State faces funding woes

A modest increase in IU funding during a tough year in the state budgeting process has IU officials gratified but not thrilled. The two-year budget -- approved close to the midnight deadline Sunday -- provides more money for some areas and cuts in others.\nWith the funding increase below the expected 4 percent inflation, officials say another rise in tuition is certain, and it appears the hike could be greater than in recent years.\nTrustee Ray Richardson said tuition will have to rise by 3.4 percent just to keep up with inflation, although that doesn't take into account increases in healthcare costs. \nIn the last two years -- when state funding for higher education was more generous -- tuition rose about 4 percent. If Gov. Frank O'Bannon signs the $21 billion budget, operating funding for higher education would increase by 3.5 percent next year and 2.4 percent in the budget's second year.\nCompared to other institutions, IU will receive a smaller increase the first year and a larger one the second. Base support would increase less than 2 percent each year.\nStill, President Myles Brand said he's appreciative of the priority put on higher education during such a tough fiscal year.\n"Under the circumstances, we are pleased with the proposed state budget for higher education and Indiana University, in particular," Brand said in a statement.\nThe state faces a $923 million shortfall, which necessitated budget spending cuts. Lawmakers rejected the politically unpopular ideas of raising cigarette taxes or legalizing dockside gambling to drum up more revenue.\nO'Bannon's initial proposal included freezing higher education funding for two years. The proposal kicked off intensified lobbying from IU and other institutions.\nO'Bannon is not expected to veto the budget, although spokesman Thad Nation said the governor hasn't yet committed to signing it. With cuts in areas other than the University operating budget, IU officials said they're still crunching numbers to determine whether the University will receive more money overall next year than it did this year.\nFunding for Information Technology was reduced more than 25 percent, and repair and rehabilitation funds were also cut 25 percent, said Don Weaver, director of state relations.\nBut it's a bitter pill University officials will have to swallow, Weaver said.\n"For us to be getting increases at all rather than being cut is a real benefit to IU," he said.\nAlthough less than requested, the state budget approves $4.5 million in start-up money for the new School of Informatics, Weaver said. It also approves $10.5 million for new classroom space at the business school and $30 million in bonding authority for IU's multidisciplinary science building.\nIU spokeswoman Susan Dillman said the bonding authority allows construction to begin immediately. She said if it wasn't approved, the science building project would have been delayed at least two years.\nStill, Brand said the budget carries serious challenges. The increase in the operating budget for the Bloomington campus is about one-half the anticipated rise of the consumer price index, below what is needed, Brand said.\n"This budget will not enable us to meet competitive faculty salary demands, which will affect our ability to attract and retain top-notch faculty, students and staff," Brand said.\nRichardson said the board of trustees would likely consider a tuition increase sometime in June, after officials are able to further probe the state's budget.\nBesides funding in the state budget, the trustees will also consider rising energy costs and a proposed student diversity retention program and a program to reduce the number of part-time faculty.