UPDATED: Ky. Supreme Court rules Gov. Bevin overstepped his authority with college and university funding cuts

09/22/2016 11:06 AM

UPDATED The Kentucky Supreme Court has ruled in a 5-2 decision that Gov. Matt Bevin exceeded his authority in ordering the state’s public colleges’ and universities’ fourth-quarter funding allotments cut last fiscal year.

The high court ruling, released Thursday, reverses Franklin Circuit Judge Thomas Wingate’s earlier ruling in the case that Bevin acted within his authority in ordering the reductions, which total $18 million.

“The Governor’s reduction of the allotments of the Universities in this case exceeded his statutory authority to revise allotments under KRS 48.620(1) and his authority to withhold allotments under KRS 45.253(4),” the majority opinion reads.

“Whatever authority he might otherwise have to require a budget unit not to spend appropriated funds does not extend to Universities, which the legislature has made independent bodies politic with their own expenditures.”

The majority opinion in the case was that Attorney General Andy Beshear had standing to challenge the governor’s use of executive powers in cutting Kentucky’s public colleges and universities by 4.5 percent during the fourth quarter of the fiscal year.

However, the Supreme Court found that state Reps. Jim Wayne, Mary Lou Marzian and Darryl Owens, all of whom tried to intervene in the case alongside Beshear, did not have standing to challenge the constitutionality of Bevin’s executive order.

The court did find that “(t)here is no question that the Governor has the authority to make budget reductions in limited circumstances.”

“Specifically where there is a budget shortfall of 5% or less, the General Assembly has authorized the Governor (and the heads of the other branches of government) to reduce appropriations under a legislatively prescribed budget reduction plan,” the majority wrote in their opinion.

Although, the case was framed as a constitutional question, the justices found that the statutes controlling the budgeting process were the key factor in interpreting the case.

Two justices dissented with the majority opinion in the case.

During a Capitol news conference Thursday, Beshear said the ruling shows that nobody, including the governor, “is above the law.” He said Bevin has 20 days to request a rehearing before the high court.

Although the case has been remanded back to Franklin Circuit Court, Beshear called on the governor to immediately release the $18 million Wingate had ordered held in abeyance until the matter was settled.

“As the court stated, it is my job as attorney general to vindicate the public rights of the citizens of the commonwealth,” Beshear said. “It’s what I did, and it’s what I’m going to continue to do.”

The Democratic attorney general also said he hoped to see the Republican governor “end the name-calling and the nasty press releases” so they could forge a working relationship on other issues.

Amanda Stamper, Bevin’s spokeswoman, said the governor’s office is “disappointed in the Court’s decision today and strongly disagree with its reasoning.”

“The Attorney General clearly does not understand the severity of the pension problem which became the nation’s worst funded plan under the watch of his father’s administration,” Stamper said in a statement.

“Today’s ruling only affects $18 million of the universities’ overall budgets which is 0.0027 of their annual $6.6 billion expenditures,” Stamper continued. “Nonetheless, we have to be vigilant about every taxpayer dollar spent if we are going to solve our pension crisis.”

Stamper added that the public colleges and universities in the state should have a stake in helping out the state’s $35 billion underfunded pension liability.

“Gov. Bevin recognizes that preserving our retirement systems for state workers and retirees is both a legal and moral obligation,” she said. “We remain determined to fix Kentucky’s pension crisis, no matter the opposition. This administration will continue to use every available tool to solve our pressing financial problem.”

House Speaker Greg Stumbo, D-Prestonsburg, predicted that the Supreme Court would rule against Bevin in other lawsuits working their way through the legal system and said the high court’s decision “strongly re-confirms the legislature’s spending authority as the constitution’s framers intended, and it gives our public postsecondary schools and our college students the money they should have had all along.”

“This case really wasn’t about winning or losing,” Stumbo said in a statement. “It was about clarifying the law, and I think the Supreme Court made the right decision according to law.”

Senate President Robert Stivers’ office did not immediately return a request for comment.

Beshear shares Stumbo’s view that the Supreme Court will rule against Bevin again, at least in his lawsuit against the governor’s reorganization of the University of Louisville’s board of trustees.

The five majority justices noted the independence granted to universities by the legislature, a signal to Beshear that his lawsuit challenging the UofL board overhaul will get a favorable ruling from the high court.

“I’m sure he (Franklin Circuit Judge Phillip Shepherd) will take a look at this opinion — we may provide it in a condensed form to him — and consider some of those rulings before he comes to his final decision,” Beshear said.

When asked whether he believes his fellow Democrats can score political points with the Supreme Court’s ruling in this year’s election cycle, Beshear demurred.

Democrats are clinging to a 53-47 majority in the state’s House of Representatives, which hasn’t been in GOP hands in nearly a century.

“I think that today is a win for the Constitution,” Beshear said. “I think today is a win for Kentucky law. I think today is a win for students and their families as well as the faculty. In the end, this ruling is all about everyone, including the governor being bound by the law.”

Universities that responded to requests for comment seemed pleased to have back the $18 million collectively yanked from their budgets last fiscal year as well as legal clarity on the subject.

Eric Monday, executive vice president for finance and administration at the University of Kentucky, said Bevin’s cuts had been hard to manage, and university leaders already knew how they would be spending the dollars returning to UK.

“Mid-year reductions to our budget are extremely difficult to manage. The Supreme Court’s ruling today provides all the state’s universities a greater sense of certainty in our budget planning process as we all move forward,” Monday said.

“The funds that will be returned to the University of Kentucky, about $5.6 million, will be included in our focus on student success initiatives, particularly in the areas of retention and graduation rates.”

UofL also issued a statement saying they would be working with the dollars approved by the legislature and governor, but they said it’s important to know exactly how much money they’ll have to spend.

“However, it is important for our university to plan ahead and not have unexpected cuts in our funding,” the statement from UofL reads.

“This ruling gives state universities some measure of stability in planning and funding. We expect to put the $2.78 million from last spring’s cut back into our operating budget to fund student success initiatives.”

Murray State University, which had $960,500 cut from its fourth-quarter allotment last fiscal year, said in a statement that it would use the funds, if released, “to advance the rigor, relevance and excellence of our academic programs for the benefit of our students.”

Bob Skipper, spokesman for Western Kentucky University, said the ruling will allow the school to replenish its reserve funds, from which it drew $1.5 million to make up the fourth-quarter budget shortfall.

Beth Patrick, vice president for administration and fiscal services and chief financial officer at Morehead State University, welcomed the return of $866,800 to the college’s coffers.

“The mid-year reductions complicated an already difficult budget situation given current economic conditions, increased fixed costs, and changing demographics of our region,” Patrick said in a statement. “MSU will be thoughtful, strategic stewards of the these funds as we continue to focus on academic excellence and student success.”

Eastern Kentucky University, set to get nearly $1.4 million, said Thursday’s ruling “adds certainty to the budgeting process and allows us to better plan for meeting the needs of our current and future students.”

“This adjustment to the 2015-16 budget was bridged through contingency funds, and EKU’s intention is to return these funds to our contingency,” the university said in a statement.

EKU will continue to look at ways to address recurring budget needs without sacrificing our mission to provide a quality education and student experience for the nearly 17,000 students we serve. The Commonwealth as a whole benefits from state support of our public institutions.”

A spokesman for the Kentucky Community and Technical College System, which will receive $3.8 million, said the 16-college network is still evaluating the ruling while a spokeswoman for Northern Kentucky University, with $970,800 coming its way, said the institution had no comment on the Supreme Court’s decision.

Read the full opinion here.

Reporting by Pure Politics Managing Editor Nick Storm and political reporter Kevin Wheatley


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