sealPurdue Letter from the President

March 2002

When the Indiana General Assembly adjourned on March 14 without reaching compromise on the budget shortfall or the tax structure problems that beset our state, we all knew that some of our worst fears about the impact of the unresolved fiscal dilemma would be realized.

Governor Frank O’Bannon is facing a very difficult situation. He has to deal with a $1.3 billion gap between revenue and expenditures. Without new revenue, his only choice is to cut spending. In recent weeks, he has announced numerous cost-cutting measures, including some that impact Purdue – and all public education – very deeply.

We certainly understand the governor’s dilemma, but we cannot escape the reality that reducing an already tight education budget endangers Indiana’s future. The presidents of the six state-supported universities, among others, have urged that a special legislative session be convened to deal with both the immediate fiscal emergency and the long-term problems in our revenue structure. I hope the governor and the General Assembly will consider this step. I believe there is still time to turn this challenge into an opportunity for our state.

Purdue’s total loss in funding in the current biennium from the previous biennium now exceeds $100 million. This is a serious diminution of our capacity to meet the educational and research needs of Indiana.

The reductions announced so far focus heavily on the repair and rehabilitation appropriation and on technology funds. This means we will have to forgo updating software and equipment that our students need to be prepared for the job market. It also means that necessary maintenance of very valuable facilities will suffer.

In the round of budget cuts announced March 28, the losses in cash appropriations to the Purdue system add up to more than $37 million for the current and next fiscal years. This does not include the planned rollover of our June appropriation of more than $24 million.

It also doesn’t take into account the freezing of the 21st Century Fund, from which Purdue expected to receive $25 million to $30 million, or the delay in payment of the $5 million grant for construction of the Birck Nanotechnology Center. In addition, a 7 percent cut in line-item appropriations will reduce funding for Statewide Technology, the Cooperative Extension Service and the Technical Assistance Program, all of which are major contributors to state economic development. It also will impact the Animal Disease Diagnostic Laboratory, which is the primary safeguard of animal health in the state.

All of these cutbacks add up to a situation that is very serious for Purdue and for all of education. Sadly, they do not solve the real problem for Indiana. In round numbers, the state plans to eliminate $500 million in recurring expenditures and $800 million in one-time costs. This is designed to cover the $1.3 billion deficit for the current biennium. But at the end of this budget cycle, the $800 million gap will still be there without a plan for covering it. History suggests that even the most spectacular economic recovery will not close that gap.

Meanwhile, serious damage will be done to our education system when we should be improving it. The Alliance for Indiana’s Future has continually urged a long-term solution to these problems. With every passing day, the problem for Indiana gets worse. We should not be waiting. We should be taking charge of our own destiny.

Martin C. Jischke