— State lawmakers’ inclination to allocate some higher education funding by a “performance” formula means the University of Southern Indiana could come out almost $1 million ahead in the state’s next budget.

Indiana’s Commission for Higher Education recommended that 5 percent of all university funding, which looks to make up about 12 percent of the state’s next two-year, $28 billion budget, be funneled through a new formula.

The Indiana House of Representatives tweaked the items included in that formula so that extra emphasis is placed on the percentage of students who obtain their degrees.

As a result, even though higher education’s overall spending level is flat-lined, USI could see its $39.1 million in annual state funding increase to $40.1 million in each of the next two years.

That’s the good news contained in the budget that passed the full House earlier this week, said Cynthia Brinker, USI’s vice president for government and university relations.

Although the House budget does not cut general university funding overall – a departure from Gov. Mitch Daniels’ proposed spending plan, which included a 3 percent cut – there is a trade-off. It does not include “repair and rehabilitation” dollars.

Republican Rep. Jeff Espich of Uniondale, the House Ways and Means chairman who is his chamber’s budget architect, said he decided to make that change after hearing news of Indiana University-Purdue University Indianapolis’ plans for a fundraising drive to build new dormitories.

“Frankly,” he said, “I think they can raise their own money to build all of their buildings then. They don’t need us. They shouldn’t be building dorms in addition.”

For USI, that means waiting until the next biennial budget cycle to seek the $15 million it had requested this year to revamp a physical activities center, the lower level of a science center and parts of a technology building.

A key portion of the budget that USI will be watching, Brinker said, is whether it will include the debt service funding of about $1 million per year that the university needs to build a new teaching theater.

The biennial budget that passed in 2009 gave the university the $13 million in bonding authority it needs. Now it just needs $1 million per year to cover debt service.

The House budget includes about half of the university’s request, but only in the second fiscal year. That’s worse than the governor’s budget, which funds the debt service request fully in both years.

If the House budget becomes law, Brinker said, it could delay building the new theater from the fall of 2011 until the summer of 2012.

“Going forward, our concern is that we would like to obviously see the full fee replacement included in the budget for the theater,” Brinker said.

The budget that cleared the House this week also includes language that could make it tougher for universities to raise tuition rates – at least beyond what the Commission for Higher Education recommends.

The commission in recent years has set a target tuition range for each university. Some have stayed within that range, while others have exceeded it. They could do so freely because the range was non-binding.

“Those guidelines will now become mandatory unless overridden,” Espich said.

That process of overriding the commission’s recommendations would involve gaining the approval of the State Budget Committee, Espich said. That panel is made up of one legislator from each party in the House and Senate, as well as Daniels’ state budget director.

The House budget also includes some changes for the State Student Assistance Commission of Indiana.

In years past, lawmakers have carved out about $9 million in grants for the Indiana Department of Education to use for programs for prisoners. The House-passed budget lowers that amount to $4 million per year.

The savings, Espich said, will go to financial aid for part-time students. The state previously had offered aid for only full-time students. Espich called the change a “good” one, though he said lawmakers still want prisoners to learn trades or skills they can later use to earn a living.

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