Higher Ed Cuts Likely to Reduce Virginia Budget Deficit, K-12 Spared

Virginia Governor Terry McAuliffe announced a state budget deal to help cover the $2.4 billion budget gap, which will spare K-12 education from cuts in state aid.

The deal, which offers a plan to reduce the state budget by $882 million while also reducing the $1.55 billion revenue shortfall, protects core government services such as health care and K-12 education, ensuring those priorities do not receive cuts to their budgets.

Virginia Education Association President Meg Gruber praised the agreement in a statement Monday. “The governor and legislative leaders understand that Virginia’s ability to build a strong, jobs-centered economy — even through tough times — depends on our commitment to public education,” Gruber said.

The proposed cuts also involve less in reductions from higher education than initially thought.  Current cuts include $192 million to state agencies, $60 million to aid for local governments and $90 million to higher education over the next two years.

The cuts were left open-ended in order to offer colleges the flexibility to determine their own plans.  They can choose to either cut or repay the state aid.  Plans are due by the end of the week.

Each institution received a different amount cut from their budget, amounting to about 3% per year.  The reductions were created to go easiest on smaller universities, according to state legislators.

Legislation encourages the schools to reach their budget goals through “productivity and operating efficiencies” rather than raising tuition.

McAuliffe plans on using the state’s rainy day fund to make up the difference over the next two years.  There is currently $705 million in that fund.

The governor praised lawmakers for working together to “send a signal to Wall Street” and preserve Virginia’s credit rating, which allows the state to borrow money at lower interest rates.

“Virginia stands at an economic crossroads and the decisions we make today will affect the Commonwealth for years to come,” McAuliffe said.  “I am pleased we were able to come together in a bipartisan way and make the tough decisions that will help ensure Virginia remains fiscally strong and provide much-needed certainty to the bond rating agencies on Wall Street.”

The cuts to state agencies represent only a 4% reduction, which according to Virginia Governmental Employees Association spokeswoman Johnna Cossaboon, the amount “greatly lowers the potential for state employee job losses.”

The new budget cuts will be voted on later this week during the Medicaid-centric special session of the legislature.

“We have once again proven just how big a difference 90 miles can make. While Washington continues to kick the can down the road, Virginia is demonstrating that elected leaders can work together, make tough decisions, and find ways for government to live within its means,” House Speaker William Howell (R-Stafford) said in a written statement.