State revenues came in more than $141 million below expectations for the first five months of the fiscal year, and Gov. Mike Pence Monday ordered a 2-percent cut in funding for public colleges and universities.
At Vincennes University, that means more than $800,000 will be shaved off this year’s budget.
Vice president for financial services and government relations Phil Rath said while the university is prepared to tighten its belt, the school is still interpreting the lasting effects.
“We always are prepared to take on shifts and moves in the state’s budgetary alignments, and we’re working to find how we can make our adjustments internally,” Rath said. “This is not going to affect employees, but we are hoping this end up being a temporary move.”
Capital projects at the university will also remain unaffected, he added, saying the reductions will take place internally, only.
“We won’t be delaying any of our improvement projects we’ve got under way — those are all one-time expenditures — our focus has to be on looking at things internally other than the employees,” Rath said. “The funds for those projects have been, in a sense, paid out by the state already, the cash appropriations are there, so those projects will continue to move forward as planned.
“We’re also not expected to see any sort of detrimental affect as far as student retention or recruitment,” he said. “All state higher education is faced with the same thing — this shouldn’t be harmful to our students in any way.”
In total, state university’s are cutting $27 million of their operational expenses, although student aid, capital expenses and debt service payments will not be affected, Rath said.
Higher education, he added, was singled out in the reduction likely because of a 5.4 percent increase in appropriations in the 2013-2015 biennial budget. The 2 percent reduction will still allow funding to grow by 3.3 percent this fiscal year.
Rath said the shortfall likely stems from a lack in revenue from income and sales taxes.
“The largest factor in this is personal income, which they’re having a hard time wrapping their arms around,” he said of state financial analysts. “Unemployment is down, and the projections should have been on target, but people are delaying things, or something is going on because we’re now faced with a $141 million shortfall from our year-to-date revenue projections.”
The state is still operating with a budgetary surplus, Rath added, saying the cuts stem from a variance in projections.
“When they created this budget they had about a $500 million budget surplus, so it’s not like we’re operating out of the red or anything like that,” he said. “They’re just running behind in their revenue projections.
“The state is still fiscally sound and they have a budget surplus still available. So that allows us to be carefully optimistic to hope this will be a temporary situation, one that will be undone, but we’ll just have to wait and see how things pan out.”
Legislators should have a more accurate account of tax revenues by the end of the first quarter next year, Rath said, although other factors could deter a reversal.
“Going into this budget session there are going to be quite a few legislative items that will be have substantial bills with them,” he said “Items like reversing personal property tax on businesses and early education programs, the Medicaid expansion, big ticket items.
“So not only will we be competing with the revenue projections, but we’ll be competing with a whole slew of agenda items. We’ll just have to wait and see how things work out.”