The Debate About The SAVE Fund Is Stupid, And Everybody Is At Fault

Earlier today, I said that good people don’t generally get into politics and that politics usually does a lot more harm than good to people’s lives.

A good example of that statement in action is the dramatic idiocy going on at the state legislature over SB 284, the bill that would raise a $1,500 student fee from every kid at one of Louisiana’s public universities but wipe it out with a tax credit paid for by the tax hikes the legislators have already passed through the House.

This legerdemain is necessary because otherwise our governor will not be able to say he fulfilled his pledge not to raise taxes. You can raise taxes to set up an offsetting tax credit; that’s “tax-neutral,” apparently.

Understand that student fees at LSU and Southeastern and other public universities are prices, not taxes. You don’t have to pay those fees; just don’t attend those colleges. A price increase isn’t a tax if you can choose not to pay it by not accessing the product or service the price increase is attached to.

And therefore, if the fee increase were to come into being in order to fund higher education in the state that is not an objectionable thing from a philosophical standpoint. College students are the most logical people to bear the costs of college; if you can’t afford to go to LSU then you should probably go to Baton Rouge Community College, which is cheaper, and learn a skill that will get you a good-paying job. If at some point in the future you have more money and can afford to go to LSU, do that.

Good policy would be for legislators to make the changes necessary so that it’s easier to transfer credits from Baton Rouge Community College to LSU, so that the kids whose financial or other circumstances make it more sensible to attend a community college can go for a four-year degree later. That would serve to increase the number of people in Louisiana who have higher education credentials – whether associate’s degrees or bachelor’s degrees.

Nobody is working on that, of course. Our legislature isn’t particularly interested in solving problems for the long haul. What they’re interested in is finding ways to raise taxes without having to admit they’re raising them. And so crafting a price increase for higher ed that is paid for by a subsidy for higher ed paid for by a tax increase – instead of just doing the price increase – is how they want to operate.

Maybe they’ll actually pass this. Right now Joel Robideaux, the House Ways and Means Chairman who is leaving the legislature after this year and wants to leave a legacy of tax increases, is holding the bill creating the SAVE fund hostage to his precious tax bills passing the Senate. The whole thing might well blow up over the battle of egos. It really doesn’t matter; all of these ideas are stupid and will have to be reformed by better leaders at some point in the future when we have such people. If we ever do.

This year, with a $1.6 billion budget deficit staring them in the face, it was time for the leges to throw open the gates and come up with big solutions that would make permanent fixes to Louisiana’s budget problems. And as we’ve discussed often here at the Hayride, the number one reason for that $1.6 billion deficit, and the billion-dollar deficits stretching out into the future as far as the eye can see, is pension costs.

Louisiana is spending a billion dollars more a year on servicing those pensions than it was spending a decade ago. And that problem isn’t going away. Louisiana’s pension funds have massive unfunded accrued liabilities, and the costs of maintaining them is bankrupting the state.

This should have been addressed years ago. Gov. Jindal sought to address it in 2012, the same year he passed his education reform package. There was zero will in the legislature to do so.

And there is zero will in the legislature to do it this year.

So instead of doing something about the structural deficiencies in Louisiana’s public fisc which will have legislators scrambling to find money every year to patch over the budget problems, they just come up with gimmicks like the SAVE fund.

A more honest way to go about things would be to say that you’re going to impose that $1,500 student fee on the 220,000 college students in the state, which if you did so would still leave the average cost of attendance at Louisiana public universities below the national average (particularly once TOPS is factored in), and in so doing move more of the state’s education funding into the marketplace and out of the state’s general fund. Or better yet, get the state legislature completely out of the business of setting prices at the state’s public universities and let the universities figure out how best to price their product.

That would be an honest, and sustainable, way to approach things. If the prices at Louisiana’s four-year schools rose too high for some of those college kids to attend, they’d go to the community colleges instead and learn job skills which would get them into the productive workforce. They’d cost the state less and they’d be taxpayers faster. And the structure of Louisiana’s higher education system would have to improve to satisfy the needs of the market – when there are no kids available to attend SUNO, then SUNO either finds a way to reposition itself in the market or it dies. Eventually, we’d have a higher education system we can sustain through the general fund and which is forced by its customers to provide the education they need to be successful.

Instead, though, there is no will to impose that kind of pain on so many people in an election year – so we craft a fiction called the SAVE fund. We’re going to impose a phantom, not real, student fee that is washed out by a tax credit paid for from tax increases on people who aren’t directly benefiting from the presence of an overbuilt and too-expensive higher education system.

It’s exactly the same charade the state has built with the inventory tax and the credit nullifying it that the state can’t afford.

It takes cowards and dunces to legislate this way. That’s what Louisiana has, along with a governor who has given up trying to reform the state’s broken system.



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