By Eric Bradner, Journal & Courier
INDIANAPOLIS - Indiana's public colleges and universities will face a $150 million funding reduction, Gov. Mitch Daniels said Friday morning as he unveiled a new series of spending cuts intended to help Indiana cope with sagging tax collections.
The announcement came after Indiana took in $144 million less in taxes in November than revenue forecasts had projected. In the first five months of the current fiscal year, Indiana is $475 million below target.
Daniels called the reduction, which amounts to 6 percent of what Indiana's budget sets aside for higher education and 2 percent on average of universities' total revenue, a "regrettable change" but a necessary one.
"Unwelcome as these actions are, we will do what's necessary to protect Indiana taxpayers from the tax hikes being imposed in almost every other state," Daniels said.
He said universities will work with the Indiana Commission for Higher Education to decide how and where spending will be cut. All state universities - including the University of Southern Indiana, Vincennes University and Ivy Tech - are expected to face reductions.
The higher education cuts led a list of several cost-cutting measures Daniels announced Friday. Others included suspending Indiana's $15 bi-weekly contribution to state employees' deferred compensation retirement accounts for 2010 and directing the state's Department of Administration to reduce the number of vehicles in the state's fleet.
He said he will also ask the Indiana General Assembly to consider a series of steps such as combining the Public Employees Retirement Fund and the Teachers' Retirement Fund. Daniels said doing so would save $50 million per year in investment management and administrative costs.
One Democrat said Daniels was moving too quickly by turning his eye to education dollars.
Senate Minority Leader Vi Simpson, D-Ellettsville, noted that revenue forecasts predict Indiana will receive $150 million in motor vehicle excise tax collections. Since property tax bills have gone out late in many Indiana counties, she said that money isn't lost; it's just coming in later than expected.
"I appreciate the governor taking into consideration the seriousness of the situation, but I think it is important to understand that the revenue forecast and the budget are based on an annual basis and not on a month-to-month basis," Simpson said.
Daniels, though, said he plans to continue taking steps to reduce spending as month-to-month revenue shortfalls occur. Revenues have fallen short of projections for 14 consecutive months.
"The chance that revenues will suddenly begin to resemble the forecast seems highly unlikely," Daniels said. "So it's highly likely these are not the last steps we'll have to take."
Cindy Brinker, vice president for government and university relations at the University of Southern Indiana, said it is still not known what USI's share of the budget cut will be, or what impact it will have.
About 60 percent of USI's operating budget comes from state appropriations. for the current academic year, USI had been slated to receive $39 million from the state, with roughly the same amount coming in 2010-11.
"We just don't know the specifics (of the cuts) at this point," Brinker said. "I would expect that in the next few days we'll know more ... First off, we need to know what our share is going to be. Then we'll know what impact it will have on the institution going forward."
Brinker said the news from Daniels today "is not unexpected. We've seen the declining revenues."
Indiana University President Michael McRobbie, speaking during this morning's IU Board of Trustees meeting, said the university will strive to protect its academic core as it deals with the budget cuts.
Purdue University President France Cordova said, "We understand the challenges facing our state. We already have started to take steps to decrease expenditures in a strategic way that will maintain the value of our Purdue degree. This new challenge will be added to those efforts."
Indiana Higher Education Commissioner Teresa Lubbers released a prepared statement:
"Higher education, like most public and private enterprises, is operating in a time of scarce resources. Governor Daniels has positioned Indiana to face tough times and resisted cuts in public education whenever possible. Fiscal realities now demand that further cuts be made, and higher education will be impacted. From crisis comes change, and this is a unique opportunity for Indiana to meet the needs of higher education in more efficient ways. To that end, the Commission for Higher Education will work with university leadership to focus on building a more streamlined and highly effective system of higher education."