INDIANAPOLIS - With the recession slamming the brakes on state tax revenues, Gov. Mitch Daniels' administration is cutting $767 million from the current state budget. Officials are trying to make the cuts in ways that won't impinge much on average Hoosiers.
Locally, among the most affected will be the University of Southern Indiana, which will see its state operating funds reduced 1 percent in the current fiscal year. That amounts to $403,874 less from the state. USI also must go without $560,962 in separate "repair and rehabilitation" funds that were intended to keep the university's physical plant in good condition.
Chris Ruhl, the governor's budget director, and Ryan Kitchell, director of the state Office of Management and Budget, said the new spending cuts should save $767.4 million, leaving a razor-thin surplus of about $4 million by June 30 - if the revenue forecast is correct.
USI President H. Ray Hoops said the university has funds reserved so it won't have to put off any essential maintenance or repairs.
"Will it materially change our lives? No, not a cut of this order. We will still be able to run the university and do a quality job," Hoops said.
The 1 percent cut will not result in staff downsizing or reductions in student scholarship assistance, Hoops said. "It's not of that order of magnitude. We are going to be able to accommodate it," he said. "We have been preparing for a date like this for at least 15 years, and it will not disrupt USI in any significant way."
All the state's public colleges and universities face a 1 percent cut in their state operating funds, and they are being asked to forgo $30 million in previously approved repair and rehabilitation spending worth $150 million. Two capital projects - a biosciences lab at Purdue University and a campus building at Ivy Tech in Portage, Ind. - won't be built, officials said.
Many cuts
Those higher education cuts are among a list of spending reductions the Daniels administration announced Monday.
An economic forecast Dec. 11 showed tax revenues falling $763 million short of what had been projected when the state budget was approved. That means the administration must cut at least that much for the budget to be in balance at the end of the fiscal year - as is constitutionally required.
Daniels previously ordered state agencies to dial back their spending another 3 percent. He canceled a pay raise for state employees, restricted hiring and prohibited out-of-state travel.
Daniels has ordered that K-12 school funding and Medicaid payments not be touched, and that the state not dip into $1.4 billion in reserves. "The goal and direction we were given by the governor was to balance this year without touching any of the $1.4 billion reserve," Ruhl said. "The point here is we've got to get spending back in line, because we don't know how long and how deep this (recession) is going to go," Ruhl said.
Among the 26 previously approved capital projects that will not be funded this year are two local projects: a pole barn at the Evansville State Hospital budgeted at $400,000 and construction of a third pier at Southwind Maritime Center in Mount Vernon, budgeted at $1.2 million.
Pulling back
Ruhl and Kitchell have sifted through state agency budgets, pulling back unspent funds from dormant programs and surpluses within individual departments, in order to shore up the overall budget.
Ruhl noted the main expense of state agencies are employees' salaries and benefits, so some vacant positions were left open and replacement workers were hired at lower salaries than their predecessors. "Certainly it was the intent of the governor to direct cuts at places where critical services wouldn't be impacted and the taxpayers wouldn't see a difference in how they interact with state government," Ruhl said. "We have to be very judicious about things we purchase, whether it be office equipment, computers or vehicles."
Kitchell said canceling the 2009 state employee pay raise will save $40 million.
The current two-year state budget that expires June 30 is approximately $26.3 billion. Ruhl estimated the next two-year budget the Daniels administration will propose will be just less than $28 billion.
But in the next budget, USI still is going to request the Legislature provide about $7.5 million to cover one-half the cost of a new university theater to replace one being demolished in the Lloyd Expressway lane expansion. "It would be highly unusual to have a university without a theater. We are prepared to cover half the cost of that," Hoops said. "I don't know what attitude of the General Assembly will be. . . . We are certainly going to make the General Assembly aware we are going to be needing the theater."
As for the 1 percent cut universities face in the current fiscal year, Hoops contends it is actually "supportive" of higher education. "This could have been much worse, and I think the governor and his staff have done everything they can to make sure it is minimally disruptive," Hoops said.