Universities were among the hardest hit state-funded entities during the so-called Great Recession.
Or maybe it’s fairer to give that designation to college students, who faced higher tuition and fees as lawmakers pulled back on funding their schools.
But in the last couple of years, lawmakers have been trying to change that. They increased funding for higher education in the current two-year budget and asked universities in exchange to keep their tuition hikes in check.
Now, some key fiscal leaders are worried their work could be thwarted by Gov. Mike Pence and his efforts to maintain and even grow the state’s $2 billion reserves. The conflict could prove interesting as lawmakers prepare to write the next two-year budget.
This summer, Pence ordered state universities to put 2 percent of the money appropriated for this year by the General Assembly in reserves. That’s some $27.5 million that State Budget Director Brian Bailey said schools will only be allowed to use if tax receipts meet projections in the first 11 months of the fiscal year.
The reductions come on top of 2 percent cuts Pence imposed on universities last year.
Bailey told the State Budget Committee last week that the cuts are part of a larger plan to ensure the state doesn’t spend more than it receives in tax revenue. And in July, the first month of the fiscal year, tax receipts did indeed dip below projections.
State agencies and other programs are facing similar cuts. So far, only K-12 schools have been spared any reductions in funding.
But while Senate Appropriations Chairman Luke Kenley appreciates the Pence administration’s efforts at balancing the budget, he and others are concerned about what it means for colleges. Kenley and others have been on a crusade to keep tuition increases at 4 percent yearly or less – an effort they’re trying to achieve without actually restricting the hikes by law.
Of late, that’s been fairly successful. But it depends in part on the legislature’s willingness to increase university funding, something that didn’t happen for several years.
In Fiscal Year 2009 – after several years of budget increases – funding for public colleges, universities and student assistance reached a high of $1.78 billion. But the following year, then-Gov. Mitch Daniels implemented a cost-cutting plan meant to keep the state’s budget in the black as tax receipts plummeted. That included cuts in money allocated to universities.
For several years, state funding for student financial aid increased significantly, debt payments on university construction projects leveled off and funding for university operations fell.
By 2013, higher education funding had fallen to roughly $1.7 billion, about 4 percent less than it was at its peak.
That’s why the increases in higher education funding for fiscal years 2014 and 2015 were so important. They were meant in part to show to the universities that lawmakers wanted to be a partner in the effort to keep tuition down.
Now, the Pence cuts may put that unofficial deal in jeopardy – which could lead to higher costs for students and their families. That’s not likely to sit well with fiscal leaders as they prepare to write the next two-year budget, a spending plan that might not give the governor all the freedom to make the cuts he’s used to.