Schools may not fare well in Daniels’ budget-WEB ONLY

Don’t be surprised if a two-year state budget Gov. Mitch Daniels plans to propose tomorrow includes no overall spending increase for public schools.

“Protecting education at today’s levels would be a huge achievement when revenues are plummeting or are down significantly,” Daniels said last week. “In many states right now, education is being cut, and I mean 2, 4 and 5 percent.”

But Daniels will have a fight on his hands if he indeed proposes to keep school funding at today’s level in the two-year budget lawmakers will draft during the session that starts Wednesday.

Despite a newly projected $763 million spending gap in the budget that ends on June 30, and predictions the state will have little new money to spend in the next budget, some top lawmakers and education groups won’t be happy if K-12 education does not get more money.

Simply getting the same funding, they say, would amount to cuts because of inflation, built-in pay raises for teachers in contracts, and increases in utility and insurance costs.

“We are going to have increased expenditures, and if revenues don’t meet expenditures, we will have cuts,” said Dennis Costerison, executive director of the Indiana Association of School Business Officials.

He said that could force districts to lay off teachers, leave vacancies unfilled or hire fewer new teachers than needed. Many schools could end up with much larger classes in which fewer students would get the individual help they need, he said.

If Daniels proposes freezing funding for public schools, it won’t be the first time. He proposed doing that when he first took office in 2005 as a way to help erase a $600 million budget deficit.

Republicans who controlled the House and Senate at the time ended up giving a slight overall increase to schools, but almost all the new money came from local property taxes. In the next budget, the state will assume responsibility for all school operating costs. Property tax increases won’t be an option for getting more money unless voters in a district approve them in a referendum.

The first budget approved under Daniels’ tenure did erase the deficit. The current budget enacted in 2007 also was expected to be balanced, but then an updated fiscal forecast projected much lower revenues. Daniels has since ordered $767 million in spending cuts in an effort to keep the books balanced.

The savings will come from a variety of steps. State employees will not receive pay raises, state agencies will make deeper cuts than previously ordered and higher education operating expenses will be cut by 1 percent. But Daniels said public schools and public safety were vital services, and he spared them from any cuts.

The state has $1.4 billion in its main checking account and reserve funds, including $400 million in a “rainy day” account for schools.

Some lawmakers and school and teacher groups say that unless the state’s fiscal picture gets brighter in the coming months, that reserve should be tapped if necessary to provide some spending increases for schools.

“It is a rainy day, and it was called a rainy day [fund] for days like this,” said House Speaker Patrick Bauer, D-South Bend. “I don’t know if you can flat-line education with the obligation we have to protect children.”

But Daniels has said that a primary goal is passing a balanced budget without increasing taxes, without bookkeeping tricks and without dipping into the state’s surplus.

He said his administration would make every effort in budget negotiations not to dip into savings, noting that the current budget was based on a forecast that missed the revenue mark by hundreds of millions of dollars.

“Who is to say that can’t happen again?” he said. “And nobody knows, including the speaker, how long this recession may last.”

Daniels also doesn’t buy the claim that keeping funding at current levels is a cut.

“We don’t play that game of setting some fictional, or theoretical … increase and subtracting from that,” he said.

Maybe not, but if he proposes a freeze on school funding, he’s going to hear the cut argument from many lawmakers and lobbyists all session long.