Lawmakers send Indiana's $34 billion budget to governor

Update, April 24: The two-year, $34 billion budget passed both chambers late Wednesday, largely along party lines. The compromise deal passed first in the Senate, 41-8, and later in the House, 67-31. It now goes to Gov. Eric Holcomb.

Earlier: Indiana lawmakers neared a two-year spending plan Tuesday that would add hundreds of millions of dollars to education spending, though none for teacher salaries, dial back planned increases for the state’s troubled child services agency and opened the door for an agreement with a Native American casino.

Education was the top priority of the budget, with $14.8 billion in funding that amounts to a 2.5% increase each of the next two years. Flanked by the heads of various state education groups — but none representing teachers — House Speaker Brian Bosma called the spending plan “historic.”

The final budget deal, which lawmakers expect to vote on Wednesday, adds $539 million to tuition support over the two years. With another $150 million to pay down pension liability — saving school districts as much as $70 million annually — and additional spending on Teacher Appreciation Grants, charters, vouchers and school safety, the final budget deal adds more than $760 million to education spending.

Lawmakers from both chambers went into final budget negotiations after receiving a state revenue forecast last week showing there would be roughly $140 million less to spend due to tax shortfalls and an estimated increase in Medicaid spending.

Teachers still not on board

The proposed $34 billion budget would increase the funding for Teacher Appreciation Grants and changes how that money gets distributed to make it more equitable. Every qualifying teacher should see some money from the program, though it still doesn't equate to a raise in a teacher’s base pay.

While it was lauded as an “education budget,” groups representing actual teachers — like the Indiana State Teachers Association or state chapter of the American Federation of Teachers — were noticeably absent.

Democrats in the House noticed their absence and questioned what it says about the budget deal that teachers weren't standing with lawmakers. Rep. Greg Porter, D-Indianapolis, also criticized Republicans for holding back more than $2 billion in reserves.

"You had nobody that's on the front line," Porter said. "You had nobody that's in the classroom that was up there saying this is a good budget and it helps public education."

Teachers rallied at the Statehouse for more funding and better pay last week, expressing frustration at a perceived lack of movement on key issues and respect for the profession.

When asked about their absence, Bosma said the groups standing with leaders were those that made “reasonable” requests.

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In a statement released Tuesday afternoon, ISTA said it presented what it saw as reasonable goals for funding increases to the legislature but that concerns about long-term school funding and teacher pay issues were unaddressed. 

“ISTA will continue to fight for increased teacher pay and funding for every student," said ISTA President Teresa Meredith. "Our members are just getting started and will continue advocacy efforts into the future. We will not stop until public schools are fully funded, educators get the pay and respect they deserve and that all kids – no matter their ZIP code – receive a quality public education.”

Schools across the state have been holding "walk-ins" over the last several weeks to rally support for their teachers.

Groups representing school business officials and school boards and those representing urban, suburban and rural schools gave leaders a list of 10 points that would be necessary to consider the budget successful for public education.

Denny Costerison, with the Indiana Association of School Business Officers, said that lawmakers hit all of them, including a request for a 4 percent increase in overall schools-related spending. With the tuition support increases, pension payoff and various other increases for school choice, the increase is actually closer to 4.5 percent, Costerison said.

Softening the blow of big cuts

Earlier in the legislative session, schools sounded the alarm over changes in state funding designed to offset the cost of educating poor students. Called complexity funding, new counts released by the state in March showed those figures dropping dramatically. The changes hit particularly hard those schools that educate high percentages of poor students — urban school districts and some small, rural districts.

The final budget deal sets a limit for how much a school district can lose in its complexity funding, softening the blow to the most affected districts. The budget deal also increases the appropriation for English-language learners, which also helps those districts.

“This will put kind of a stop on that so they don't lose as much,” Costerison said.

The budget also includes language calling for a study of how the state calculates funding to support poor students. Right now, it’s measured by counting the number of students receiving benefits for food assistance, needy families and foster care services.

Retiree spending restored

The Senate budget had called for eliminating the "13th check" that retired educators receive from the state pension program. This was to be the last budget for that benefit, as it's getting replaced in a few years, but lawmakers contemplated eliminating it ahead of schedule. 

After outcry from retired teachers and public school advocates, that benefit was restored in the final budget deal, to the tune of $27.5 million each year. 

School choice gets a boost, too

The final budget deal also struck compromises on several spending proposals related to the state's robust school choice programs. 

It retains a new level of funding for the private school voucher program that had been proposed by the House but left out in the Senate's budget proposal. The final deal also increases the charter school grant from $500 per student to $750. The House had originally proposed doubling the grant to $1,000. 

Budget dials back proposed increase for Child Services

The House and Senate agreed to increase the Department of Child Services' funding by $256 million in 2020 and $246 million in 2021. That's a significant cut from the additional $286 million that had been proposed to bring its budget in line with actual spending. 

Bosma, though, said the agency has been putting downward pressure on its spending since implementing reforms and no longer projects to need so much money. 

The state is reforming the chronically overworked agency, which has overdrawn its budget for years. Indiana has more youths in its child welfare system than do any surrounding states in theirs, according to a report released in June, and some caseworkers have caseloads that exceed standards.

The report recommended improving staff training, decentralizing decisions, giving staff members more time to both respond to and assess cases, reducing the supervisor-to-caseworker ratio, finding alternatives to DCS for opioid addiction treatment and creating a strategy to better retain staff.

General Assembly to end Pence-era program

The budget will end a program former Gov. Mike Pence championed during his initial run for governor and signed into law in 2015. The regional cities program allowed cities, towns and counties to compete for state funds, such as $3.4 million to renovate a former Studebaker building in downtown South Bend. In its first two-year cycle, the state budgeted $85 million for the program.

The House’s lead budget writer, Rep. Todd Huston, R-Fishers, said there was a nominal amount of money left in the fund and it originally was created using money from a 2015 tax amnesty program. The state budget was tight this year, he said, and lawmakers needed to find areas to cut. The state will continue to fund any programs that were previously approved and have not yet been completed.

Door is open to negotiate with South Bend casino

The General Assembly stuck language into the budget to authorize the state to enter into agreements with federally recognized Native American tribes, an action that appears to be aimed at a casino that recently opened in South Bend.

Bosma said the budget language will allow the state to regulate certain activities at the casino, for instance, offering workman’s compensation. But there could be more to that story down the road.

Casinos can be boons for the budgets of cities, towns and the state. When the Potawatomi opened the Four Winds casino near South Bend, it reached agreements with that will pump millions annually into city coffers.

The state could negotiate with the tribe to allow it to add live table games, which the Potawatomi currently can’t offer. In the past, state lawmakers generally have been opposed to any sort of compact with tribes since the passage of a federal act three decades ago allowing them to open casinos. Huston threw cold water on the idea of adding live gaming when asked Wednesday.

Time will tell if such opposition dissipates.

Hoosier State Train to make final run

Holcomb's initial budget cut a $3 million annual subsidy for the Hoosier State Train, which runs from Indianapolis to Chicago. The Senate and the House declined to put that money back into the proposal despite some last-minute urging from Sen. Ron Alting, R-Lafayette. 

Amtrak has announced that without state funding, service will end the day the money runs out, June 30. 

State officials say ridership is not high enough and is not growing quickly enough to justify the subsidy.

The future of the train has been unclear for years due to its many challenges, including slow speeds and infrequency. In 2017, Amtrak took over operation of the train from Iowa Pacific Holdings, which wanted a larger subsidy.

The train is funded mostly by the Indiana Department of Transportation, with another $500,000 or so from Lafayette, West Lafayette, Tippecanoe County, Crawfordsville and Rensselaer.

Not everyone is giving up on restoring that funding. The Indiana Passenger Rail Alliance and Amtrak Midwest will hold a news conference Wednesday at Amtrak's Beech Grove facility to appeal to lawmakers to keep the service running. They rallied last week at the Statehouse.

Legislature takes control of toll road money

Holcomb and the General Assembly have been arguing about who has control of $1 billion in toll road money to fund a variety of transportation projects.

They largely have agreed on how the money should be spent, but Holcomb has maintained he could spend it administratively. Instead, the General Assembly stuck it in the budget, maintaining some control over how that cash will be spent. Under the language included in the budget, it can be spent in Elkhart, LaGrange, Lake, LaPorte, Porter, Steuben and St. Joseph counties.

The General Assembly did appear to largely agree with Holcomb's list of projects, which include completion of I-69 from Martinsville to Indianapolis, to finish turning U.S. 31 into an interstate-quality highway north to South Bend, to fund broadband service in rural areas, create trails throughout the state and to pay for flights from Indianapolis International Airport. The budget limits spending to $90 million for trails, $20 million for direct flights and $100 million for rural broadband.

Call IndyStar education reporter Arika Herron at 317-201-5620 or email her at Arika.Herron@indystar.com. Follow her on Twitter: @ArikaHerron.

Call IndyStar reporter Chris Sikich at 317-444-6036. Follow him on Twitter: @ChrisSikich.