According to inquisitor.com, LSU has officially begun the process of filing for academic bankruptcy. If no other solution can be found, the University will suffer an 82 percent cut, in turn dropping student funding from about $3,500 to a mere $660.00 per student.

Will this really happen, or is it a publicity stunt of sorts in the face of possible State budget cuts?

To make matters more immediate, the bankruptcy decision will need to be finalized soon to prepare for the Fall Semester. The decision will affect many things, including that of faculty and potential new hires.

From inquisitor.com -

“Being in a state of financial exigency means a university’s funding situation is so difficult that the viability of the entire institution is threatened. The status makes it easier for public colleges to shut down programs and lay off tenured faculty, but it also tarnishes the school’s reputation, making it harder to recruit faculty and students.”
For the time being it appears that LSU’s administration is approaching the potential bankruptcy with a relatively level head. F. King Alexander, the president and chancellor of LSU, stated that the cries of bankruptcy were not mere attempts to stir up public panic.
I'm no financial expert, so in real world terms, I'm not 100 percent sure about how harshly this will impact LSU. I will definitely keep you posted as I get more information.
All the best to staff, students, and all involved with the university.