Tom Loftus

@TomLoftus_CJ

FRANKFORT, Ky. - In a ruling that has as much impact on state politics as the state purse, the Kentucky Supreme Court ruled Thursday that Gov. Matt Bevin violated his power last spring in unilaterally ordering funding cuts to state universities.

"The governor's reduction of the allotments of the universities in this case exceeded his statutory authority," wrote Justice Mary C. Noble in a 50-page opinion. "Whatever authority he (the governor) 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 control over their own expenditures."

The ruling reverses an earlier one by Franklin Circuit Court Judge Thomas Wingate saying a governor does have the authority to withhold funds appropriated by the General Assembly to universities.

Four justices concurred with Noble in the 5-2 opinion. (Read the full opinion) Justices Daniel J. Venters and Samuel T. Wright III dissented.

At issue in the case is Bevin's controversial directive to cut state funding to universities and community colleges by 4.5 percent during the 2015-16 fiscal year. Bevin later agreed to reduce the cuts to 2 percent and exempt Kentucky State University – the state's smallest university.

The 2 percent cuts amount to about $18 million – money that has been held in a separate account pending the Supreme Court's final ruling.

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That amount of money is not so significant in the context of the combined annual budgets of about $6.6 billion for all Kentucky public colleges and universities after state support, federal support, tuition, fees and other revenues are accounted for.

But the impact of the ruling is huge as it relates to the Republican governor's aggressive exercise of executive power and his ongoing legal clashes with Democratic Attorney General Andy Beshear, who filed the lawsuit challenging the university cuts.

"Today, the Supreme Court enforced Kentucky law, reminding us that not even the governor is above the law," Beshear said at a news conference late Thursday morning. "Based on today's ruling, I am calling on Gov. Bevin to immediately release the $18 million he wrongfully withheld from our public universities and colleges."

Beshear also said, "I'm also calling on the governor's office to use today as a turning point. It's time for him to stop attacking and instead to join me in building a better Kentucky."

But the response of the governor's office made clear Bevin is not ready to join Beshear in anything. That response briefly said Bevin disagreed with Thursday's ruling and emphasized that the cuts to universities were part Bevin's broader strategy to save money to address the crisis within state pension funds, which have unfunded liabilities of about $35 billion.

"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 (former Gov. Steve Beshear's) administration," Bevin Press Secretary Amanda Stamper said in a statement.

The Universities of Louisville and Kentucky welcomed the ruling, which they said would add stability.

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The University of Louisville said in a response, "This ruling gives state universities some measure of stability in planning and funding." The statement said U of L's share of the $18 million is about $2.8 million, which will be used "to fund student success initiatives."

Eric Monday, executive vice president for finance and administration at the University of Kentucky, said, "The Supreme Court's ruling today provides all the state's universities a greater sense of certainty in our budget planning process."

Monday said UK's share was about $5.6 million, which he said will also be used for student success initiatives, "particularly in the areas of retention and graduation rates."

The ruling is the first final decision by the Kentucky Supreme Court in lawsuits brought by Beshear and others challenging the legality of various Bevin executive orders through the spring and summer. The high court is also expected to ultimately decide at least two other cases involving challenges of Bevin orders reorganizing the boards of the University of Louisville and the Kentucky Retirement Systems.

Just last month, Bevin boasted on a Louisville radio show that Beshear "will lose every one of these cases."

On Thursday, House Speaker Greg Stumbo, a Prestonsburg Democrat, predicted the ruling in the university funding case "will be the first of what will be a series of Kentucky Supreme Court rulings against Gov. Bevin's illegal actions. The court's opinion strongly re-confirms the legislature's spending authority as the constitution's framers intended."

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In January, Bevin warned that the pension funding crisis forced him to propose spending cuts, including a 4.5 percent cut in the 2015-16 fiscal year and a 9 percent cut through the new 2016-18 budget period for universities.

The General Assembly reduced the size of his cuts: approving a 4.5 percent cut for universities in the 2016-18 budget but rejecting any cut in the 2015-16 fiscal year.

But Bevin still issued directives that ultimately cut universities' funding in 2015-16 by 2 percent, and Beshear filed suit claiming that the governor lacked the authority to unilaterally make spending cuts unless a revenue shortfall forced cuts to balance the budget. There was no revenue shortfall, and the 2015-16 fiscal year ended with a small revenue surplus.

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In the majority opinion Thursday, Noble rejected Bevin's arguments that he did not usurp the legislature's power to make appropriations to universities but, instead, reduced the state treasury's allotments to universities under his authority to manage the executive branch finances. Noble also emphasized that universities are different from other agencies within the executive branch of government.

"Although the Universities are state agencies and are attached to the executive branch for budgetary purposes, they are not part of the executive branch in the same sense as the program cabinets and boards directly under the Governor's control," Noble wrote. "... The Governor's suggestion that he has simply stopped the money from being spent mischaracterizes what he has actually done. Rather than ordering the Universities not to spend money, which he cannot do ... he has instead effectively intercepted the funds before they became available to the Universities. By reducing the final quarterly allotment, the Governor has essentially frustrated the overall appropriation by the General Assembly."

Venters said in his dissent that the attorney general does not have legal standing to bring such a case. He said the majority opinion "opens the gate for future adjudication of political issues best left to be resolved within the political branches or by litigation by a party seeking redress for a direct and immediate injury."

Reporter Tom Loftus can be reached at (502) 875-5136 or tloftus@courier-journal.com. The Associated Press contributed to this story.