Senate reveals budget proposal; calls for sustained IU funding

Indiana Senate leaders released a budget proposal Wednesday, calling for sustained IU funding even as the state is faced with diminishing tax revenue.

IU’s funding, according to recommendations made public Wednesday afternoon, will flat line during the next two years. The Senate proposed using the federal stimulus package to help prop up institutions in danger of budget cuts.

“They have invested in trying to keep education whole,” said Tom Morrison, associate vice president for public affairs and state relations, referring to senators.

He called the budget an encouraging “prioritization of education in general.” However, he added that the recommendations were “fluid” and could likely still change in the coming weeks, depending on the state’s economic health.

“In any other year, we’d be enormously concerned about a flat-line budget,” he said.

Those recommendations set the stage for deliberations in the coming weeks as the House, Senate and governor’s office work toward a compromise among competing proposals.

“It sounds like the Senate Appropriations Committee recognizes the importance of maintaining higher education in times of economic hardship,” said IU spokesman Larry MacIntyre.

Politicians have struggled this year to balance Indiana’s budget as revenue collected from taxes continues to decline.

On Monday, state tax collectors reported a 16 percent drop in tax revenue in March. The revenue missed expectations by $157 million, putting the State $755 million behind projections on the year so far.

With the revenue shortcomings, Senate leaders looked to a federal stimulus package for funding. That funding will help sustain IU for the next several years.

However, Morrison said he recently fears an increased reliance on federal funding will create a false sense of security. That funding will not remain forever, he said, adding that setting this precedent could shift the responsibility of the University away from the state legislature.

While in recent years administrators and trustees complained about higher education appropriations failing to keep pace with inflation, they have said a 1 percent increase would help IU avoid major cutbacks. 

Morrison and other University leaders have warned tuition could jump if funding isn’t sustained.

IU president Michael McRobbie has pledged to try to keep tuition increases “modest and reasonable,” MacIntyre said.

After McRobbie’s recent address to the Senate Committee on Appropriations, funding for higher education was not drastically changed in the budget proposal.

Higher education cuts recommended by Gov. Mitch Daniels earlier this year, before the stimulus package was approved, were not included in the proposal.

IU relies on the state for 23 percent of its funding, MacIntyre said. The eight IU campuses receive more than $500 million each year in funding, with the Bloomington campus receiving more than $200 million.

The Senate budget also includes increased funding for prisons and for public broadcasting.

Following reports of state revenue shortfalls earlier this year, Daniels ordered a $767 million slashing for the current fiscal year. IU responded in turn to the cuts as McRobbie reduced spending by 1 percent across the board.

MacIntyre said students should not be affected by budget restraints during the next year.

This year, however, salary freezes for more than 400 administrators will save the University $2 million, and the hiring of administrators will also be slowed down in an effort to cut spending.

McRobbie has also created a committee to curb the growing health care costs of the University, which have grown by 8 percent in recent years, MacIntyre said.

While tuition might not increase dramatically, the State Student Assistance Commission of Indiana may not be able to keep pace with the requests for tuition assistance, said A.D. King, IU Student Trustee.

The state appropriates $1.8 billion for higher education annually, said Bernard Hannon, assistant commissioner for facilities and financial affairs for the Indiana Commission for Higher Education.

Any cut in funding should be replaced with money through the federal stimulus package, Hannon said, but only for the next three years.

Despite funding available through the stimulus package, MacIntyre said state funding for higher education does not keep pace with inflation and has declined in the last 30 to 40 years.