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State revenue lag means budget cuts ahead

Miami officials are awaiting details on a mid-year cut in state funding following word from Columbus that state revenue has fallen $600 million short of initial projections.

Ohio Gov. Robert Taft indicated last week that the shortfall in state revenue would likely result in a 6 percent cut in funds for many agencies, including colleges and universities. This would mean about $5.2 million in reduced funding for Miami’s three campuses, said Richard Norman, vice president for finance and business services.

University officials had been bracing for a possible cut, given the concern over the economy and the court battle over funding for primary and secondary schools, said Norman. "Certainly, prudent planning means that you must prepare for the consequences of an economic downturn by maintaining reserves. However, a 6 percent mid-year cut translates to a 12 percent annual reduction in state funding. Also, remember that Miami’s initial state funding for this year was 1 percent below the previous year’s."

University administrators have begun to discuss among themselves and with key advisory groups such as the fiscal priorities committee how to respond to a possible cut, "but we are not in a position to weigh all of the options until we have more information from the state," said Norman. Details may be forthcoming as early as this week, he added.

"We do know that we will want to protect student instruction and essential services. Beyond these broad goals, it is too soon to predict how we will respond until we know the magnitude of the cut, how the reductions will be imposed, and when," said Norman.

Gov. Taft has indicated he might propose using a combination of budget cuts, revenue enhancements and some of the $1 billion in the state’s rainy day fund to address the shortfall. He can order the budget cuts but must seek cooperation of the General Assembly to take the latter two steps.

State leaders in Columbus warn that unless the economy improves, a similar problem could occur next year. Also, the final decision on funding for primary and secondary schools coming out of the State Supreme Court case could result in less money available for higher education and other state needs, they noted.

Date Published: 10/11/2001
Volume: 21   Number: 11

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