No layoffs. No seven-figure budget cut to sweat through.
IU School of Medicine Dean Dr. Craig Brater had many reasons to raise a toast this month, when a new fiscal year began and the school left behind an old one marked by the worst budget cuts in decades.
Indeed, Brater said he is breathing a little easier as the school starts fiscal 2006-2007 with a budget of more than $815 million. An increase in clinical revenue and grant money helped stave off another round of cuts and layoffs.
However, a stagnant base budget that supports a number of growing programs stokes worry about the future.
“We’re not screaming and yelling this year,” Brater said. “But we will be severely limited in our capacity to do all the things we do and contribute to the life sciences economy if our base budget stays flat like it is.”
Several doses of bad news gave medical school leaders reason to scream and yell last year. Operating revenue the school receives from the state decreased $900,000, to $88 million.
Research grants also declined, and the school saw a jump in its assessment, the amount of money it pays the university to cover heat, lighting and other utilities.
The crunch forced the medical school to cut 36 positions, including 13 vacant jobs, and trim more than $5 million from its budget. The school’s central administration absorbed most of the blow in order to spare academic departments.
But that was last year. This fiscal year, which started July 1, the school made no position or budget cuts.
“With all the maneuvers we have done, we were able to continue the same amount of dollars flowing to each department,” Brater said. “Of course, that means there was no adjustment for inflation or anything else.
“It was all flat budgets.”
Operating revenue from the state decreased another $200,000, to $87.8 million for 2006-2007, and the assessment stayed flat. But grant funding was on track to increase 7 percent at the end of May, and the school also pulled in more money from the clinical services its faculty provide at more than 100 locations, Brater said. Clinical services revenue and grant funding funds the bulk of the school’s budget.
“Essentially, our clinical mission stepped to the plate to help support education and research,” he said.
Grants collected from various sources include $8.9 million to expand an HIV/AIDS program in Kenya and $5 million to establish an Asthma and Allergic Diseases Cooperative Research Center here.
However, that money comes with a caveat, according to Brater. The school also needs corresponding operating revenue increases to support those programs. The medical school has grown from $300 million to $820 million in total revenue over the past decade.
“When you almost triple in size, you need a larger infrastructure, and that infrastructure is basically what you need the base budget for,” he said. “You reach a point where you cannot sustain further growth unless you have continued investment, and that’s true in any sector.”
Higher education operating budgets-which cover things like salaries, benefits and supplies-have been flat all over Indiana.
The state contributes to the operating budgets for seven public universities, and its total appropriation for that category rose just two tenths of 1 percent in the new budget, to $1.19 billion, according to Bernie Hannon, associate commissioner for finance for the state Commission on Higher Education.
The Legislature decided instead to devote more money to the State Student Assistance Commission for scholarships, said David Dukes, a fiscal analyst for the House Ways and Means Committee. Funding there rose from $188 million in 2005 to $197 million last year and to $218 million in the 2007 budget.
More higher education help may be on the way. Hannon said he sees state tax revenue starting to pick up across Indiana. The state government also recorded its first surplus in three years when it closed the books on fiscal 2006.
The state owes higher education more than $62 million in delayed payments dating back to 2002. But Hannon also cautioned that other programs like primary and secondary education need money, too.
“There’ll be a lot of competition for those new dollars on the table,” he said.