Revised budget expands school voucher funding, accelerates income tax cuts
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Republican leadership in the Indiana House and Senate have reached an agreement on a state budget that dramatically expands eligibility for the private school voucher program, allocates $225 million in new funding for local public health services and speeds up individual income tax rate cuts that were passed in 2022.
The two-year $44.5 billion spending plan restores measures coveted by leaders in both chambers, a reflection of the April state revenue forecast that showed Indiana is expected to receive $1.5 billion in increased revenue over the next two fiscal years.
In a news conference Wednesday, the four highest ranking Republican lawmakers in the Indiana General Assembly said House Bill 1001, the state budget, makes historic investments in education, public health and mental health. However, Democrats expressed dismay at the decision not to increase public health funding to levels recommended by public health experts and to expand the Choice Scholarship Account program.
“Expansion of vouchers at that magnitude is despicable,” said Rep. Greg Porter, D-Indianapolis, the ranking minority member on the House Ways and Means Committee.
The budget revives a $1.1 billion expansion of the program—a measure that was stripped from the Senate budget—that increases the eligibility to 400% of the federal free or reduced-lunch program, meaning a family of four making up to roughly $220,000 would qualify for a voucher. Current law caps eligibility at $154,000.
It also provides $25 million for charter school capital grants and increases the Charter and Innovation Network School Grant to $1,400 per student each fiscal year.
House Speaker Todd Huston, R-Fishers, a strong supporter of charter schools, said he appreciated the Senate’s cooperation on the issue.
Public schools are set to receive an additional $1.2 billion in K-12 tuition support, an overall 8% increase compared with fiscal year 2023 levels. Democrats had sought a higher number, rather than expanding the school voucher program.
The budget also increases the rate at which income tax rates drop from the current rate of 3.15% to 2.9% by 2027, shortening the timeline enacted in the 2022 income tax cut legislation by two years.
It also revives a proposal that was cut out of the Senate’s amended budget that funds Career Scholarship Accounts at $5,000 per student as part of House Bill 1002. The money could be used toward technical coursework and credentials based on a student’s career aspirations and interests.
The spending plan also includes massive investments for economic development, including $500 million for the Regional Economic Acceleration and Development Initiative, or READI, 2.0 program, $500 million for a deal-closing fund for the Indiana Economic Development Corp. and $150 million for a revolving site-acquisition fund.
In a show of support for the IUPUI and Purdue University realignment, the budget allocates $120 million for capital projects for IU Indianapolis and PU Indianapolis.
“We’re excited about the project and we think it’s transformational for higher education in Indianapolis,” Huston said.
The spending plan includes $225 million for public health over the biennium, which falls short of the recommended $240 million in annual funding recommended by the governor’s public health commission. It also appropriates $100 million year for community mental health and $10 million for regional mental health facilities.
The plan also reinstates $5 million in funding for Martin University, the state’s only predominately Black institution of higher education, although that number is still $5 million shy of the number recommended by Gov. Eric Holcomb (and included in the House budget).
The budget ends the two-year biennium with a $2.7 billion surplus.
The proposal also:
- invests $3.1 billion in the Pre-1996 Teachers Retirement Fund, including a $1 billion supplemental deposit into the fund in the current fiscal year;
- allocates $26 million for airport improvement programs;
- eliminates fees for textbooks and curricular materials;
- continues $10 million annual investment in Education Scholarship Accounts for students with special needs;
- appropriates $10 million for land conservation and $30 million for Next Level Trails.
Republican leaders expect to release the full text of House Bill 1001 around 5 p.m. Wednesday.