Vice Chancellor John Brown delivered the news that across the University System of Georgia's 35 schools, enrollment has dropped from 318,000 last year to 317,000 this fall. The only other period of enrollment decline since World War II when a shift from the quarter system to semesters held the student population down for two years.
When a member of the board raised the question about the borrowing done by the schools' foundations for campus buildings, Brown offered a sober warning.
"The downturn in enrollment is going to present problems on that front," he said.
Regent Kenneth Barnard expressed alarm.
"We as a board must strongly look at where we're going with (foundation debt)," he said. "... This is a big disaster if we're not careful."
The University System staff has begun addressing it, according to Brown, who said it is drafting the first statewide procedures to guide schools on how to handle debt. One recommendation will be for them to keep 12 months of expenses on hand in cash, he said.
All of the foundation-debt buildings were financed based on projections that enrollment would continue to soar. That might be understandable since enrollment has grown exponentially in recent years, even after the recent recession left 9 percent of the state work force unemployed.
Enrollment in the system was 233,000 students 10 years ago and had steadily climbed every year until peaking last year.
The decline is most pronounced at the state's junior colleges, the two-year schools that have less rigorous entrance standards to provide a chance to less-prepared students. Students needing extra tutoring dropped 14 percent since June, 2010 without better-prepared ones filling the gap.
Brown didn't blame rising tuition, but he did point to changes in the HOPE Scholarship which no longer pays for remedial courses. The board also changed its admission policy so that students needing remedial help in all three areas of English, reading and math are no longer accepted for enrollment.
A third possible reason for the decrease is a change in the federal Pell Scholarship program that no longer pays for courses during the summer semester.
Enrollment is a factor in how the General Assembly grants funds to the University System and thereby to colleges. The drop comes at a time when weak tax collections has prompted Gov. Nathan Deal to instruct all government agencies -- except k-12 education -- to pare 3 percent from their current budget and that much from their request for next year.
"Institutions should fully expect to lose this money. It's not precautionary," Brown said. "The prudent individual will plan for more (cuts of 1-2 percent)."
Chancellor Hank Huckaby, a former budget director to past governors, said he's told college presidents to make permanent reductions rather than using furloughs or other one-time savings.
"In this environment of the new normal, we're going to be spending it in a different way," he said.