Gov. Christie moves to slash fringe benefits for Rutgers employees
The annual battle over the Rutgers budget has begun with a state budget proposal from Gov. Chris Christie that would cut direct operating support to fund fringe benefits for employees.
Fringe benefits, as defined by the Internal Revenue Service, can take the form of a company car, cafeteria plans, health insurance or other forms of "pay for a performance of services."
Christie’s budget proposal –– which will go to the New Jersey legislature for review and revision –– reduces direct funding to colleges across the state, said Peter McDonough Jr., senior vice president for external affairs.
“The aid to senior public institutions … is the same as last year, but the mix is different,” he said.
Rutgers’ funding from the state last year totaled $811 million, McDonough said. Of that, $409 million was direct aid and $402 million went toward fringe benefits.
Total funding remains at $811 million this year, but only $394 million goes to direct aid, representing a decrease of roughly 4 percent.
Fringe benefits include pensions, health insurance and other benefits for faculty, staff and other Rutgers employees, McDonough said. Direct operating aid is the University’s disposable income.
These changes are the same across all of higher education, McDonough said. Total funding for higher education comes to $2.225 billion, an increase of $19 million, but that figure includes an increase in tuition aid grants for students.
Other public research institutions would experience a 6 percent direct aid reduction under Christie’s plan, and non-research state universities would experience a 9 percent reduction.
“Relatively speaking, our reduction of $15 million –– It’s a challenge, but it’s not cast in stone,” he said.
State funding forms about one-fifth of the University’s budget, McDonough said. The exact number depends on the Rutgers budget, which has not been released for the next academic year.
He emphasized that the budget was far from final. The state budget is typically passed in June, in time for the Board of Governors to pass the Rutgers budget in July. In the time before then, the legislature will debate and decide whether to keep or change Christie’s numbers.
University President Robert L. Barchi plans to testify to the legislature in April, McDonough said.
“Obviously, he will plead the case strongly for increased aid for higher education, to help keep tuition increases as affordable as possible,” he said.
Barchi would also point out ways in which Rutgers effectively uses its money with an update on the Big Ten integration and the needs of Rutgers-New Brunswick, -Newark and -Camden, he said.
“He will try to put together testimony as (completely and compellingly) as possible,” he said.
Many of the problems with higher education funding are the result of New Jersey’s pension system, McDonough said. Benefits have increased 2.5 to 3 percent in the past year, but the issue has more long-term implications.
The state pension system has not been fully funded since 2001, and has fallen under terrible deficit, he said. In addition, if a lower court decision is upheld, the government may be forced to increase contributions.
Both Christie and the legislature have offered reforms to address the costs and take the pressure off year-to-year payments, he said. That may make more money available for higher education.
“All colleges and universities wish that (the) proposal didn’t nick away at direct operating revenue,” he said. “We would like to try to preserve increases for grants to students while getting more aid.”
Student aid in the form of scholarships and grants would increase from $427 million to $443 million, according to Christie’s budget proposal.
Some individual grants have increased as well, McDonough said. For example, a one-time $10 million grant to the Cancer Institute of New Jersey would be extended to the next year.
Brian Cunningham, a School of Arts and Sciences senior, said he is concerned about the cost of Rutgers, since he is about to graduate with student loan debt.
While he found college to be a vital tool to get a leg up on his career, he is worried his salary as a police officer will be too low to support his loans.
“Most students don’t care about the costs until they see their first bill,” he said. “When you graduate high school, you just think you’ll go to college and deal with it later –– you think about the repercussions after the fact.”
He said he would be curious to know if students would be as likely to assume debt if they were to enter college in their 20s, rather than at 18.
Seth Ankrah, a School of Arts and Sciences sophomore, said the direct aid reduction may have a negative effect.
Still, he is concerned about where Rutgers' funding will come from.
“Does this mean increased tax dollars?” he said. “Unless it’s donated by Gov. Christie himself, probably.”
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