Pence: Austerity steps needed despite big reserves

The administration of Gov. Mike Pence has told state agencies to hold back 4.5 percent of their funding for the current fiscal year despite the state's $2 billion in reserves, a spokeswoman said Thursday.

The State Budget Agency has told agencies not to spend that portion of their appropriations for the 2015 fiscal year, matching austerity measures from last year, Pence Communications Director Christy Denault said in an email to The Associated Press.

Public universities have been told to keep in reserve 2 percent of their operating and general fund line-item appropriations after they had to cut nearly $34 million last year.

"There was a 5 (percent) increase in total funding for higher education in (the last budget year), so even with a reversion, overall budgets were increased," Denault said.

The Republican administration uses the spending cuts to manage potential budget shortfalls and ensure the state maintains adequate reserves, she said.

"Our current reserves of $2 billion are sufficient to run the state for 49 days, and are a significant factor in the state's AAA credit rating, which encourages businesses to bring their jobs to Indiana," she said.

The spending cuts were first reported by the Evansville Courier & Press.

The cuts have been criticized by Democrats, advocates for publicly funded programs and K-12 schools, among others. Adoptive parents have sued the Department of Child Services, claiming it has shorted them on payments while the agency was returning about $240 million to state coffers.

Mark Rozewski, vice president for administration and finance at the University of Southern Indiana, said the Evansville school would have used the money it's being told not spend to add staff and increase capacity for its nursing program, which has had to turn away students.

"Obviously, if these cuts continue into the following years there will be additional negative effects and frankly it puts pressure on tuition," Rozewski told the Courier & Press.

State Auditor Suzanne Crouch reported Monday that the state closed out the fiscal year ending June 30 spending $106 million less than the revenue it took in, allowing the reserves to grow past $2 billion.