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Strategic Budget Advisory Committee (SBAC)
Strategic Budget Advisory Committee

Budget-Cutting for All

December 30, 2008

The Journal Gazette

City and county government have had little choice but to trim costs.

Declining property tax revenue leaves few options, so officials have rightly targeted expenses that will have the least deleterious effect on their ability to provide services.

Belatedly, Indiana’s public universities and Ivy Tech Community College are coming to the same realization that they must make do with less:

  • Purdue University officials have suspended merit bonuses, are reviewing all job openings and have instructed all departments to plan for budget cuts. The university also agreed to delay an $18.6 million biosciences building.
  • At Indiana State University, President Dan Bradley has called on department heads to review open positions and justify the need to fill vacancies.
  • Ball State University officials have instituted a hiring freeze across administrative, staff and service jobs.
  • Indiana University President Michael McRobbie will recommend a wage freeze for 300 to 400 senior administrators, a measure expected to save $2 million in the next fiscal year.
  • Ivy Tech Community College has agreed to return to the state $1.6 million earmarked for a new campus in Portage.

If public universities are late to join private-sector employers in cost-cutting measures, they still are ahead of Indiana’s public school districts.

While schools see the effects of the economic downturn in their classrooms each day, budget cycles and union contracts have insulated them from the tough job of cost-cutting that most companies are facing.

In any other year, the downturn wouldn’t be as ominous. But next year brings a new reality for Indiana public schools: general fund costs covered entirely by the state, funded by income and sales taxes. Ironically, school officials long resisted efforts to move education expenses from local property taxes because they realized those revenues were steady and reliable. Now the switch has been made at a time when income and sales taxes are certain to suffer from job losses and reduced spending.

School officials would be wise to prepare now for the worst. That means a serious examination of all spending, including benefits packages that have gone largely unchanged even as private-sector workers have faced dramatic increases in health insurance costs and reductions in coverage.

Granted, the demands on schools have grown exponentially in recent years, but the financial challenges all workers are facing make shared sacrifice a necessity. Trimming costs where they least affect instruction is the best approach to the financial squeeze, and the only realistic option when public revenues are the only source of support.