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Coalition Asks Ind. Governor To Tap Reserves or Raise Taxes

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A coalition of Indiana education groups is pressing Gov. Evan Bayh either to tap state reserve funds or back off from his pledge not to raise taxes in order to assure adequate funding of local schools.

An education budget based on the Governor's recommendations has already passed the House, where his fellow Democrats hold a majority, and awaits action in the Republican-controlled Senate.

Under the plan, the state's share of school aid would drop by $60 million in calendar year 1992 and another $120 million in 1993. School districts would be authorized to raise property taxes by an average rate of 7.5 percent the first year and 7 percent the second year to maintain current spending levels.

State officials contend that under Indiana's current economic constraints, it is appropriate to assign more of the burden for school funding to districts.

The shift would cut the state's share of education spending to slightly less than two-thirds.

The administration contends it is merely "straight-lining" spending.

But the education coalition--which includes associations representing school boards, parent-teacher groups, superintendents, teachers' unions, principals, and special- and vocational-education administrators--says schools will be unable to maintain their current level of services under the plan.

Because the plan does not allow for inflation, "it would mean a significant reduction in programs and services," said Norma Kacen, a lobbyist for the Indiana State Teachers Association. The budget also could trigger increases in class sizes and cuts of up to 10 percent in school staff, she warned.

"Budget recommendations which will limit schools to current revenues for the next two years will have a drastic and unavoidable impact on school personnel and instructional programs," the education coalition said in a statement.

Local Tax Hikes Urged

Mr. Bayh has encouraged districts to seek referendums raising property taxes higher than the plan requires if they wish to supplement school spending. But Tom W. Richardson, president of the Fort Wayne Education Association, said voters are unlikely to go along.

"A referendum after [the initial increase] is not going to happen," he said, adding that Fort Wayne would have to lay off more than 100 teachers under the proposal.

Mr. Richardson also noted that another House proposal--to remove Social Security payments as a separate budget item, fold them into the school-aid formula, and cap the amount of funds districts can claim from the state--will further erode local spending power.

For example, he said, while Fort Wayne received some $51 million in state aid in the last school year and $5.6 million in Social Security reimbursements, it would get about $53 million to cover both under the plan.

To bolster school aid, the coalition is urging the Governor to tap temporarily some of the $631 million stored in three state reserve funds--an approach also pushed by some Senate Democrats--or consider "a modest increase in a wide range of taxes."

But observers say neither scenario is likely.

Officials say fiscal circumstances do not meet legal requirements for dipping into the state's "rainy-day fund" and other reserve pools, and that Mr. Bayh is committed to maintaining his campaign pledge not to raise taxes.

"The Governor has consistently said no to taxes," said Don Ernst, his executive assistant for elementary and secondary education.

Nor is there much appetite in the legislature for raising taxes, said Senator Lawrence M. Borst, chairman of the Senate Finance Committee. "The Governor has been so adamant ... and he may be on sound footing," Mr. Borst observed.

'When the Recession Is Over ...'

Jeff Viohl, assistant director for education in the state budget agency, acknowledged it would be difficult to "provide monies for any new pro4grams or significant increases in salaries or other costs" under the plan.

But he noted both that the local tax levies required under the plan are "consistent" with those raised by school districts over the last 10 years, and that the proposed formula would generate some $12 million for enrollment growth and $44 million over current spending for regular programs statewide.

Mr. Viohl also said the state's share of education spending was already well above the national average, which he noted is currently 48.7 percent. Mr. Bayh has also pointed out that school funding rose by 16 percent in the last biennium, and that he was the first governor in the state's history to raise school funding in a "off" budget year.

"When the recession is over and more money is available, I will be the first to propose that any added resources be spent to assist our local schools," Mr. Bayh said in a letter responding to critics.

Although the Governor won approval in the House for several new education initiatives he proposed this year, observers say the programs are unlikely to be fully funded in the current fiscal climate. The initiatives highlight early-childhood education, workforce preparation, basic skills, and computer technology.

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