Rainy-day fund could provide stability for NU students and state of Nebraska
The state of Nebraska is clearly facing fiscal challenges. During these times, the Legislature is required to balance the budget by adding taxes, cutting spending or using other management tools. There are no easy choices.
Conservative states like ours generally focus on scaling back on spending. But that approach can cause significant disruption for education, where 80 percent of budgets are directed toward people. And when it comes to higher education, cuts in state funding often result in new taxes in the form of tuition increases for students and families, who are working hard to pay for a college degree.
Fortunately for Nebraskans, a conservative policy was adopted in the mid-1980s whereby, during profitable economic times, money is systematically placed in a “rainy-day fund.” The fund provides for fiscal restraint in good times and, in bad times, is available to fill the short-term gaps that result from lower revenue. It’s for all practical purposes a shock absorber to keep a steady flow of funds available for vital state functions and it allows us to smooth out the impact of the ups and downs that are part of the normal economic cycle.
In other words, Nebraska policymakers had the foresight to create a financial policy to save money for times of fiscal stress, when it’s needed.