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Strategic Budget Advisory Committee (SBAC)
Strategic Budget Advisory Committee

Ball State Waits as Debate about Indiana State Budget Continues to Rage

June 29, 2009

By Chris Paliga

INDIANAPOLIS - The mood at the state house has become more pessimistic as the General Assembly nears its deadline to pass a budget.

Indiana faces a government shutdown if the Indiana General Assembly does not pass a state budget by Wednesday.

Indiana's Constitution forbids the state from spending money from the treasury without approval by the General Assembly. A report from the non-partisan Legislative Services Agency stated it is largely unknown what would happen in the event of a shutdown.

The state would also stop paying financial aid to students.

According to the Legislative Services Agency, Indiana law only provides that psychiatric hospitals, the Indiana School for the Deaf, the Indiana School for the Blind, the Indiana Veteran's home and the Plainfield Juvenile Correctional Facility could continue operating.

Gov. Mitch Daniels said he also would keep the state police and prisons operating. He said unemployment benefits, child support payments and welfare payments would continue for those already eligible.

Because the last government shut down was in 1887, it is unclear how the courts would respond to such spending.

Randy Howard, associate vice president for finance, said Ball State University would continue to hold classes as normal if there were a government shutdown. He said because the university gets revenue from places other than the state, it has more flexibility to keep running. He said these revenue sources include tuition, fees and foundation money.

He said he is confident the General Assembly will pass a budget before Wednesday.

"They've done that for more than 100 years," Howard said. "Although this is a difficult year for them, we are confident that they will realize the implications and pass a budget. We'll evaluate day-to-day, week-to-week following what the state does and go from there."

He said the university would likely not start any major new initiatives. Howard declined to speculate how long Ball State could run without state money, but said he didn't think any budget shutdown would last long enough to prevent Ball State from operating.

"We're going to do whatever it takes to deliver the education they're coming to Ball State for," Howard said.

He said at worst, the university would have to cash in a certificate of deposit early, something he doesn't anticipate happening.

The legislature is in a conference committee intended to resolve differences between the House and Senate versions of the budget.

The General Assembly failed to pass a budget before the regular session ended earlier this year. The Senate had passed a budget and the House did not approve it.

Daniels called a special session to begin June 11. The Democrat-controlled House established its version of the budget and then sent the bill to the Republican-controlled Senate.

The Senate passed its own version of the bill and sent it back to the House for approval. The House did not approve the budget. It went to a conference committee tasked with creating a conference bill, which began its work Wednesday. The leading legislator from each party for budget issues in both the House and the Senate serve as the four voting members on the conference committee who must unanimously approve the budget before it can be sent to the full House and Senate for their approval.

The Senate budget is for two years, as is traditional in Indiana. The House version is a one-year budget. Republicans say a two-year budget would be impractical. Democrats say a one-year budget would allow for new revenue projections.

The Senate budget contains a two-percent decrease for higher education operating funds. The House version has a two-percent increase.

Ball State's Associate Vice President for Governmental Relations Philip "Satch" Sachtleben said the school's appropriation would likely fall somewhere between the House and Senate versions.

Chief GOP budget negotiator Sen. Luke Kenley said he and other senators did not relish cutting money from higher education. But, he said, there was no other option. He said higher education escaped more serious cuts that other agencies received.

"Everyone else is just getting left in the dust," he said.

Kenley urged students to look at the state's big picture and realize that a college education is still worth the money if there is a minor increase.

Republicans say the House Democrat's budget would bankrupt the state. Democrats say it costs about the same as the Republican Senate budget. House Ways and Means Fiscal Analyst Erik Gonzales said Democrats measure their spending off of how much is spent out of the general fund. He said this is how measurements are usually done.

Kenley said this year is different because of federal stimulus money. He said the House budget uses nearly all of the federal money in the first year. He said this overcommits the state for the next year, when the state will not have the stimulus money to fund at those levels.

Gonzales agrees the House budget spends the stimulus money up front. He said he has reason to hope that the state's fiscal situation will get better, allowing the increases.

He said it is still possible for things to stay the same or get worse, at which time it would be necessary to make harsher cuts. He said waiting to see would allow state institutions time to plan for that.

Howard said Ball State has been looking at likely scenarios and will be ready when the state passes a budget. He said Ball State is ready to work quickly on its normal procedure.

He said once the university gets the budget it will announce a public hearing to discuss tuition.

He said the university administration provides data to the Board of Trustees to help make their decision. Howard said while it sounds simple to anticipate what a tuition increase would be, the Board has many other factors to consider besides tuition, such as whether to fund new initiatives, whether to raise salaries and other places to cut back.

Legislators left the Statehouse at about 9 p.m. Sunday. The committee is expected to reconvene this morning. The conference committee has to make some sort of compromise by the end of the day so the caucuses can see if they have the votes to pass the budget.

© Copyright 2009 Ball State Daily News