Will Indiana “fall off a cliff” in 2011? The governor and legislative leaders apparently fear we might.

The problem: how to spend billions of dollars of federal stimulus money – especially $1.3 billion marked for education – over the next two years in ways that won’t lead to layoffs or program cuts when the money runs out.

Our solution: geothermal heat pumps. Any stimulus money invested in converting schools to geothermal heating and cooling will give back for decades to come. If part of those savings were directed into the Geothermal Conversion Fund (which the General Assembly is on the verge of establishing), the money would give back exponentially.

This solution is all the more inviting because it would help solidify Indiana’s role as a national leader in geothermal. The second-largest geothermal parts manufacturer in the nation, Water Furnace, is located in Fort Wayne, and an increasing number of Indiana firms are specializing in geothermal system design and installation.

A growing number of schools in Indiana and across the nation are turning to geothermal heat pumps to reduce their heating and cooling expenses. According to the EPA, geothermal is “the most energy-efficient, environmentally clean and cost-effective system of temperature control.” Although it is initially more expensive to install, geothermal offers immediate and substantial energy savings for the life of the system.

Last month, the Indiana House unanimously passed HB 1669, authored by Rep. Nancy Michael, which establishes the Geothermal Conversion Loan Fund. Last week, the Senate passed it, also unanimously.

If used in conjunction with the stimulus money, this fund could lead to hundreds of schools installing geothermal with a relatively small initial investment.

Here is how it could work: Let’s say the state were to use as little as $40 million of its $1.3 billion in federal education funds to assist geothermal installations in 40 schools over the next two years. Each of the 40 schools would receive half of their allotment as a grant and half as a no-interest loan to be paid back into the Geothermal Conversion Fund out of their utility savings. The $20 million paid into the fund by the original 40 schools could then be used in future years to pay the gap between the cost of installing geothermal and conventional systems in other schools.

Suppose that those later schools were required to pay back 75 percent of their loans. At the end of 20 years, the original $40 million in stimulus money would be sufficient to help nearly 200 schools install geothermal. The avoided utility costs would reach into the hundreds of millions of dollars.

The president wants stimulus money to be used quickly to generate jobs, improve schools and enhance energy efficiency. The governor wants the money to be used in ways that provide long-term benefits rather than artificially boosting spending in unsustainable ways. Geothermal fulfills both of these goals. By using the money this way, we would not only avoid “falling off a cliff,” but we would also create a rock-solid foundation for our schools and taxpayers for years to come.

To access our report on geothermal in Indiana schools, go to ingeothermal.pbwiki.com.