University may need to trim budget due to shortfall
>>Print ViewPublication Date: 11/13/2009
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Due to recent state revenue shortfalls, Purdue might be asked to trim its budget.
State tax collections are 7.4 percent below forecast for the first four months of the fiscal year. Gov. Mitch Daniels announced last week that all state agencies must trim their budgets by 10 percent in order to slow down the already $309 million shortfall since the fiscal year started in July. Daniels said in a press release the state’s $1.3 billion reserves would be depleted by next August if spending cuts did not occur.
“It would not be surprising, considering the governor’s actions, if all state universities were asked to reduce their budgets,” said State Sen. Brandt Hershman, R-Wheatfield.
State Sen. Luke Kenley, R-Noblesville, said he agrees with Hershman that it wouldn’t be unexpected if universities were asked to make cuts. Kenley said it is a tough time for everyone in the state and that the struggling economy affects everyone.
“If tax collection revenues continue to fall,” he said, “I think everybody’s got to share the pain here.”
Kenley said Daniels is working hard to protect education, but the real issue is whether there is funding.
“He’s trying to protect education, but if we continue to lose revenue, he’s going to have to face that, too,” Kenley said.
State Rep. Sheila Klinker, D-Lafayette, said cuts might be necessary to avoid depleting budget surpluses.
“Unless there are cuts, there may not be that kind of a surplus,” she said. “If the dollars come in poorly and forecasts are off again, then all education funding might be asked to take a cut.
“I think that will be the very last thing to be cut, K through 12 and higher ed.,” she said.
According to Klinker, the legislature is still watching the state budget and might face more budget cuts.
“We’re going to be watching very carefully, we’re going to be looking at December forecasts and we’ll be making some other forecasts at that time,” she said. “There may have to be some tough cuts in state government.”
Bernard Hannon, chief financial officer of the Indiana Commission for Higher Education, said “universities have not been asked to reduce their budgets so far,” but that it is possible they will be asked to in the future.
“I think it would not be surprising at all,” he said. “Like all organizations, they simply need to find a way to spend less money.”
Hannon said universities would likely find cuts in places that don’t affect education, such as infrastructure, maintenance and grounds upkeep, but if there still need to be cuts after that, more drastic measures would be taken.
“They’d have to cut personnel and things affecting students,” he said. “It all depends on where they spend less money.”
Hannon said the commission is still waiting to see what effect the governor’s announced cuts will have, but Hannon said the reality is that everyone will be spending less.
“We understand that the reality is that Indiana revenues are doing very poorly right now and we have to live within our means like everyone else is,” he said.
Melissa Johnson, director of budget and fiscal planning at Purdue, said Purdue being asked to make budget reductions wouldn’t be entirely unexpected.
“I don’t think I would be surprised – if the state continues to see a decline from what was projected,” she said. “We were not included in this round of cuts, but it would not be surprising that we might be if the state continues to see declining revenues in the next few months.”
Johnson said the University would have to go through planning exercises if faced with a situation where the budget would need to be trimmed.
“It is so early in the fiscal year, we’ll certainly be monitoring the situation and be in a position to take budget action if we need to,” she said.
Johnson said information technology is being reviewed as one of the ways the University could save money.
Al Diaz, vice president for business and finance and treasurer for Purdue, said in an e-mail that there is a committee that “is looking at everything Purdue does and finding ways to streamline, consolidate or eliminate programs and services that are not adding to the educational experience of our students or helping our staff and faculty do their best work.”
According to Diaz, Purdue is monitoring the state budget and taking it into consideration while the committee assembles a report for the President’s Forum on Nov. 20.
“The governor’s announcements for state agencies do not affect Purdue directly,” he said in the e-mail. “Still, we’re watching the state revenue situation very closely and taking the shortfall very seriously.”
When asked further questions, Diaz said questions would have to wait until the committee’s report comes out Nov. 20.