The Journal Gazette
Wednesday, January 13, 2021 9:17 am

Governor's budget includes new money for schools, invests in broadband

NIKI KELLY | The Journal Gazette

INDIANAPOLIS – Gov. Eric Holcomb's proposed budget would essentially send new expected tax revenue to K-12 schools the next two years and use an unexpectedly high surplus to increase broadband and invest in capital projects. 

Cris Johnston, director of the Indiana Office of Management Budget, unveiled the proposal at today's State Budget Committee.

It is the first volley in the process to craft the state's next two-year budget. The House will use Holcomb's budget as a starting point and offer their own version sometime in February.

Indiana schools would receive a 2% funding increase in fiscal year 2022 and an additional 1% in fiscal year 2023 under the Holcomb plan. That is $377 million in new dollars over the biennium. Due to the funding formula, some schools will see cuts if they lost enrollment.

Nothing in his budget directly addresses teacher pay but the administration continues to encourage local districts to pass the tuition support dollars onto teachers.

Holcomb will also restore a 7% cut to higher education from last year and then add a 1% increase in each year of the biennium.

While ongoing new revenue is sparse, the state unexpectedly has a larger surplus than expected due to two things. First, the state used $440 million in federal COVID relief dollars to reimburse state payroll related to the pandemic. And its initial agency cuts saved more needed as the economy rebounded quicker than expected.

That allows Holcomb to propose some one-time spending, including $50 million for a new swine barn at the state fairgrounds; $20 million for a Department of Revenue modernization an additional $100 million for rural broadband expansion.

Holcomb's administration is also spending $700 million this fiscal year – which ends in June – to pay off bond debt and reduce teacher pension obligations. If not for that the state would end the year with nearly $3 billion in surplus instead of a projected $2.3 billion.

The debt that is being retired includes bonds on the I-69 extension, three hospitals, one prison, the state fair coliseum and some park facilities.

And Holcomb is also putting $400 million in cash into the pre-1996 teacher retirement fund, which will allow the state to reduce its future ongoing appropriation by about $69 million each year. The General Assembly would then have the ability to spend that money elsewhere on an ongoing basis.

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