Pro and Con of UPike Joining State System

Tuesday, February 21st, 2012

President Wayne Andrews of Morehead State University doesn’t want to divide the pie and give a slice to the University of Pikeville.

President Paul Patton of Pikeville says he wants to graduate more students from eastern Kentucky who will stay and work in eastern Kentucky.

Monday night’s Kentucky Tonight program heard these views as well as those from two other guests, Rep. Leslie Combs, who supports former Governor Patton, and Bell County Judge Executive Alvey Brock, who opposes a move to make the University of Pikeville a part of the state’s system of higher education. Judge Brock opposes the move based on Patton’s idea to use the twelve-county coal severance tax fund to aid the University of Pikeville’s move into the higher education system.

Governor Beshear has asked for a study from an out-of-state consultant on the issue. The study won’t be ready until the middle of March.

Many of you weighed in with your opinions. Here’s a sample of audience responses:

Steven A. Hicks
We must stop HB 260 now while it is in committee in the Kentucky General Assembly. I am a fifth-generation native eastern Kentuckian and the first generation in our extended family to achieve a college education. MSU graduates have created the middle class in eastern Kentucky.  I have no bias in my decision to oppose the formation of the University of Pikeville. It is simply a matter of economic reality. The proposed budget and agenda for UPike now in front of the education committee is grossly underfunded and can only survive by cannibalizing the limited educational resources of MSU.  

The idea that coal severance taxes will cover the additional costs of UPike is at best a dream. As we all know, eastern Kentucky’s economy has for almost 100 years been tied to the coal industry. Coal has seen numerous boom and bust cycles that have brought almost instant prosperity as well as created ghost towns with equal swiftness. I have spent over 30 years in the coal, electric power and energy industry. I deal daily with energy price analysis that impact coal. I look at forecasts for demand, supply, production, and consumption in both domestic markets as well as international markets. The sad news is that coal has just started its latest down cycle. Eastern Kentucky coal prices have dropped from about $80 per ton as traded on the NYMEX in June of 2011 to less than $60 per ton now. Plus, lay-offs and production cuts are common headlines in local newspapers. At least 1,000 miners will lose their jobs and over 10 million tons of production cuts will be made in 2012 for eastern Kentucky. The estimates for direct coal revenue loss for eastern Kentucky will easily exceed $1 billion. When coupled with the losses from the service and supply industries supporting coal, the loss can be multiplied to $6 to $8 billion in 2012—a staggering blow to the economy of eastern Kentucky. This trend is expected to continue for the next three years. NYMEX futures prices remain under $70 per ton through 2013 and under $75 per ton through 2014.

According to the EIA, in 2011 eastern Kentucky produced about 68 million tons of coal at a value of $5.1 billion. The Kentucky severance tax rate is 4.5 percent of the sales price. The effective rate is somewhat less, but based on initial data, the estimate is about $230 million in severance tax revenues from eastern Kentucky, the highest tax revenues in history. However, 2012 projections for severance taxes from eastern Kentucky are scheduled to drop by 25 to 28 percent. This is a loss of $58 to $60 million and, when combined with the loss from severance tax revenues generated by western Kentucky, the estimated loss will reach $70 to $75 million in 2012.

The primary drivers for the bust cycle in coal are: cheap natural gas due to overproduction, over-regulation by the Obama administration to stop coal mining and prevent its use as a fuel for generation of electricity, the loss of an energy intensive manufacturing base from the economy, and the government subsidy of alternative electric energy such as windmills, solar panels, and biofuels although they are 10 to 100 times more expensive than coal-based energy. Plus, the overproduction of natural gas in Ohio, Pennsylvania, and New York has another negative economic impact on the eastern Kentucky economy: the closure of practically all natural gas drilling activity.  

In summary, eastern Kentucky has provided the Commonwealth with over $1.8 billion in coal severance tax over the past ten years. The University of Kentucky sits on a natural resource base in eastern Kentucky valued at about $1 billion from the gifts designated by the Robinson Land Trust for the students of eastern Kentucky. Yet, the University, because of its environmental loyalties, refuses to develop the resource for its intended use. The socioeconomic divide between eastern Kentucky and the Bluegrass is enormous. Eastern Kentuckians cannot help but champion our programs, and our leadership attempts to return a part, if only in a small portion, of that which has been severed from our region. But, in reality, we are faced with Kentucky politics and its regional economic budgeting bias, existing educational cuts, and the projected decline in coal severance tax revenues. Therefore, the funding of UPike at the expense of our existing MSU facilities and programs simply cannot at this time be justified. Shame on the Commonwealth of Kentucky for pitting two education programs with common goals and the best interest of its students at heart against each other in this upside-down battle for shrinking education funds.   

If the University of Pikeville were to become a state-supported institution, would there be an incentive to draw students from southwest Virginia and West Virginia?

Joshua L. Ball
Paintsville, Ky.
What programs would UPike offer at extended campuses? Would it be education, social work, and nursing? If this is the case, isn’t it a duplication of effort already in place by MSU and EKU at their extended campuses? What are MSU and UPike going to do to bring more programs to eastern Kentucky and keep our educated adults at home working in their desired field of study and not going off to school to come back home and being underemployed?

Levi Castle
As an MSU alumnus and current KCTCS faculty I feel this point is important to discuss. Why is there such an emphasis on rushing the inclusion of UPIKE to the state system? History shows that analysis of data is key to making correct decisions. Why is the time spent considering the addition of UPike so dissimilar to that which was spent considering the addition of Louisville?

Ken Wilson
I think adding the University of Pikeville to the state system is a great idea. It will make it more affordable for the young men and women of the area to go to college and stay in the area, making the area more attractive to new industry. Thanks for your attention. Ken

Thanks to everyone who wrote or called. If you missed the program live or on the radio Tuesday, watch  Kentucky Tonight.

2 Responses to “Pro and Con of UPike Joining State System”

  1. Mike Phillips says:

    To the Luddites among us

    In 19th century England, there arose a sort of social movement bent on reversing the gains of the industrial revolution.There were new ways of doing things in textiles and it was putting people out of work; people who’d been somebody under the old ways of doing things.

    Of course, it was futile, because some things are inexorable.But that didn’t stop the disciples of one General Ned Ludd, a figure whose reputation was not unlike that of Robin Hood in his day.For this reason, those who sought to undo the advances in textiles bought about by mechanized looms became known as Luddites.

    Luddites is a name now given to people who oppose new ideas or new ways of doing things that threaten either their livelihood or privileged positions they hold. We are seeing some latter day Luddites appear in Kentucky in response to the suggestion that the University of Pikeville be made a state-supported institution of higher learning.
    They come from both governmental and educational backgrounds, but they have one thing in common: They are opposed to establishing a new, state supported school for southeastern Kentucky.

    Those from government who oppose a state supported UPike include both members of the state assembly and various county fiscal courts.Let’s say they are well-represented by state Senator DamonThayor from Scott County.Senator Thayor, like the members of the various fiscal courts who are also opposed, is concerned about the funds that will be needed for the new-look UPike.There’s not enough now, he says, for those schools out there.

    Senator Thayor might remember when then-Governor Martha Layne Collins proposed spending $125 million dollars to bring Toyota to Georgetown.This proposal also generated a lot of opposition, but he’d have to agree that the much smaller amount of money that would be needed for a state-supported school in this area could also hold the same promises for Eastern Kentucky that Toyota held for Scott County. And may I add that that $125 million was money well spent.

    Senator Thayor also mentioned it was the strong Eastern Kentucky powerbase that was behind this proposed new state-supported school.Really?A strong Eastern Kentucky power base?Listen, if that was the case, Thayor and the rest of the Golden Triangle would be a lot poorer, because a strong Eastern Kentucky power base would have kept 100% of the coal severance tax in the counties that generated it.

    From the educational opponents, none is perhaps more vocal than Morehead State University.Both the Board of Regents and the Rowan County Fiscal Court have passed resolutions opposing a state-supported UPike and for the same reasons.They see the new school taking students from Morehead, and they don’t like it.

    But it isn’t that the University of Pikeville wants to rob them of any potential students from this area.Those who have the wherewithal can continue their two hour plus commute to that campus.It is those students who might not go to college at all because of the distance to schools like Morehead UPike is after.

    And if the new state-supported school manages to increase the percentage of area residents with a college education to the level found elsewhere around the state, then the funds needed for a state-supported school, like the money spent for the Toyota plant in Georgetown, would also be money well-spent

    City/County: Feds Creek Pike County

  2. Josh Cohen says:

    I think the big issue is what will allowing UPike to become a state institution add as far as programs and options for eastern Kentucky students. If MSU already offers the same programs that UPike offers then I don’t see how this can benefit students. This is especially problematic when one considers that the strain on MSU’s budget may cause the university to cut programs and majors to save money. Reducing diversity of programs will not help any student. MSU isn’t that far from Pike and they seem to keep afloat as a private institution. As far as retaining graduates locally; there aren’t jobs for these new graduates within the counties at present. They can’t all graduate and work at UPike. These points aside, it doesn’t make sense to take this step now. We can talk about this transition when it is economically feasiable. Sure MSU wants to retain students, but where I’m located there are plenty of options for higher education and plenty of opportunity to get a B.A. I would like to see more rank 1 universities and higher high school graduation rates.

    City/County: Wayne

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