Budget deficit trumps school funds

INDIANAPOLIS -- Gov. Mitch Daniels defended his decision to withhold about $52 million that public schools had expected to receive this calendar year, saying Friday the state cannot afford to distribute the money and still balance its budget.\nBut many schools say they already are strapped for cash and had banked on the money, and likely will have to cut staff and programs if lawmakers do not defy Daniels' wishes by making up that funding gap and giving at least some new money to schools in the two-year budget they pass this year.\n"The only solution we have is to cut programs and reduce what we offer to students, and that could be anywhere from increasing class sizes, eliminating staff members or eliminating programs," said Thomas Rohr, superintendent of Greater Clark County Schools. His district in southern Indiana would get about $533,000 less this calendar year under Daniels' order to reduce state payments.\nSome school districts may struggle to meet payroll and pay bills on time without money they had expected to receive based on the school funding formula, said Damon Peigh, interim superintendent of the Cloverdale Community School Corporation.\n"It's difficult to meet expenses anyway without having the revenue part of it held back," Peigh said. His district about 40 miles southwest of Indianapolis would get about $72,000 less than it expected under Daniels' order.\nDaniels said he considers education "very important," but the state cannot distribute that money and still reach a balanced budget without making even greater cuts in other areas.\n"I know there'll be some disappointment," Daniels said. "It's going to be very difficult to balance the books of this state even without this."\nDaniels ordered reductions in monthly payments to schools starting in March to start meeting the current budget's cap on school spending. Schools would receive about $26.8 million less from March through June -- the end of the fiscal year -- than they had expected based on the funding formula.\nThe reduced payments would continue through the end of the calendar year and total about $52 million. The reductions would be based on enrollment, so their amounts would vary by district.\nRepublican House leaders say it is possible that lawmakers will make up the funding gap in the two-year budget they pass this year. Daniels said he was open to suggestions by lawmakers on how that could be done while still erasing the state's projected $645 budget deficit.\nIn his first few weeks in office, Daniels has upset many school officials with some of his education proposals. Among other things, he wants to freeze basic funding for schools at current levels for the next two years.\nEducators say that amounts to a budget cut because without increased funding, schools cannot keep up with the rising costs of health care, teacher salaries, utilities and other expenses.\nMurray Pride, superintendent of North Putnam Community Schools, said he sympathized with lawmakers who are trying to tackle the state's fiscal problems, and schools are trying to do their part. But he said the $99,000 hit his district would take in reduced payments this year already had been budgeted.\n"We are a growing school corporation. These are salaries we are paying, utilities we're already paying, and doing what we have to do," Pride said. He plans to meet with principals in the district Monday to start seeking ways of absorbing the $99,000 shortfall.