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General Assembly

School funding rises, taxes drop

– The Indiana General Assembly early today approved a new $30 billion biennial budget that is highlighted by tax cuts and saving for the future.

The House passed the budget 70-30. The Senate passed it 39-11

One of the last-minute additions to the budget was an additional $2 million a year in funding for IPFW. It is not directed to any specific program. Instead, it is meant to help the university’s financial position because IPFW receives the lowest funding per student in the state.

“It’s a home run for Hoosiers,” said Senate President Pro Tem David Long, R-Fort Wayne, who said it might be the first time the income tax has ever been cut in Indiana. Under House Bill 1001, Indiana’s individual income tax rate will drop 5 percent over four years. The first reduction will see the rate fall from 3.4 percent to 3.3 percent in 2015. Then it will decrease again to 3.23 percent in 2017.

Gov. Mike Pence had sought twice the relief in half the time. An average taxpayer might save $1.50 a week under the plan.

In addition, the legislation calls for a retroactive repeal of the state inheritance tax effective Jan. 1, 2013, and a reduction in the financial institutions tax.

A phase-down of the corporate tax also continues.

The budget takes in more money each year than it spends by about $100 million. And it ends with reserves of about $2 billion.

Both sides trumpeted hundreds of millions in new education funding.

Schools on average will receive a 2 percent increase in funding through the tuition support formula in the first year and 1 percent – which is below inflation – in the second year.

There is also an additional $34 million to reward teacher performance.

Locally, Allen County’s four school districts would see different funding levels largely dependent on enrollment growth or loss.

Fort Wayne Community Schools would see their total per pupil funding rise 2.1 percent in the first year and then drop slightly in the second year.

Similarly, Southwest Allen County Schools would rise less than 1 percent each year; Northwest Allen County Schools would see total per pupil funding increase 2.1 percent the first year and 1.3 percent the second year; and East Allen County Schools would get a large 3 percent jump in the first year and 1 percent in the second year.

FWCS Chief Financial Officer Kathy Friend said the district “is pleased with the increase provided in the per pupil foundation amount, which grows by 4 percent over the two years of the biennium.”

She said that in addition, there is an increase for full-day kindergarten, though not enough to cover FWCS’s costs for the program.

“A second tier of funding had been provided to very complex school districts. That formula has been changing since 2012, and it continues to go down, providing fewer dollars to the most complex school districts,” Friend said. “We are seeing a reduction of $1.5 million instead of the statewide average increase of 1 percent.”

Some Democrats have been concerned that the explosive growth in the voucher program is taking money from the tuition support formula for public schools. As a result, a provision was put in the budget that if the voucher payments are more than projected, as much as $25 million can be taken from the tuition reserve fund to shore up funding for public schools.

House Speaker Brian Bosma removed a requirement that the Department of Revenue start performing income verification on voucher and textbook reimbursement applications.

And he cut an unexpected provision that would have dramatically altered public pensions in Indiana without a public hearing.

The budget plans to pay off bonds for the Indiana State Museum and Forensics and Health Sciences Lab, and pay $200 million in cash for new projects.

One of the university building projects included in the budget is a student services and library complex at IPFW costing $24 million.