JACKSON (AP) — Republican Gov. Haley Barbour calls for reducing the number of school districts and merging some universities, reviving many of his past recommendations in his final Mississippi budget proposal.

He also suggests spending the $97.4 million remaining in a health care trust fund that was created before he took office.

Barbour released his nearly $5.5 billion budget Tuesday. His second term ends Jan. 10, nearly six months before fiscal 2013 begins on July 1.

He’s giving his proposals to incoming Republican Gov. Phil Bryant and new lawmakers. They can accept or ignore Barbour’s ideas as they decide how to spend state money.

“I have offered the Legislature an honest budget to show them options,” Barbour said.

The Joint Legislative Budget Committee released its own recommendations this past week, with an overall state spending reduction of 2.3 percent. Barbour recommends an average 2.9 percent cut for most state agencies.

Barbour suggests using the balance of the health care trust fund as a way to avoid some spending cuts. Legislators also propose spending the $97.4 million.

Legislators created the trust fund in 1999 as a way to set aside winnings from Mississippi’s 1997 settlement of a massive lawsuit against tobacco companies — a suit that was filed by then-Attorney General Mike Moore, a Democrat, when Barbour was a Washington lobbyist whose clients included tobacco companies. Mississippi receives tens of millions of dollars a year from the companies, and the idea was to sock away the money in a trust fund that eventually would grow to billions of dollars.

Lawmakers originally said they’d spend only the annual earnings from the fund and leave the principal untouched.

Barbour said he likes the original concept of the trust fund.

“But the fact of the matter is, before I was governor, the Legislature started spending it,” he said Tuesday. “After a while it became clear to me that it was not ever going to be treated as a trust fund.”

Some of his budget ideas:

— Requiring local school districts to either make spending cuts or dip into their own reserves to help fund elementary and secondary education. Barbour said the 152 districts, collectively, now have about $615 million in reserves compared to about $469 million a year ago. He said the state could create a $10 million fund to lend money to districts with little or no money in reserve. He has proposed requiring districts to dip into reserves in the past, and legislators ignored the suggestion. In school districts with larger reserve fund balances, administrators said making them spend the money would amount to punishing their districts for good fiscal management. In districts with little or no money, officials said they can’t spend what they don’t have.

— Merging the three historically black universities into one, with Alcorn State and Mississippi Valley State becoming part of Jackson State. Barbour also proposes merging Mississippi University for Women into Mississippi State University. He said he wants to keep all current campuses open but consolidate administrative functions. That means Jackson State would have branches in Lorman and Itta Bena and MSU would have a campus in Columbus. Barbour proposed the same university mergers two years ago, but alumni groups opposed it and lawmakers never acted on the governor’s idea.

— Reducing state funding for athletics in high schools and moving toward eventually eliminating state funding for athletics in community colleges and universities. Barbour attended the University of Mississippi on a baseball scholarship. He said he knows many people love high school and college sports, but said, “We have to have a bigger focus on academics.”

— Requiring state employees to pay more toward their own retirement. Barbour said the Mississippi Public Employees Retirement System needs $26.3 million to keep from falling further behind on its long-term financial obligations. He proposes covering half of that cost through taxpayer money, with the other half coming from state employees by withholding more from their paychecks.

— Requiring state government retirees who are younger than 65 and are still covered by the state employees’ health insurance program to pay more for their own coverage. Barbour recommends a 15 percent increase in premiums for that group of people for four years.

— Reducing state funding for the Arts Commission, the Library Commission and Mississippi Public Broadcasting, with the goal of eventually eliminating most state funding for MPB. Barbour said commercial TV and radio networks produce programming similar to what’s on MPB, without government financial support.