Special Education Stimulus Funds Diverted to Other Costs

March 18, 2010

"It was the lousy economy that made him do it.&amp ;quot; That’s what Gov. Mitch Daniels told an audience at Ball State University on Wednesday. It was declining state revenues that sealed his "next-to-last" resort decision to cut funding for higher education.

In December, the governor ordered a $150 million decrease, or 6-percent cut, in state funding for higher ed.

At a forum on Wednesday in the student center, Daniels didn’t say what the last resort was, but he displayed a slide that provided the answer: K-12 schools, which also are facing a reduction in state funding.

The slide showed that 50 percent of state general fund expenses for 2010 will go to K-12 schools, followed by higher ed at 13 percent, Medicaid at 13 percent, corrections at 5 percent, teacher pensions at 5 percent, child welfare at 3 percent and "other" expenses at 12 percent.

"I’m not any happier about it than you," said Daniels, a graduate of Princeton University.

The governor has proposed earmarking growth in lottery revenue for higher ed.

Other states have been forced by the recession into budget "slashing, cutting and raising taxes left and right," he said.

Indiana, meanwhile, has enacted a law capping property taxes, and the governor noted that voters will have a chance to amend those circuit breaker tax caps into the Constitution in November.

Daniels didn’t mention it, but in 2008, the state increased the sales tax from 6 percent to 7 percent.

Keeping taxes down is key to defining the state’s future success, he said. Doing so will lead to more and better-paying jobs to fund public services such as schools, student loans and better highways, he said.

Indiana was on a roll when the worldwide economic and financial crisis struck, the governor said, comparing the state to the prettiest girl in school at a time when the prom was canceled.

But the state is well-positioned for recovery, ranked high by chief executive officers among the best states to do business in, and also ranked high as a business-friendly state.

Daniels said his top priority as governor has been to raise the net disposable income of Hoosiers. His next priority could be doing the same for the entire country. There has been speculation that Daniels will run for president, but he pooh-poohed that idea.

"This is the only public office I’ve sought," he said, "or ever will."