Without New Revenue, Louisiana College Aid, Medicaid Face Steep Cuts

Update, May 7: We’ve updated this post.

Louisiana faces a massive budget shortfall due to the legislature’s failure to replace some temporary taxes that will expire on June 30. Instead, state policymakers unveiled two proposals that would impose painful cuts on either of two critical programs — the state’s Medicaid program or TOPS, the state’s popular merit-based college aid program — ultimately pitting them against each other.

The first plan, from Governor John Bel Edwards and based on an earlier, lower revenue forecast, would make significant cuts to most state agencies and programs, including an 80 percent cut for the Taylor Opportunity Program for Students, or TOPS, whose current funding is $288 million. (The governor’s office pointed out that Governor Edwards is constitutionally obligated to present a balanced budget based on current revenue levels and that he does not support the plan). The second proposal, which the House recently passed, largely shields TOPS but slashes Medicaid by roughly $565 million, triggering the loss of well over $1 billion in matching funds from federal and other sources. Both proposals would put the burden of balancing Louisiana’s budget on low- and middle-income families.

Some 50,000 students count on TOPS to pay for college. It covers 100 percent of tuition at Louisiana public colleges for students with at least a 2.5 high school GPA and an ACT score of 20 or higher. Under current law, if the state fails to address its budget shortfall, all TOPS recipients would receive the same percent cut to their scholarship regardless of family income. If TOPS is cut, lawmakers should ensure that the most needy students can still get fully funded scholarships. TOPS is crucial for making college affordable for low- and middle-income families, and the financial uncertainty around it might lead some students to decide not to attend college entirely.

The House budget, meanwhile, shields TOPS from the brunt of these painful reductions, but at the expense of Medicaid. The vast majority of budget cuts would fall on Medicaid, endangering the lives of the 1.6 million Louisianans, including some 740,000 children, who depend on it for health care. In addition, removing what amounts to $1.8 billion from Louisiana’s health care industry could cost the state thousands of jobs in the first year alone by some estimates.

The gubernatorial and House budgets would impose painful cuts on proven programs that promote broadly shared prosperity, leaving families across the state wondering what their children might have to forgo next year: health care or higher education. Louisiana’s failure to quickly resolve its budget crisis is making it especially hard for low-income families to plan how to pay for household expenses. Under Louisiana’s rules, any revenue solution will require a special session, but even if the governor calls one in May, students likely won’t know how much they can expect in TOPS aid until June — well after they’ll need to make decisions about fall college plans.

Regardless of the details, a cuts-only approach to balancing the budget will hit Louisiana’s low- and moderate-income families the hardest. The legislature’s failure to raise revenue has given lawmakers two seemingly impossible choices, pitting critical programs against each other. In reality, lawmakers don’t have to decide between shuttering hospitals or denying students access to affordable higher education. They can and should replace the expiring taxes.