Tennessee higher education officials breathed a collective sigh of relief Monday after Gov. Phil Bredesen said his budget will provide $470 million in stimulus aid to cash-strapped colleges.
"That is going to help us a heck of a lot," UTC Chancellor Roger Brown said.
The one-time federal education funding, doled out over the next three years, likely will prevent dramatic tuition increases and staff layoffs, officials said, but schools still must cut up to 25 percent of their budgets in the next two years.
More than $100 million will be put into higher education this year, which state Finance Commissioner David Goetz said "may really be a surprise" to college officials.
$58 million - Cut from high education in fiscal year 2009
$42 million - Taken back from higher education in August
$947.59 million - Amount given to Tennessee for federal fiscal stabilization funds
$775 million - Amount of those funds being put into education over the next three years.
FY 09 - $100 million
FY 10 - $185 million
FY 11 - $185 million
"I hope they don't run out and do something silly," Mr. Goetz said. "They need to be thinking about the endpoint in fiscal year 2012 and be intelligent, as I know they will be, to get to a recurring balance."
While the stimulus doesn't take higher education institutions off the hook, it does give schools time to make strategic decisions about tough cost-saving measures, said Charles Manning, chancellor of the Tennessee Board of Regents. Some of the money may be used for buyouts and early retirement options, he said.
"The stimulus provides us opportunity to where we don't have to terminate people, but we will have to reduce the number of employees we have," he said. "This provides a good cushion, but we can't sit on our hands."
The Board of Regents oversees Tennessee's 13 community colleges, six four-year universities, including the University of Memphis, and 26 technology centers.
Some of the money for the University of Tennessee at Chattanooga may be spent hiring part-time faculty, which could prevent the university from having to cut hundreds of class sections in the coming academic year, said Dr. Richard Brown, vice chancellor of finance and operations at UTC.
The funds also can be used to offset growing utility costs, Dr. Brown said.
"It is pretty exciting," he said.
Hank Dye, a spokesman for the UT system, refused to comment on how stimulus money would aid UT.
Yet with the injection of federal money, Dr. Manning said, college leaders will face a lot of pressure from state legislators to keep tuition increases low.
Gov. Phil Bredesen said Monday that the federal government wants stimulus dollars to be used to minimize tuition hikes.
"We're going to try to do that to help these students during this time. ... I think (higher education officials) should err at the moment on the side of keeping tuition down," he said.
The Tennessee Higher Education Commission has recommended a 5 percent tuition increase for community colleges, a 7 percent increase for schools such as UTC and a 9 percent increase for the University of Tennessee in Knoxville and the University of Memphis.
Earlier this month, some UT board members said those increases are not enough and called for double-digit tuition increases.
Some higher education officials said they feel stuck in a crosscurrent. State funding for higher education continues to fall and, at the same time, officials are being strongly encouraged to keep tuition increase to a minimum. The stimulus money helps calm the waters a bit, they said.
"(This money) will change the tone of tuition increases," Dr. Brown said. "We want to keep tuition as low as we can but reasonable."
Dr. Brown said he hopes stimulus aid will be used as a "stopgap until the state becomes healthy enough to continue to reinvest in higher education."
"One has to remain optimistic," he said.
Staff writer Andy Sher contributed to this story.