Like other state-related universities and the public school systems in Indiana, Purdue has spent the last few weeks looking very closely at its budget in order to decide how to cope with potential funding reductions. Bad economic news seems to greet us at breakfast every morning and to gain momentum throughout the day.
A national economic downturn has turned into a major budget crisis for Indiana. One of the nations largest state surpluses has evaporated with startling speed, and Indiana finds that it must reduce spending to avoid a deficit.
Governor Frank O'Bannon has proposed cutbacks designed to cope with the immediate fiscal challenge. Whether or not his plan can be implemented by the state, the governor deserves credit for putting the issue on the table. If we fail to confront the crisis and I believe crisis the correct term it will only get worse.
For Purdue, the governors proposals add up to a substantial budget reduction. A "best-case" analysis of the O'Bannon plan would cost the university between $50 million and $60 million this year. This is a significant and potentially damaging reduction. Its impacts would be felt in every area of the Purdue system, including the technology infrastructure, facilities maintenance and employee compensation.
However, Purdue recognizes the challenge the state faces, and we are prepared to do our part to help the governor and the General Assembly solve the problem. With good fiscal management, including some significant reallocations of funds, I believe we can get through the immediate situation without passing the harmful effects along to our students.
The longer term is another matter entirely. Neither Purdue, the other state universities and colleges, nor our public school system, can absorb continued funding reductions without a loss of educational quality. This damage inevitably will injure the state through lost economic opportunities and a reduction in the quality of life.
All crises bring us a mixture of danger and opportunity. In this case, the danger is that we will succumb to the temptation to solve only the short-term problem, thereby leaving ourselves vulnerable to the next economic downturn and the next one and the one after that.
It would be a serious mistake to focus only on getting ourselves through the current biennium. If we resolve now to solve Indiana's long-term fiscal malaise, we can take charge of our own destiny and position our state for a far better future.
The budget problems we face are real and it will take money to solve them. Indiana's taxation system has evolved over the decades, but it remains rooted in an economy that no longer exists. Now is the time to take a fundamental look at the state's tax structure and reinvent it. We need:
A tax structure that takes into account today's and tomorrow's economic realities.
A statewide strategy aimed at fostering a healthy and growing business climate.
A continued commitment to education at all levels.
Improved coordination among state government, local government, private enterprise and education.
These things won't come easily. They will require a determined effort on a broad front, but I believe they are possible.
It is also time to recognize education for what it is: A basic and essential resource that must be strong. If we settle for anything less, we will be choosing to be a second-rate state in a highly competitive global market.
Higher education institutions and the K-12 systems necessarily are administered separately. But in strategic terms, we need to see them as a single state resource. The taxpayer dollars that underwrite the schools, colleges and universities are an investment that is both low-risk and high-return a rare combination. A good education pays off big almost every time, and its benefits are widely distributed.
The individual involved gets a better life, better health and a higher salary. He or she becomes a better parent and a more involved citizen. With a well-educated population, communities and the state collect more taxes, spend less on social services and reap the benefits of creativity and entrepreneurship that translate into true prosperity. It is this prosperity that will keep talented young people in the state, completing the circle of opportunity.
Indiana is well-positioned to take advantage of the tremendous advances the 21st century will bring. The knowledge-based enterprises that hold so much promise for the future are still looking for places to put down roots. The places that are best-prepared will be successful. If we have the will, we can choose now to be among them. Let's not miss the chance.