The Indiana Commission for Higher Education said state colleges and universities need to find new ways to be efficient—without new tuition hikes—to cope with spending cuts ordered by Gov. Mitch Daniels.

Daniels ordered a $150 million cut in state higher education spending over the remaining 18 months of the state's two-year budget cycle because tax revenues are far below previous projections. The cuts average to about 6 percent of colleges' general fund appropriations and stimulus money that is being used to restore previous general fund cuts.

Individual universities will decide what gets cut, but the commission made recommendations to the governor Tuesday on how much each state school should lose.

The commission rewarded schools that receive lower amounts of state funding per student and those that are making progress toward degree-completion goals. The amount of federal stimulus funds available also factored into the formula for cuts.

Ivy Tech Community College, which has the lowest operating expense per degree according to fiscal year 2008 data, fared the best under the commission's plan, with a 3.49 percent reduction over the two-year budget cycle. Ivy Tech would lose just 0.7 percent this fiscal year, which the school said would allow it to accommodate its record enrollment without layoffs.

Indiana State University would have the highest percentage of cuts, losing 6.64 percent over the two-year budget cycle. Indiana State received more state funding per student in fiscal year 2008 than Purdue University at West Lafayette, Indiana University at Bloomington and most other state schools. Indiana State is also among the schools with the highest operating costs per degree.

Diann McKee, who oversees Indiana State's finances, said the university is already seeking ways to cut spending, including consolidation of administrative functions.

Higher Education Commissioner Teresa Lubbers said it makes sense to make the cuts less painful for schools that do more with less. She expected the governor to accept the recommendation and make cuts starting as early as next month.

"This recommendation attempts to strike a balance between what is equitable with the recognition that a uniform, across-the-board cut for all universities would not be in the best interest of Indiana students or our system as a whole," Lubbers said.

Daniels said the commission's plan was a "thoughtful, fair and tailored" way to divvy up the cuts.

Indiana University would lose about $58 million, or about 5.8 percent, under the commission's plan, while Purdue University would lose about $45 million, or just over 6 percent.

IU President Michael McRobbie said hard decisions will be made in the next few weeks on implementing more cuts while protecting research and instruction.

"No one should underestimate the very serious challenge that this deep cut represents nor the impact it will have on ... IU's broader contributions to the state," McRobbie said Tuesday.

Purdue President France Cordova said her school has been planning for reductions, and is reviewing hiring as well as seeking energy-conservation measures.

The commission said instruction should be schools' top priority, and that they should allocate resources to high-demand programs critical to the state's economy. That could mean cutting low-priority programs, offering more online courses or giving incentives to students who complete degrees with the fewest possible credit hours.

The commission also said schools should seek other long-term efficiencies, such as joint purchasing agreements. But Lubbers said she didn't expect schools to institute new tuition hikes to deal with the cuts.

State tax collections for the first five months of this fiscal year already are $475 million below a May forecast, which lawmakers used in planning the current budget. A new forecast issued this month predicted the state will take in $1.8 billion less through July 2011 than previously projected.