Indiana budget plan invests revenue bump in education, infrastructure

An extra $2 billion in revenue has led to new and “historic” investments in education, small businesses and broadband, Indiana legislative and executive leaders announced Tuesday.

Gov. Eric Holcomb boasted of a “transformational” 2022-2023 budget that takes advantage of what he described as a “vibrant” post-COVID Hoosier economy during a Tuesday news conference. He, Lt. Gov. Suzanne Crouch, House Speaker Todd Huston and Senate President Pro Tem Rodric Bray – all Republicans – released a revised biennial budget plan after news came last week that the state’s tax revenues would bounce back stronger than expected after the pandemic-induced economic downturn.

“We are in a rare time and place and space to seize the day,” the governor said.

Holcomb, Huston and Bray all described education funding as their top priority. The revised budget allocates $1.9 billion in new dollars to K-12 funding – “all-time record high levels,” according to the governor. That’s a 29% increase in education funding since fiscal year 2012, according to data provided by Holcomb’s office.

State leaders are also requiring school districts to dedicate 45% of their tuition-support dollars to teacher pay, a minimum Bray said came out of the December 2020 report from the Next Level Teacher Compensation Commission.

Additionally, the state is calling on school districts to set starting teacher salaries at $40,000 annually. If a school district can’t meet that amount, it must submit a report to the Department of Education explaining why.

Relatedly, absent exigent circumstances, districts cannot drop their salary budgets below the level of the previous year. That means that if a group of experienced teachers retires in a given year, the pay scale will not decrease in response to new-teacher salaries, Bray said.

Additionally, $600 million in state funds will be deposited into the Pre-1996 Teachers Retirement Fund, Huston said.

“This is a historic win for Hoosier students, teachers and families,” the speaker said.

The budget also makes a “substantial investment” in school choice, Huston continued. That includes $3 million in fiscal year 2022 for start-up costs and $10 million in FY2023 for education savings accounts — stipends for parents of children with special needs.

Senate Republicans had initially pulled back on plans to create ESAs, and Bray acknowledged Tuesday that there had been “trepidation” about the program within his caucus. But with the expected revenue boost opening up additional dollars for public education, he said Senate Republicans “found (them)selves in a good place.”

Indiana Democrats praised GOP leaders for “heeding the advice from Hoosier Democrats to fund the state’s public schools at levels not seen since Democrats last controlled the Indiana House.” Even so, Democrats criticized the increased investment in the voucher system

“Governor Holcomb and Statehouse Republicans are trying to have it both ways on education funding, but Hoosiers must remember that the Republicans have been consistently trying to tip the scales away from a strong public education for everyone to private school for some with taxpayer dollars,” Lauren Ganapini, executive director of the Indiana Democratic Party, said in a Tuesday statement.

Outside of education funding, the governor announced plans to invest $500 million of the state’s federal stimulus dollars into the Regional Economic Acceleration and Development Initiative, or READI grants, a successor to the Regional Cities Initiative. Using a scoring process, the grants will be distributed to Indiana communities regionally to address issues such as talent recruitment and workforce development.

The Regional Cities Initiative was funded at $120 million and, according to the governor, yielded about $1.22 billion for the state. If the same is true of the READI grants, he said, the yield would be about $5 billion.

“Folks are chomping at the bit” to receive a READI grant, the governor said. He said grant money should be distributed at the beginning of next year.

The governor also spoke of “mega-transformational” infrastructure investments, including investing $250 million of federal stimulus dollars in broadband expansion.

Crouch championed the broadband investment, noting the state has already invested $79 million to increase connectivity for some 22,000 families. After the pandemic, she said, the need for greater broadband access became more pronounced.

“What we learned during COVID is that being connected is no longer a luxury but an essential,” the lieutenant governor said. “This historic $250 million investment in broadband is going to continue to take Indiana to the next level and connect Hoosiers like never before.”

“The final budget proposal also reduces state debt by more than $1 billion, setting up our state for continued success,” Sen. Ryan Mishler, the Bremen Republican who chairs the Senate Appropriations Committee, said in a Tuesday statement. “Finally, this proposal highlights the General Assembly’s work with the governor to appropriate nearly every federal dollar our state received in light of the COVID-19 pandemic.

Indiana received about $3 billion in federal stimulus funds. The budget proposal released Tuesday showed the allocation of about $1.6 billion of that money, leaving room for “flexibility,” according to the governor.

Huston added the full amount had been allocated, but not all of it will be spent in the next biennium. The money is available through the end of 2024.

“We’ll have the chance over the next two years to make strategic changes,” the speaker said.

Lawmakers must pass the 2022-2023 biennial budget by the end of this week, the deadline legislative leaders set for adjournment of the 2021 session. Leaders had originally planned to adjourn today but conceded last week that the additional revenue could delay them.