State colleges face $150M in cuts as tax revenues fall

December 4, 2009

Indiana Gov. Mitch Daniels said the state will cut $150 million in funding for state colleges and universities because of a continuing decline in tax revenues.

Daniels also said Friday morning during a press conference that other steps will be taken because revenues are missing their targets significantly.

Tax collections for November were $144 million below forecast, and for the first five months of the fiscal year are $475 million below target. Daniels said if previously announced budget cuts and the new steps were not made, what was a $1.3 billion surplus in July would be wiped out by next summer.

Daniels said universities will work with the Commission for Higher Education in deciding how the $150 million in cuts will be made. A new revenue forecast will be presented on Dec. 15.

Indiana University President Michael A. McRobbie pledged to work with state officials on the cuts, but expressed concern that they be fairly allocated among the state's public institutions.

"It is ... essential that these new proposed cuts not fall disproportionately on institutions that have already made sacrifices that others were exempt from making," he said in a written release.

Other budget-cutting actions announced on Friday included:

— Suspending a $15 bi-weekly matching contribution to state employees for deferred compensation retirement accounts for calendar year 2010. Savings are estimated at $9 million.

— Directing the Department of Administration to further reduce the number of state-owned vehicles. Since 2005, the number of state-owned vehicles has been reduced by over 2,500, according to the governor's office.

Additionally, the governor will submit a package of cost-savings initiatives to the Indiana General Assembly.  It will include a proposal to combine the administration of the Public Employees Retirement Fund and the Teachers’ Retirement Fund, which is projected to reduce investment management fees and administrative duplication by at least $50 million per year. The proposal also will include merging or eliminating several boards and commissions.

House Republican Leader Brian C. Bosma, R-Indianapolis, applauded the cost-saving steps.

“Every level of government, including our universities, are having to cut back," Bosma said in a release. "While none of these decisions are easy, I think with all of us working together we can weather this fiscal storm. But the No. 1 priority must continue to be protecting the taxpayer, and I support the governor’s steps in this regard.”


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