(The Center Square) — Louisiana colleges and public school systems will miss out on hundreds of millions in projected savings after voters rejected a constitutional amendment Saturday that would have used education trust fund money to pay down retirement debt.
The savings would have come as several public Louisiana universities face significant budget deficits and worsening inflation.
When speaking to lawmakers in March, Commissioner of Higher Education Kim Hunter Reed said that the Board of Regents’ “number one request” was for colleges to keep the savings generated by paying down the retirement debt.
The proposal would have eliminated the Louisiana Education Quality Trust Fund, the Louisiana Quality Education Support Fund and the Education Excellence Fund. Their balances would have been used to pay off about $2 billion in debt owed by the Teachers’ Retirement System of Louisiana.
Hunter Reed said that colleges would save more than $70 million because colleges and universities would no longer have had to make certain payments toward teacher retirement debt.
The Board of Regents, which houses Hunter Reed’s office, said its budget plan “first prioritizes” retiring state debt because of the relief it would provide higher education budgets. The board said Louisiana colleges and universities were projected to pay about $245 million in unfunded accrued liability payments to TRSL and the Louisiana State Employees’ Retirement System in fiscal year 2025-26.
Rep. Jack McFarland previously told The Center Square he expected those savings to help public universities close existing deficits. He added that certain funding requests weren’t included in the currently pending state budget because of the expected savings.
The Board of Regents said that institutions could use the savings for student success efforts, academic programs, technology and equipment upgrades, campus safety and other needs.
Senate President Cameron Henry told reporters last week that he was not aware of how the universities planned to use their savings, but added that “they can always find way to spend money.”
“The higher education systems wouldn’t have a mandated use for the savings they receive, though likely they’d want to at least cover the cost of programs they have financed annually with the investment earnings from the trust funds,” the Louisiana Public Affairs Research Council wrote in a recent report.
The Louisiana Federation of Teachers, citing the Teachers’ Retirement System of Louisiana, said the amendment was projected to reduce annual employer retirement contributions by about $271 million statewide, including about $199 million for K-12 systems.
