The news came as a surprise to many state officials, including those at Indiana University who are being ordered to trim their budget by 2 percent.
IU Associate Vice President Mark Land says that amounts to a $10 million cut.
“The budget has been set which is one of the things that makes this really challenging and quite frankly a little bit disappointing, because we put together a budget that included the lowest tuition increase in more than 40 years based on the appropriation that was passed by the legislature,” Land says.
Other state agencies are looking at a 1.5 percent budget cut on top of the 3 percent the state typically has agencies revert at the end of the fiscal year.
More than half of the $140 million shortfall came during November. State budget director Brian Bailey says that is what prompted the governor’s cuts.
“If we project out in current trends, that number could be greater, could be as high as 300 million by the time we get to the end of fiscal 2014. So rather than waiting to we get further into the fiscal year when it would get more difficult for agencies and universities to make those cuts with fewer months left, we decided now was the appropriate time,” he says.
The governor is also delaying funds for the new Indiana Bio-sciences Research Institute, which Pence only last week touted as a major accomplishment of his first year in office.
He also intends to sell the state plane. He’s hoping these steps will save the state $57 million.
But with $2 billion in cash reserves, State Representative Terry Goodin says cutting higher ed dollars borrows from the future.
“You see the governor rummaging through the closets at the statehouse trying to find things to put in the state yard sale and at the micro level you think, ok this is just a November – December problem, we came up a little short but really we need to look at this in the macro spectacle.”
Goodin says Indiana’s economy is consumer driven, and cutting budgets will only hurt more.
Meanwhile, IU officials are not panicking. Land says they’ve been through this before.
“The governor has said that student aid programs won’t be affected so I think this is going to be more of an issue of the university looking for ways to run a little bit more efficiently.”
Land says the best case scenario is the state’s revenues come back the next 6 months and the reserve is released back to the university. But state budget director Brian Bailey is not so sure.
“In theory, it would be possible for those reserves to be adjusted downward,” Bailey says. “In practice that’s not likely to happen given the strong miss on forecasts we’ve seen in the first five months.”