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Take caution with IPFW budget cuts


Budget woes at IPFW are budget woes for all of northeast Indiana. The university’s financial well-being is a key factor in the region’s economic health, demanding of attention as painful cuts are made and funding for the next biennium is secured.

IPFW’s financial troubles result from declining enrollment, higher operating costs and a new performance-based funding formula that does not serve all state institutions equally. A shortfall of at least $4.2 million is expected for the budget year beginning July 1.

Walt Branson, vice chancellor for financial affairs, told The Journal Gazette’s Sarah Janssen that some layoffs are expected. Job losses at one of the region’s major employers will have repercussions for all of northeast Indiana.

Both of the university’s major revenue sources are declining, in part, because of changes in the state’s higher education policy.

On the enrollment side, IPFW saw a 3.9 percent decline in the number of students last fall plus a 6.1 percent decline in credit hours. One factor in the enrollment piece is dual credit, as Janssen’s Saturday story noted. The 13,771 students enrolled last fall include about 2,700 high school students earning credit for college-level courses taken at their home schools. Indiana education officials have encouraged dual-credit courses by allowing the completion of six college credits to satisfy requirements for an academic honors diploma.

But dual credit comes at a cost: Universities are required to offer the courses to high school students at a reduced rate – $25 per credit hour, or 10 percent of IPFW’s current rate.

IPFW’s revenue from the state also has been affected by a policy change. A portion of state institutions’ base funding is determined by performance measures, including a school’s success in getting students to certain credit-level thresholds. The Commission for Higher Education tweaked the metrics two years ago to allow for differences in the types of schools – two-year versus four-year, for example.

But some observers have suggested the formula is more of a blunt instrument than a fine measure of performance.

“The overarching concern here is whether each institution has an equitable chance to compete for limited dollars,” said Randy Howard, Ball State University’s vice president for finance, at the time the formula was adjusted. Ball State’s strategic plan, for example, focused on improving the quality of an undergraduate education, not the quantity of diplomas. But the performance funding formula does not consider the quality of the degree, instead rewarding schools for types of degrees, including engineering.

For IPFW, the performance-based funding formula translates to a $1 million loss in state funds. The Fort Wayne campus continues to receive among the lowest per-student appropriations from the state, ranked 13th out of 15.

The budget-cutting process now under way is rightly aimed at preserving academic quality, and some of the efforts already instituted, such as reducing custodial services, are long overdue. Budget reductions in some instances represent an opportunity to make changes that private-sector employers, local government and K-12 schools made years earlier.

But a budget shortfall that could climb as high as 8 percent of the university’s total $112 million general fund calls for another look at the performance-based funding formula. Drastic reductions could harm the support services that help students stay in school and on track to graduate. That would further reduce funding under the performance-based measures.

Indiana’s northeast legislative delegation should work to ensure IPFW receives equitable treatment in the next two-year budget. The region’s economic recovery could be hampered if layoffs affect too many of the university’s 1,200-plus full-time employees or if budget cuts erode the quality of its largest four-year institution.