University projects improving cash position while UL System points to four financial warning triggers; dispute over $1.46 million in employee raises also exposes breakdown in budget review process
Louisiana Tech University entered the current fiscal year facing significant liquidity problems, including negative unrestricted cash and millions of dollars in aging vendor bills, according to figures provided to BIZ by the University of Louisiana System.
But Louisiana Tech says some of the deterioration resulted from the timing and classification of revenues, while enrollment growth, increased research activity, spending reductions and other measures are expected to improve the university’s financial position during the current fiscal year.
The competing assessments are at the center of a dispute over $1.46 million in planned employee raises that were included in Louisiana Tech’s operating budget and approved by the UL System Board of Supervisors before System officials intervened to defer them.
Written responses, public records and statements reviewed by BIZ show the disagreement is not simply about whether Louisiana Tech can afford raises. It encompasses how the university’s financial health is measured, whether its state funding adequately reflects its mission and performance, and how raises made it through the budget approval process before System officials raised objections.
System identifies four financial warning signs
According to figures provided to BIZ by the UL System, Louisiana Tech’s FY26 fourth-quarter financial report triggered four indicators under the System’s Financial Warnings Policy.
The System reported a $4.8 million unrestricted operating deficit; deterioration in unrestricted fund balance from negative $13.7 million to negative $18.5 million during FY26; negative $9.1 million in unrestricted cash as of June 30; and $3.6 million in accounts payable that were between 90 and 365 days old.
The negative $9.1 million unrestricted cash position was equivalent to approximately negative 15 days cash on hand, according to the System.
At last week’s Board of Supervisors meeting, Louisiana Tech was identified as one of three UL System institutions remaining in the System’s “critical risk” category.
Louisiana Tech does not dispute that its liquidity needs improvement, but university officials say the year-end figures require additional context.
In written responses to BIZ, Tech said $4 million expected from conference and NCAA distributions in June instead came through a state appropriation in July as part of the university’s transition to the Sun Belt Conference. The university also said some dollars it expected to be classified as unrestricted were ultimately classified as restricted.
Tech said its financial improvement plan includes an active hiring freeze and position controls, expenditure reductions, enrollment growth, expanded research activity, improved revenue associated with its athletics conference transition and a future infrastructure project with the City of Ruston intended to reduce maintenance costs.
The university expects to exceed its budgeted 3.1% enrollment growth during FY27 and projects a 4.6% increase in self-generated revenue compared with FY26, driven by enrollment growth and expanded research funding.
Cash projections have changed
Louisiana Tech’s current cash projection is more conservative than one presented to employees earlier this month.
In an Oct. 6 email cited during the Board of Supervisors meeting, President Jim Henderson projected Louisiana Tech could finish FY27 with approximately 37.5 days cash on hand if the employee raises were implemented and approximately 41 days without them.
The UL System told BIZ it lacks sufficient information to support that projection and would not produce its own year-end forecast. System officials said they instead plan to monitor Tech’s progress quarterly.
Louisiana Tech now says its financial improvement plan, using the UL System’s definition of days cash on hand, is projected to produce approximately 25 days at the end of FY27.
If the money designated for employee raises remains unspent rather than being used elsewhere in the budget, Tech projects approximately 28 days cash on hand.
Tech said its first-quarter financial statements were still being closed when it responded to BIZ but said they are expected to show “significant progress in liquidity” compared with both the fourth quarter and the same period last year.
The UL System has said institutions should maintain at least 60 days of unrestricted cash on hand under financial oversight requirements associated with Act 772 and has said it will work with universities on goals and timelines for improving liquidity.
$1.46 million in raises put on hold
Louisiana Tech’s original FY27 budget included $1,465,314 for employee compensation increases, including $1,026,300 in salaries and $439,014 in associated benefits, according to figures provided by the UL System.
The proposal included a 4% cost-of-living adjustment capped at $2,400 annually, with an anticipated Oct. 1 effective date, as well as market adjustments in the College of Liberal Arts.
Tech said faculty and staff last received a cost-of-living adjustment in fall 2024.
The Board of Supervisors unanimously approved the university’s operating budget with the compensation money included.
System officials subsequently identified the Tech raises while reviewing campus compensation plans, which are submitted separately from university operating budgets.
After reviewing the proposed raises against Tech’s financial condition, the System sought a budget adjustment through the Louisiana Board of Regents. The $1.46 million was moved from salaries and benefits into the “Other Charges” category.
The money was not removed from Louisiana Tech’s overall budget.
The UL System told BIZ it expects the funds to remain unspent while Tech’s financial condition is evaluated. No specific financial benchmark has been established that would automatically allow the raises to proceed.
Board Chairman Mark Romero characterized the decision during last week’s meeting as “not a no, a not now.”
The System also said Louisiana Tech’s next president should have an opportunity to establish financial priorities balancing competitive compensation with long-term financial sustainability.
Board members question how raises were approved
The financial debate also exposed concerns about the System’s own budget review process.
During last week’s board meeting, one member questioned how the board could unanimously approve a university budget containing raises, allow university officials to announce those raises to employees, and then see the compensation adjustments pulled back between board meetings.
“We have egg on our face,” the board member said.
Romero acknowledged problems with the process, describing the circumstances as “a product of haste.”
He said the System plans to change its budget review schedule to give board members more time to examine university budgets before voting on them, potentially including a separate Finance Committee meeting.
Faculty Senate President Michael Swanbom told the board that competing descriptions of Louisiana Tech’s finances had created distrust among faculty.
Swanbom has sought records from the System showing what review was performed and what authority was used to defer compensation adjustments contained in the board-approved budget.
He told BIZ that he wants financial warning triggers to be evaluated transparently and objectively and financial corrective measures applied equitably across UL System institutions.
Tech points to state funding gap
Louisiana Tech and faculty leaders also contend the university’s financial condition cannot be separated from how it is funded by the state.
Tech provided BIZ with a four-year analysis comparing State General Fund funding with full-time-equivalent enrollment at the nine UL System institutions.
The university’s analysis shows Tech’s state funding per FTE below the UL System institutional average in each year from FY23 through FY26.
The gap increased from approximately 5.5% below the System average in FY23 to 16.4% in FY24, 19.4% in FY25 and 27.1% in FY26.
Using the UL System average state funding per FTE as a benchmark, Louisiana Tech calculates that it would have received approximately $31.6 million more in State General Fund support over those four years.
That calculation does not mean Tech was entitled under the state’s funding formula to an additional $31.6 million. State higher education funding is distributed through a Board of Regents formula that considers factors beyond simple enrollment.
UL System President Rick Gallot made that distinction during the board meeting, noting that the funding formula considers factors including graduate enrollment, transfer students, Pell-eligible students and research activity.
Gallot also said Louisiana Tech has one of the largest total budgets in the System when state and self-generated revenues are considered.
Tech counters that its mission should be part of the comparison.
The Board of Regents classifies Louisiana Tech, UL Lafayette and the University of New Orleans as statewide research institutions, while the other six UL System universities are classified as regional institutions.
Tech also points to its student outcomes, including what it says are the UL System’s highest graduation and retention rates and fastest time to degree.
Different views of the same institution
The records and responses reviewed by BIZ do not support a simple conclusion that Louisiana Tech is financially healthy or that its problems can be attributed to a single cause.
The university finished FY26 with significant liquidity problems and remains under heightened System financial monitoring. Tech itself has instituted a hiring freeze, position controls and other measures intended to improve its financial position.
At the same time, Tech is growing enrollment and self-generated revenue and argues that its comparatively low state funding per student has contributed to financial pressure despite strong student outcomes.
The $1.46 million employee compensation dispute brought those issues into public view.
It also revealed a breakdown in a budget approval process that allowed the raises to be included in a unanimously approved university budget before System officials raised concerns about whether Louisiana Tech could afford the additional recurring expense.
For now, the money remains in Louisiana Tech’s budget but is expected to remain unspent.
Whether it eventually reaches faculty and staff will depend on what the university’s financial numbers show in the quarters ahead and on decisions made as Louisiana Tech transitions to new presidential leadership.