Daniels slashes $300M of K-12 budget

INDIANAPOLIS (WISH) - The governor plans to cut school spending as the result of a new forecast of state tax revenues. The search is now on for $300 million in cuts to K-12 education.

The reason for the new approach is a prediction that state tax revenues will continue to drop so far that the state's billion dollar budget surplus will disappear.

The revenue forecast issued Tuesday afternoon calls for a billion dollar shortfall in this fiscal year and another shortfall of $800 million in the fiscal year that ends in June of 2011. That's on an annual budget of about $13 billion.

The governor appeared with updated charts to say that it's time for schools to do their part to keep state government out of debt.

"I've asked the State Board of Education to meet quickly and recommend how much of a reduction can be absorbed without reducing the number of classroom teachers," said Governor Mitch Daniels (R)-Indiana.

His announcement followed a report to the state budget committee that predicted a "subdued recovery" from the recession.

"Historically," said economist Nigel Gault. "Since recoveries after financial crises have generally been slow that is likely to be the case this time."

"So the revenue loss to the state in this recession is much, much more profound than what it has been in past recessions," said Dan Novreske of the state forecast committee.
It means that the schools that were scheduled for a 1% average increase in state funding can now expect a 2% cut from what they received in the last state budget.

Combine that with $500 million in cuts already ordered by the governor and it will still take the entire billion dollar state surplus to balance the budget.

"The debate over the reserves is over," said Daniels. "We are using them. The only question is whether we'll use every penny of them or find a way to have something left."

The governor can make the cuts without input from the legislature.

In fact, it appears legislators would prefer to let him do the dirty work. So far, not a single lawmaker has issued a public statement on the governor's plans.

The State Board of Education meets on Thursday to consider recommendations.