Gov. Kernan Needs Fiscal Reality Check

December 4, 2005

Andrea Neal column for Jan. 13 and thereafter
720 words

(Note to editors: Publication is especially timely for Tuesday Jan. 13 because Gov. Joe Kernan will deliver his State of the State address that evening).

ImageINDIANAPOLIS — Buried deep in a news article about Gov. Joe Kernan’s all-day kindergarten plan was this comment from Republican governor candidate Mitch Daniels: "Given the state"s bankruptcy, it is not clear that a sustainable program can start now, but let"s have a look."

Forget what he said about kindergarten, for a moment. The news flash is this: Indiana is bankrupt.

"Bankrupt? That would be an accurate statement," says state Sen. Luke Kenley, R-Noblesville, a member of the Senate Finance Committee and chair of the Education Committee.

"For this cycle, we have drained out every reserve account you can find anywhere — to give schools an increase," Kenley says. "We are spending $850 million more a year than revenues are producing." All the pots of money are "dried up and gone." And the picture isn’t looking better, despite positive signs nationally. "Revenues are coming in even slower than we predicted."

Just last week, lawmakers heard that bad news from State Budget Director Marilyn Schultz. December tax collections fell $13.6 million short of expectations.

These were the dismal numbers that formed the backdrop for Kernan’s incredible proposal last week for all-day kindergarten and Democratic House Speaker B. Patrick Bauer’s announcement he would sponsor it.

Why incredible? Because the legislature is in a short session, it’s not a budget year, Indiana is out of money and facing a mini-property tax revolt and Kernan would have to divert money from teacher pension funds and convince lawmakers and voters to enact a constitutional amendment to finance his plan, which wouldn’t fully take effect until 2007.

No matter what you think about all-day kindergarten (and most experts think it’s a good idea for kids whose parents aren’t preparing them at home), you’ve got to recognize Kernan’s proposal for what it is: politics.

"Not fiscally responsible or honest," is how Kenley puts it. "It shows how desperate we are to find money. We’re down to a change in the Constitution to find money."

Kernan wants to amend the Constitution in order to tap money from the Common School Fund, which provides loans for school construction and technology purchases. And he wants to divert money from the teacher’s retirement fund, which is already underfunded to the tune of $7.9 billion.

If Kernan wants to make all-day kindergarten his legislative priority, why not do the honest thing? Why not propose a tax increase to cover the $150 million annual cost and push for it immediately? Then Hoosier citizens can debate the issue, communicate their wishes to lawmakers and let them cast the final vote.

Here’s why not: Because he suspects Hoosier taxpayers would have a fit. The recent property reassessment caused the tax bills of many homeowners in urban areas to skyrocket, and came on the heels of the 2002 General Assembly’s vote to raise the cigarette tax by nearly 40 cents and the general sales tax from 5 to 6 percent.

We’re taxed out at the moment and need a reality check. Indiana is doing well by its K-12 public schools.

While most other states have flatlined or cut school spending, Indiana lawmakers raided enough pots last session to increase the school funding formula by 3.3 percent in fiscal 2004 and 2.9 percent in fiscal 2005. Even before that increase, Indiana’s schools were well above national average.

According to a just-released report by Education Week analyzing 2001 budgets, Indiana ranked 10th of the 50 states in per pupil spending at $8,163. The study gave Indiana a B+ in the "funding adequacy" category. To borrow a phrase from Mitch Daniels, "given the state’s bankruptcy," we’re showing an incredibly strong commitment to our schools.

To take on new expenses such as all-day kindergarten, without knowing how we will sustain current spending levels if the economy fails to recover, would be foolhardy. On the other hand, when the economy does bounce back, current tax rates would probably accommodate the expansion of kindergarten.

Last week, as Kernan proposed raiding teacher pension funds so he could spend more, Michigan’s budget director announced an $84-per-student funding cut to make up for that state’s projected revenue shortfalls. In Kentucky, Gov. Ernie Fletcher ordered $6.9 million in cuts in elementary and secondary education funding.

Hoosiers, it’s time to face facts. Indiana is bankrupt, just like our neighbors to the north and south. Don’t fall for Kernan’s kindergarten proposal. It’s all smoke and mirrors.

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Andrea Neal, former editor of the Indianapolis Star editorial page, is adjunct scholar and columnist with the Indiana Policy Review Foundation. Contact her at aneal@inpolicy.org



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