No voucher expansion, more health care funding in Indiana’s GOP Senate budget plan
The Senate released its budget plan Thursday, spending $43.3 billion over two years and ending the biennium with $3.2 billion in reserves. (Getty Images)
Indiana’s Senate Republicans nixed a major voucher school expansion in favor of increased Medicaid funding under their latest state budget proposal released Thursday.
That’s a significant shift from the House GOP spending plan, which sought to allocate $1.1 billion in fiscal years 2024 and 2025 to expand eligibility for the Choice Scholarship program.
The new voucher dollars accounted for roughly a third of the $2 billion in new, additional state funds that House Republicans wanted to earmark for K-12 education. K-12 tuition support increased by 8.5% in the first year and 2% in the second year in the House budget. On the Senate side, tuition support goes up 4.68% in the first year followed by a larger 9.43% bump in the next year.
But Senate budget writers opted to keep the Choice program as-is, meaning vouchers will stay limited to Hoosier families that make less than 300% of free and reduced lunch eligibility, equal to about $154,000 annually for a family of four.
“Medicaid is now outpacing K-12,” said Sen. Ryan Mishler, R-Mishawaka, who chairs the Senate Appropriations Committee. “(Medicaid) has already grown at a rapid pace. Everybody wanted to expand it more in their bills. And this is the thing that scares me the most .. we have to figure something out.”
The two-year budget spends $43.3 billion overall and ends the biennium with $3.2 billion in reserves.
The Senate also included a separate, $160 million annual line item to eliminate K-12 student textbook fees. House budget writers, on the other hand, required schools to dip into their foundational funding to fully pay students’ curricular materials costs.
Advocates for vouchers blasted Senate Republicans, who have long been more cautious than their House counterparts.
Betsy Wiley, the president & CEO of the Institute for Quality Education, said in a statement that six other states had adopted universal choice but senators did “nothing to expand eligibility for the largest single voucher program in the nation.”
“The two-year budget proposed by the Indiana Senate Republicans today ignores the students and families in Indiana who want educational freedom and choice,” Wiley said in a statement. “…Adoption of the Senate budget plan would be a huge step backward for Hoosier students and a complete assault on Hoosier voters who support educational freedom and universal school choice.”
Property taxes going to charter schools
Mishler noted that while the education budget shrunk from 50% in the last biennium to 48% in both the House and Senate proposals, Medicaid expenses had increased from 15% to 17%.
As part of negotiations in previous sessions, senators agreed to implement House-proposed income tax cuts so long as economic fortunes held and lawmakers sent an additional $1 billion to an outstanding debt obligation.
In their budget proposal, the House accelerated the tax cuts but didn’t include $1 billion for the Pre-1996 Teacher Retirement Fund. The Senate reverted back to the original tax cut plan and $1 billion payment.
Spending on the healthcare assistance program would total $7.5 billion in the budget and includes the federally required equalization between programs while maintaining a 90% reimbursement rate from the House proposal.
Senate Democrats signaled their support for the Senate version of the budget over the House voucher expansion but were concerned about new funding language for charter schools.
That new language would allow eligible charter schools to receive a portion of property tax collections starting in 2024 but only incremental, or new, revenue. The base would still go to traditional schools.
“We know many of our school populations are in impoverished areas. They’re struggling with assessed value and they still struggle with a variety of funding issues,” Sen. Eddie Melton, D-Gary, said. “We do not support the House version… (but this) is a new model that hasn’t been fully vetted and discussed.”
The property tax could not be distributed to virtual, adult or distressed charter schools. For schools that qualify, the property taxes would eventually replace the charter school grants, which Mishler said would be phased out.
According to the budget presentation, the Charter and Innovation Network School Grants will decrease from $1,250 per average daily membership (ADM) in fiscal year 2024 to $937 in fiscal year 2025 – though the property taxes start in calendar year 2024.
Charters would receive an estimated $313 per student from property taxes in 2025 as the grants decrease.
Public health, mental health funding TBD
Mishler said the Senate GOP plan also commits the same as the House budget — $225 million — for public-private partnerships meant to increase public health services across the state. That’s still only two-thirds of Gov. Eric Holcomb’s ask for the statewide program, and less than half what the Governor’s Public Health Commission originally proposed.
And while Senate Bill 1, which shores up the state’s crisis response system, finally got an explicit amount of funding – $35 million over two years – legislators still haven’t come to an agreement on a phone fee for 988.
The hotline, designed to be a mental health counterpart to the public safety services under 911, would connect Hoosiers to resources that could include short-term crisis stabilization centers.
Federal law allows states to charge a phone fee up to $1 monthly for 988 – though the highest state-implemented tax is $0.27. Indiana already has a $1 cell phone fee per month for 911 but hasn’t set a dollar amount for 988.
“We agree; we didn’t fully fund it. We just put some general fund dollars and there’s got to be something else in there,” Mishler said. “But I think we need to decide – what is that going to be?”
Mishler said a fee could be implemented to supplement the fixed appropriation dedicated to mental health services.
Senators in the Appropriations Committee did not implement a cigarette tax increase, despite support from House Republicans and some senators.
Senate Republicans have long resisted increasing the state’s cigarette tax, though all three other caucuses seem to approve of one. Melton said Thursday that increasing the tax could help fund mental health and public health priorities.
“We’re going to continue to push that on the Senate floor and hopefully we’ll come to the conclusion there,” Melton said. “It’s a piece of the puzzle. I think the cigarette tax increase in addition to the 988 solution… will fully address the issues.”
Other highlights in the Senate budget proposal include:
- An elimination of standalone Career and Technical Education (CTE) grants. Instead, Senate Republicans want to roll CTE funding into the school funding formula so those dollars can be used by any K-12 student.
- University operating fund increases of 4% in fiscal year 2024 and 6% in fiscal year 2025. The House had only a 2% increase for higher education funding in fiscal year 2025. The Senate budget additionally creates a separate funding formula for Ivy Tech Community College.
- $75 million over the biennium for a residential housing infrastructure assistance revolving fund, the same as in the House budget.
- $500 million for Regional Economic Acceleration & Development Initiative (READI) grants in fiscal year 2023, the same as in the House budget. But the Senate renames the program to Collaborative Communities.
- $600 million to create a “deal closing fund” for the Indiana Economic Development Corporation (IEDC) — a $100 million increase from the House budget.
- $1.25 billion in fiscal year 2023 to finish four ongoing capital projects across the state, also identical to the House spending plan.
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