How are Indiana’s colleges and universities dealing with state funding cuts?
Subscriber Benefit
As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe Now
As commencement ceremonies wrap up and summer begins for students, Indiana’s public colleges and universities are already feeling the pain of legislative budget cuts.
Facing a projected $2.4 billion shortfall over the next two years, Republican lawmakers passed a budget that cuts 5% from the state’s public colleges. Combined with recent guidance from the Indiana Commission for Higher Education that urges colleges not to raise tuition, higher education institutions are being squeezed.
The result: layoffs and a variety of cost-saving measures from public colleges, which observers say could start a downward spiral for Indiana’s economic output and quality of life.
“Institutions of higher education are economic drivers for states, and they help produce a quality workforce. They do research, often that is applied to the local economy. … So it really affects, certainly the economy, but quality of life,” said Tom Harnisch, vice president of government relations at the State Higher Education Executive Officers Association.
Harnisch’s group, based in Washington D.C., works with state commissions for higher education (including Indiana’s), and between budget cuts at the state level and losses in federal research funding, he says it’s a rough time for higher education.
In a press release addressing the cuts, Gov. Mike Braun wrote, “Out of all state entities, our higher education institutions are in the best financial position to weather these cuts as state funding represents just one of the revenue streams—and institutions hold strong financial reserves.
“Higher education institutions should address the reductions in the same way as other state entities: by
refocusing on their core missions, finding efficiencies, eliminating redundancies, and identifying ways to streamline the delivery of higher education.”
Budget cuts
Braun signed the state budget in early May, and already most public colleges in the state have reacted to the impending budget reductions.
Some, like Ivy Tech Community College and Purdue University Fort Wayne, have announced layoffs. Others have announced or are mulling tuition increases.
A list of announced budget reduction measures from the around the state as of Tuesday includes:
Indiana University: IU announced it will seek to cut $200 million in spending, including $100 million in the 2026 budget. The university’s release says the cost savings will come from eliminating vacant positions, cutting travel and operational expenses and “scal[ing] back support for some non-academic programs and benefits.”
IU spokesperson Mark Bode declined to make administrators available for an interview.
Purdue University: Purdue has pledged to keep its base tuition rate flat through 2027, though the university is seeking to increase fees for international students and for those enrolled in some of the school’s STEM and business programs.
Purdue also shut down its DEI office last week. It’s unclear if those positions are being terminated.
Purdue University Fort Wayne: Saying it needed to reduce its operating budget by $6 million by July 1, Purdue Fort Wayne’s Chancellor Ron Elsenbaumer announced layoffs to about 45 positions. Elsenbaumer’s letter did not specify from where those cuts would come. A spokesperson for the school declined to comment for this story.
The university previously said it is eliminating its baseball and softball programs as part of its budget cuts.
Ivy Tech Community College: Last week Ivy Tech announced it will terminate 202 employees—162 staff members, 38 faculty members and two administrative faculty. The cuts will be across Ivy Tech’s system and come as the school looks to cut $54 million from its budget.
Indiana State University: Indiana State President Mike Godard recently announced the school will not give raises for the upcoming academic year in light of a nearly $4 million annual budget decrease resulting from the state budget. The school’s capital project funding will be put on hold and ISU is seeking a 5% increase in tuition for out-of-state students.
University of Southern Indiana: USI President Steve Bridges said last month on IIB’s Business & Beyond podcast that the university is likely to raise tuition. However, the university announced Tuesday it is proposing that tuition and mandatory fees be held flat for the 2025-26 and 2026-27 academic years.
Ball State University: A spokesperson for Ball State declined to answer questions about potential cost-saving measures, saying the university’s trustees meet on June 13.
Economic impact
According to Tom Harnisch, the announced cuts to personnel at many schools make sense, as salaries and benefits make up the biggest part of most college budgets.
Beyond salaries, State Higher Education Executive Officers Association research shows colleges and universities often try to raise tuition, especially for out-of-state students, to make up for funding gaps.
That trend appears to describe conditions in Indiana currently as Purdue, ISU, and possibly IU, are all seeking tuition increases for out-of-state students as a way to raise revenues. Purdue and IU especially have increased the number of international and out-of-state students as those groups often pay full-tuition compared to in-state attendees.
“Public research universities … they can attract a lot of international students and a lot of students from out of state, and this helps to account for some of the losses in state funding. That definitely has been a strategy,” he said. “It’s going to be more difficult, I think, with the Trump administration’s increased scrutiny and restrictions on international students.”
Research also links decreases in public spending for colleges with lower college-going rates for in-state students and lower graduation rates. The effects are more pronounced at regional and community colleges.
If Indiana can steady its financial course in the next few years and the cuts are temporary, Harnisch doesn’t foresee a long-term impact. However, if reduced budgets become the norm, Indiana might struggle to keep pace as top faculty move to better-off states and as more jobs require college degrees.
“We’ve seen that Indiana, along with other states, there could be more and more jobs that are going to acquire some form of a higher education, from certificates all the way up to advanced degrees,” Harnisch said. “So in order for the state to remain competitive, we need to increase that college going rate and help students complete these credentials that are aligned with the workforce needs.”