IU approves tight budget

The IU board of trustees approved the University's budget for 2004-2005 Friday, which includes a 2.4 percent net increase in projected revenues. But in economic reality, the University has almost zero dollars to expand and invest for the next academic year.\nThe approved budget includes a general fund base revenue of $591 million for IU-Bloomington, up $24 million from last year, or 4.2 percent. But $10 million of that revenue has already been allocated for various funding decreases, leaving IU-Bloomington with a net revenue increase of $14 million, or 2.4 percent.\nThe budget is considered modest by most, and reflects the economic situation of the state. Fred Eichhorn, the president of the board of trustees said although the new budget will be tight, it allows IU enough room to sustain operations.\n"We think we can make it work," Eichhorn said. "It's a maintenance budget -- it's not a budget that will enhance quality. We'll have to find quality dollars someplace else."\nThe 2.4 percent net increase is only slightly higher than the 1.9 percent inflation rate for 2003. Economics Professor Peter Olson said universities' cost increases may run higher than other sectors because they don't enjoy the privilege of technological advances some other sectors do.\n"Changes in technology can help cut costs in many industries," Olson said. "But those opportunities are much more limited in higher education."\nFor example, Olson said computer chip manufacturers can make production cheaper by using robots. But, he said, "when you add more classes, you've just got to pay more faculty."\nEichhorn said while the budget is sufficient for sustaining the University's activities, it will be detrimental to growth.\n"I wouldn't say I'm disappointed," Eichhorn said, "but it limits our ability to do program improvements which we all strive to accomplish."\nA meager increase in tuition will account for most increases in the budget but will limit IU in any further budgetary expansion, Eichhorn said. Resident students will incur a 4 percent increase in tuition and instructional fees next year, while non-residents will pay between 6 and 6.5 percent more. In comparison, Kentucky universities are levying tuition increases of 10 percent to 12 percent next year, according to The Courier-Journal in Louisville, Ky.\nThe 2003-2004 IU revenues were allocated heavily toward faculty and staff salaries, which accounted for 46 percent of the University's total budget. Supplies and expenses made up another 28 percent, while student financial aid accounted for only 6 percent. \nStephen Ferguson, vice president of the board of trustees said because of the constricted budget, the University must be frugal in University investments, which could range from new buildings and technology to hiring more faculty.\n"We have to be very careful not to be an inch deep and a mile wide," Ferguson said. "We have to make sure we maintain the current areas of quality and make investments with a great deal of care."\nAlthough Indiana is currently experiencing economic hardship, Ferguson said the state is not to blame for the tight budget.\n"The state did the best they could, given the structural deficit problems Indiana is facing," Ferguson said. "Having said that, the University is attempting to maintain that same approach and trying to also keep the University afloat for students, which is our primary mission in serving them."\n-- Contact staff writer Rick Newkirk at renewkir@indiana.edu.