (PSC). You will hear from both Dr. Smith and Dr. London in a few moments.

NYSUT has many concerns regarding the Executive Budget proposal for Higher Education. The 2013-14 Executive Budget essentially holds year-over-year funding flat for CUNY, the community colleges and nearly all of SUNY's campuses. SUNY's Health Science Centers are cut by $28 million. Our public higher education institutions have been cut by over $1.7 billion since 2008. Flat funding for public higher education is not a recipe for student success and the state needs to make a greater financial commitment to public higher education.

SUNY and CUNY Four-Year Campuses

First, I would like to talk about our SUNY and CUNY four-year campuses. If the Executive Budget level of funding is adopted, it will be the second year in a row of flat funding to these campuses after suffering years of major cuts. The level of state support, and the percentage of state support that makes up SUNY's and CUNY's total operating budgets, has fallen significantly over time. For SUNY, state support in 2000-01 constituted 60 percent of SUNY's operating budget with 40 percent coming from other retained outside revenues. By 2011-12, we saw a complete turn of 180 degrees with only 40 percent SUNY's operating budget coming from state support and 60 percent coming from other revenues.

For CUNY, the story is not much better. In 2000-01, state support constituted 58 percent of its total operating budget with 38 percent coming from other revenues and three percent coming from the city of New York. By 2011-12, state support dropped to only 51 percent with 47 percent coming from other revenues and three percent from the city of New York.

At SUNY and CUNY four-year institutions, the state's focus in recent years has been all about the role these institutions can play in economic development. While NYSUT believes that SUNY and CUNY have a role to play here, it should not come at the expense of its primary mission which is teaching and learning. It's time to get back to focusing on academics. You heard me raise these points last year. Yet, once again, there is no increased funding for the classroom and programs where students need it the most. Instead, we have another round of proposed 2020 challenge grants to essentially build buildings that are not fully paid for by the state. We know that in relative terms, a small amount of funding goes a long way in higher education. We ask that you make a commitment to begin replacing state funding to our SUNY and CUNY four-year campuses that has been lost in recent years.

Let me turn to the issue of full-time faculty. The declining cadre of full-time faculty has long been a concern for us and for students. Every year, NYSUT has espoused the value of full-time faculty and its direct correlation to quality for our students' education. In 2011, the enactment of the NY-SUNY 2020 legislation authorized tuition increases at SUNY and CUNY for five years. It was understood that the revenue derived from these tuition increases would be used to hire more full-time faculty and improve student academic programs and services. Yet, to date we have not seen any significant improvement in this area. We would like to know, where are the faculty? Let's be clear, we are not talking about Research Foundation faculty who do not teach our students in the classroom. Students deserve to get more when they pay more.

This leads me to another issue that is very troubling to us and our affiliate, UUP, which is SUNY's new state resource allocation model. Generally speaking, the model that we have seen (dated 12/5/12) heavily weighs graduate student enrollment as a factor in the allocation of state aid to SUNY's state-operated campuses. Therefore, it cuts state support from the comprehensive and technology campuses and increases funding to the university centers. According to the latest data on SUNY's website, in the 2008-09 academic year, a total of 89,645 degrees were awarded by SUNY of which, 75,440 or 84 percent were undergraduate degrees and just 16 percent were graduate degrees. Moreover, currently, only 29 percent of their academic program offerings are graduate programs. (Source: SUNY Fast Facts)

Under SUNY's allocation model, ten of the thirteen comprehensive campuses (Brockport, Buffalo State, Cortland, Empire State, Fredonia, Geneseo, Old Westbury, Oneonta, Owsego, and Potsdam) and five of the eight technology campuses (Alfred, Cobleskill, Delhi, Morrisville, SUNYIT) will be cut. The largest cut to the comprehensive colleges is 22 percent (Potsdam) and the largest cut to the technology colleges is 27 percent (SUNYIT).

In addition, the Albany university center, ESF, Optometry and Downstate Medical Center are all cut. Downstate Medical Center is cut by almost seven percent. In our view, a student attending a comprehensive or technology campus is no less important than a student attending a university center. Why should that student receive fewer state resources at his or her campus for their college education? Especially when you consider that these students are paying the same tuition rate as those attending university centers and that tuition is going up every year. We respectfully requested that SUNY re-think this approach and we are heartened to learn that they have decided not to implement this model this year. We hope that any model that is finally implemented will base state funding on campus needs. You will hear more from Dr. Smith on this topic.

SUNY Hospitals

I would now like to talk about an extremely important and critical issue for us which is, the SUNY hospitals. State support for SUNY's hospitals was created more than 20 years ago to recognize that New York has a responsibility to at least partially compensate the hospitals for their service to indigent populations.

In recent years, the state has consistently reduced funding to SUNY's hospitals. In fact, since 2008, state support to these hospitals has been cut by almost 50 percent (2008 funding = $128 million, 2013-14 Executive Budget proposed funding = $60 million). In 2010, the Executive Budget completely eliminated all state support to SUNY's hospitals. Thanks to the Legislature, $60 million was restored. Last year, you again added another $28 million unfortunately, however, this year's Executive Budget cuts that funding. This proposed cut goes against the SUNY maintenance of effort provision contained in the recently enacted NY-SUNY 2020 legislation.

Moreover, SUNY hospitals in general, are unfairly treated by the state when compared to other state entities. In fact, the SUNY hospitals are the only state entities that must pay their own increases in collective bargaining and fringe benefit costs as well as their own debt service on capital projects. All other state agencies or entities have these mandatory costs paid by the state through General State Charges. Why are the SUNY hospitals treated differently? This unfair treatment has contributed to their precarious financial situation. It's wrong and must be changed.

SUNY hospitals provide unique life-saving services not typically provided in private hospitals. These include burn units, trauma care units and poison control. They also serve as a safety net for low-income communities, the uninsured and the underinsured. These patients rely on these hospitals for health care.

The simple truth is that our SUNY hospitals cannot carry out their critical public health care and academic missions on this level of state funding. The state needs to make a financial commitment to these hospitals to ensure their survival. These hospitals are in serious financial jeopardy especially, SUNY Downstate.

I urge all of you to do whatever it takes to keep the University Hospital of Brooklyn (Downstate) from closing. I ask that you reject any notion that Downstate be privatized and urge you to provide state resources to keep Downstate a full-service state-operated public hospital.

SUNY Downstate is one of the nation's leading urban medical centers. SUNY Downstate comprises a College of Medicine, College of Health Related Professions, College of Nursing, School of Graduate Studies, School of Public Health, and University Hospital of Brooklyn.

During Superstorm Sandy, SUNY Downstate was there for New York City, opening its doors to patients from two private hospitals that were evacuated due to the storm. The health care professionals at Downstate answered the call by working around the clock to provide those evacuated patients with first-rate care.

Notwithstanding its tremendous contribution to the citizens of Brooklyn, New York City, and the state, Downstate is in serious financial jeopardy. An audit released on January 17, 2013, by state Comptroller Thomas P. DiNapoli found that poor financial decisions by management greatly contributed to the hospital's dire financial situation. SUNY Downstate is facing insolvency and may run out of money by May unless drastic steps are taken. Increased state funding is needed now for this critical institution to survive.

The state should not walk away from its financial responsibility and commitment to Downstate and its public health care and academic mission. The fact is, however, that the state has not adequately funded this mission. This mission states that the state university shall provide the people of New York with, "educational and research programs of the highest quality," and this includes strengthening "its educational and research programs in the health sciences through the provision of high quality health care at its hospitals, clinics, and related programs." The closure or privatization recommendations of Downstate and the consistent under-funding of this institution by the state are contradictory to this mission.

In addition, the Executive Budget proposes Article VII legislation (S.2606/A.3006 - Part E) which would establish a pilot program to restructure health care delivery systems. The proposal authorizes the establishment of two business corporations through the public health and planning council - one of which shall be an operator of a hospital or hospitals in Brooklyn. The business corporation is also required to affiliate with an academic medical institution (Presumably Downstate). If this legislation is adopted, it would set the stage for the closure, or at the very least, the privatization of SUNY Downstate. This cannot be allowed to happen. We strongly urge you to reject this proposal.

I submit that closing Downstate is not in the best interest of the state and will have tremendous negative consequences on the citizens of central Brooklyn. If the hospital is closed or restructured and privatized, unique, life-saving critical health care services not readily available at other hospitals will be jeopardized, first-rate medical care to the citizens of central Brooklyn - regardless of their ability to pay - will be compromised, and graduate medical education and cutting-edge research will be negatively impacted.

Each day, thousands of people in Brooklyn depend on Downstate for medical care and specialized treatment. Many of these patients are indigent. As a state-operated public hospital, Downstate accepts all patients, regardless of their ability to pay for services. Families with no health insurance or those that are underinsured go to Downstate for care. If this hospital is closed or privatized, where will these families turn? It is not assured that these patients will be able to go to another private hospital in Brooklyn as these hospitals routinely send these same patients to Downstate.

NYSUT is also very concerned about Downstate's academic mission. Without a closely connected hospital, you are not going to have a quality medical school. SUNY Downstate's medical school is a leader in medical education and research but is also heavily subsidized by the hospital. Without the financial support of the hospital, the medical school simply could not operate. We are talking about a medical school that serves the most diverse student population in the state. Where 55 percent of its students are minorities and 75 percent of its students receive financial aid. Where 41 percent of its students are Brooklyn residents and 70 percent are New York City residents. The Downstate medical school produces more New York City physicians than any other medical school and we all know about the growing shortage of physicians in this state and in this nation. More than 80 percent of Downstate medical school graduates stay to practice in this state. It was also the first institution to open a school of public health in New York City and it ranks higher than Johns Hopkins, NYU, Yale, Cornell, and UCSF in the number of graduates who hold faculty appointments at American Medical schools. We cannot afford to lose this fantastic medical school by closing SUNY Downstate. The two go hand-in-hand. (Medical School Statistics Source - SUNY Downstate Medical Center)

Finally, NYSUT is also troubled over the economic fallout that will occur if Downstate is closed or down-sized. More than half of Downstate's 8,000 workers live in Brooklyn and Downstate is the borough's fourth-largest employer. Downstate is an economic engine for Brooklyn and for the state. The medical center generates more than $1.3 billion yearly for the state's economy. Every dollar of state funding to Downstate returns $12 to the local economy.

These job losses would devastate Brooklyn's already weak economy. Reducing employment in this economically distressed area-an area that needs more jobs, not fewer jobs, is counterproductive and wrong. Brooklyn already suffers from one of the highest unemployment rates in the state as well as a high foreclosure rate. The unemployment rate is 9.5 percent which is the second highest rate in the city of New York and the fourth highest county rate in the state. (Source: NYS Department of Labor)

Brooklyn deserves the best health care available. Please keep Downstate open as a state-operated public hospital to save vital health care services and jobs. Our patients and employees are depending on you.

Community Colleges

I would now like to turn my attention our community colleges, which are a vital part of our public higher education system. These institutions are the access point, the gateway to higher education for hundreds of thousands of people in this state. We appreciate that the Legislature provided an increase in state base aid of $150 per full-time equivalent (FTE) student last year, which raised the level of base aid funding to $2,272 per FTE student. Unfortunately, we are still $403 lower than the 2008 state funding level of $2,675. This $403 drop in state base aid per FTE student has had a negative impact on the academic programs and services that are offered by community colleges. At the same time, local county government finances are facing constraints in part due to the two percent property tax cap. This has resulted in a decrease in the local funding share for many local sponsors which has further constrained community college operating budgets. It also has meant spikes in student tuition which have unfortunately priced some students out of a college education.

State base aid per FTE student is now lower than the level in 2002-03 ($2,300 per FTE) and lower than the level in 1971-72 ($3,521 per FTE) when adjusted for inflation. As the chart below illustrates, on average, the state's contribution per FTE student for the 2012-13 state fiscal year (latest available data) as a percentage of operating costs for SUNY community college campuses is 25.6 percent. The student share is 43.9 percent and the local share is 30.5 percent.

For CUNY community colleges, the state share for 2012-13 on average is 26 percent with the local share being 33.9 percent and the student share is 40.1 percent (Does not include all student fees). Students are funding over 40 percent of the operating costs of these campuses, which is the direct opposite of the intent of the education law. Moreover, according to the College Board, New York is the sixth most expensive state in the nation for community college tuition and fees.

suny cuny budget
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Again, we recognize the increase provided last year however, that increase does not move the percentage of the state share enough forcing campuses to over-rely on student tuition and fees to meet operating costs. NYSUT requests that you increase community college base aid in this year's budget as we are still $403 per FTE lower in state base aid than the level in 2008. Our short-term goal is to get back to that level. SUNY and CUNY have requested a $260 per FTE increase and we hope that at least that amount of funding can be restored.

Another area of great concern we have for our community colleges is the proposed Next Generation NY Job Linkage Program (Article VII ELFA - Part D). This legislation will impact our campuses by linking the current state base aid amount of $2,272 per FTE to student performance in credit-bearing certificates, associate of occupational studies degrees, or associate of applied science degrees. If students fail to meet the requirements as laid out by the Executive Budget, community colleges will lose both their share of the $5 million performance based incentive allocation and the $2,272 of community college base aid for each student. NYSUT strongly opposes this legislation.

As I have pointed out already, the state is currently far from living up to its statutory obligation of funding 40 percent of the net operating costs for these campuses. If you want to talk about performance, let's look at the state. The state has met its statutory obligation only once in over 40 years. That's what I would call, poor performance. The state should concentrate on improving its performance by living up to its obligations before it ties community college funding to performance. We also strongly oppose the notion that the state is going to decide what jobs students should be directed towards. We strongly urge you to reject this proposal.

Conclusion

In conclusion, we need to make public higher education a priority in this state. That begins with a commitment from the state to begin to provide more funding to start replacing what we have lost in recent years. There are many revenue raising measures that we have already presented to this joint fiscal committee in our K-12 testimony such as closing certain corporate loopholes that would generate over one billion dollars in new revenue without raising tax rates. A portion of this is revenue could be used for SUNY, CUNY and the community colleges. It could also be used to provide a life-line to SUNY Downstate to enable it to continue to carry out its critical public health care and academic mission.

Again, thank you for the opportunity to testify today. I will now turn it over to Dr. Smith who will be followed by Dr. London.