INDIANAPOLIS - The Indiana Commission for Higher Education hopes state universities refrain from major tuition hikes to offset cuts recommended by Gov. Mitch Daniels in the next state budget.
Universities were notified last month that state funds would be cut by 1 percent for the current fiscal year as a result of December's dismal economic revenue forecast.
Bernard Hannon, the commission's associate commissioner for finance, said colleges are being encouraged to make up the difference by cutting costs rather that adding on to tuition fees.
But Senate Minority Leader Vi Simpson, D-Bloomington, whose district includes Indiana University, said universities won't have much choice, because such a predicament forces schools to make major cuts or increase tuition.
IU President Michael McRobbie announced Wednesday that all vice presidents, chancellors and deans need to reduce their operating budgets by at least $4.9 million to cover the lost 1 percent.
The ordered cuts include all of IU's satellite campuses.
"The current state of the economy is forcing some very difficult decisions on the governor and legislature as they work to prepare the next biennial budget," McRobbie said. "It is my intent that Indiana University will find ways to operate at these reduced funding levels without sacrificing the quality of our basic academic and research missions."
Under Daniels' proposal, during the 2010 fiscal year the IU system would get 3.1 percent less in funds than the current year.
Overall, the plan cuts all state colleges and universities during the next fiscal year by 4 percent of what was appropriated for the current fiscal year and 3 percent of what will the schools actually receive.
For 2011, the cuts aren't as drastic - none is more than 1.5 percent from the 2010 figures - but only the Ivy Tech Community College system will get more state money than the year before. Its 4 percent bump will exceed its 2009 actual funding by 3 percent.
Larry MacIntyre, a spokesman for IU, said a goal of the university has been to make the cost of an IU education cheaper. He pointed to an increase of aid money available compared to the percentage of tuition hikes.
"We have in the last couple of years made the actual (average) price of attending Indiana University go down slightly."
McRobbie also said the current rounds of cuts won't come from financial aid money.
MacIntyre said IU understands the governor's plight, but it is McRobbie's duty to maximize money allotted to the university so it can provide quality education.
Simpson said she plans to meet with McRobbie to discuss the proposal in the near future.
Purdue University officials will spend a few days reviewing the proposal and focusing on ideas to cut costs, said James S. Almond, chief financial officer.
Some of them include suspending Purdue's special merit bonus program for faculty, examining vacant positions and notifying all departments to be ready for a smaller budget.
"We recognize that we will need to operate in a very tight budget situation," Almond said.
While the higher learning commission has already told universities about the cuts, Hannon said they may not be as deep as the governor's current proposal since lawmakers always make changes.
But Hannon conceded there won't be much, if any, new money for higher education.
Before the two-year budget can become official, it must pass the Senate and the Democratic-controlled House, where Speaker B. Patrick Bauer, D-South Bend, already has questioned the Republican governor's proposal.
Simpson said the higher education funding budget will not pass in its current form.
In addition to the necessary steps of going to both houses and a conference committee, a new revenue forecast is due in April, in time to affect the budget, she said.
"Everything leading up to the conference committee is (just) drama," Simpson said.
John Schorg, a spokesman for House Democrats, said Bauer shares Simpson's concerns about the higher education proposal, including the fear of higher tuition costs.
In a meeting Thursday, the State Budget Committee, a bipartisan mix of representatives and senators, approved the proposed budget. The governor now will send a revised proposed budget back to lawmakers to discuss and amend.
Even Republicans expressed concerned about the proposed cuts to higher education, though the proposal was sent back to Daniels with a 3-2 victory.
Sen. Luke Kenley, R-Noblesville, voted to pass on the proposed budget but said he worries Hoosiers won't be able to keep up with annual tuition increases.
Typically, the amount of money that goes to fund public universities' operating costs would go up as well, but with a proposed decrease of funds, universities will have to make the costs up somehow.
K-12 education, which would maintain its current funding level, takes up slightly over half of the operating budget each year. Higher education, though significantly less, is still the second-highest cost.
"Budget cuts have to come from somewhere," Kenley said. "The governor made the decision he didn't want to deal with K-12."
Simpson said funding all education, not just K-12, is etched into the state constitution.
"We have the duty to maintain all educational opportunities, K-16," she said.
Kenley said he would ideally like to have universities put a one-year lock on tuition rates so Hoosiers can still afford to continue their educations.
"But can I convince them to do that while not giving them any more money?" Kenley said.
Under Daniels' proposal, most agencies would receive the same or less funding than their current levels over the next two years if this budget moves through both houses, with the exception of Medicaid and the Indiana Department of Corrections, which are both in line to receive moderate increases in their funding compared to the current budget.
Sen. Teresa Lubbers, R-Indianapolis, has previously worked with the Center for Education Technology, one of the programs the governor targeted either for cuts or to be eliminated from the 2010-2011 budget.
Lubbers, who chairs the Senate Education and Career Development Committee, said she thinks the technology center is worthwhile.
But Lubbers said she will "consider anything the governor proposes because he's not doing it because he wants to. He's doing it out of necessity."
Legislators generally agree that there will have to be budget cuts, but they likely will differ on what has to go.
"I think my priorities would be different if I was doing this," said Rep. Dennis Avery, D-Evansville.
Franklin College Statehouse Bureau reporter Whitney Lee contributed to this report.