Indiana Capital Chronicle: Holcomb outlines big spending plans for education, public health, police in 2023 budget

By: Casey Smith

Indiana Gov. Eric Holcomb on Wednesday rolled out proposals for several major funding increases in the next state budget, including paying for all K-12 textbooks, salary increases for state police troopers, and millions more for public health services in all 92 counties.

The Republican governor announced his priorities for the 2023 legislative session, which is set to kick off next week at the Statehouse.

Indiana writes its two-year budgets in odd-numbered years during four-month sessions. State budget writers are likely to release their completed plan in April, following a final revenue forecast.

Members of Holcomb’s administration say revenue increases have put the state in a favorable position to spend more and called the governor’s budget proposal his most comprehensive yet in terms of how many Hoosiers could benefit from state dollars, should lawmakers greenlight the requests.

“The budget that we’ve presented is balanced — it doesn’t spend more than we take in, forecasted or actual,” the governor said Wednesday.

Still, Indiana economist Michael Hicks noted that Holcomb’s budget proposal is lower than the last one when accounting for inflation. The state experienced a 15.9% price level increase since June 2020, but the governor’s plan is only a 12.8% increase from the budget.

“I just believe that over the course of the next four months, this is a bold agenda that hits on topics that are needed,” Holcomb said. “They’re not just a wish list — these things are needed.”

Republican Senate Pro Tem Rodric Bray said in a statement Wednesday that Indiana Senate Republicans “share a number of the governor’s priorities,” including public health spending, law enforcement support, K-12 public education spending boosts. He also mentioned paying down the pre-1996 Teachers’ Retirement Fund, which wasn’t part of Holcomb’s plan.

GOP House Speaker Todd Huston said his chamber is also similarly focused on “funding critical services and making strategic, one-time investments that deliver results for Hoosiers — all while keeping government small.”

House Democratic Leader Phil GiaQuinta, D-Fort Wayne, said that while his caucus and Holcomb “are on the same page,” he fears whether Republican lawmakers “are as forward-thinking” as Democrats and the governor.

Meanwhile, Senate minority leader Greg Taylor, D-Indianapolis, said the governor’s budget priorities “ultimately just fall short.”

“There were several good priorities in the governor’s agenda which members of my caucus have been pushing for years — investments in K-12 and public health, more money for food banks, elimination of school textbook fees, auto-enrolling students in the 21st Century Scholars Program — but as is the trend, his agenda failed to go far enough,” Taylor said in a statement.

State funding for textbooks

In addition to proposed increases to K-12 tuition support — 6% in fiscal year 2024 and another 2% in the following fiscal year — Holcomb is calling on state lawmakers to eliminate textbook and curricular material fees for Indiana families. Indiana is currently one of only seven states that allows families to be charged for textbooks.

Instead, the governor wants Indiana to fully fund those fees for more than 1 million Hoosier students at all public and charter schools, as well as some students at non-public schools.

The move would cost the state approximately $160 million per year — but only $121 million would be new money. Indiana already budgets $39 million per year for textbook reimbursement for the 440,000 Hoosier students who qualify for free or reduced lunches.

Under the proposed model, non-public school students who already qualify for textbook reimbursement will continue to be eligible for textbook fee waivers.

“We have the financial wherewithal to do this,” Holcomb said Wednesday.

Senate President Pro Tempore Rodric Bray, R-Martinsville. (Senate Republican website)

He added that the overall school funding increase he proposed is enough to raise average Indiana teacher salaries from $56,600 to $60,000.

“It will vary, depending on the local bargaining units,” he said, adding that while he supports “local determination … I don’t want the state to come in and start setting those levels.”

In response to calls for the the state to up investments in literacy, which fell during the pandemic, Holcomb wants to establish a $20 million incentive program that rewards schools and K-3 teachers that improve students’ passing rate for the Indiana Reading Evaluation and Determination, also called the IREAD-3 test. He also wants to secure $10 million in state funding to obtain another $10 million match from the Lilly Endowment to continue the state’s literacy initiatives.

Just 81.6% out of the 65,000 third graders at public and private schools in Indiana passed the 2022 exam. The Indiana Department of Education’s goal is that 95% of students in third grade can read proficiently by 2027.

For the state’s higher education institutions, Holcomb recommended a 6% increase in year one and a 2% increase in year two, totaling $184 million of the biennial budget. That state support comes with a charge that a portion of the funding be based on performance goals that are “focused on keeping the students that are coming to our state here in our state.”

The governor said he supports the Commissioner for Higher Education’s goal of auto-enrolling eligible students in the 21st Century Scholarship Program, a statewide grant program that supports student enrollment at two- and four-year schools. Administration officials said auto-enrollment shouldn’t be a cost to the state for six to seven years.

Other education line items include:

Expanding On My Way Pre K eligibility to another 5,000 families by raising the income eligibility criteria from 127% to 138% of the federal poverty limit. Federal funds will be used through September 2024, and the state will spend $15 million per year after that.
Calling on Indiana’s Family and Social Services Administration to use $25 million in federal funds to develop a grant program to encourage employer-sponsored childcare.
Appropriating $4.1 million to implement statewide the Dolly Parton Imagination Library, which provides every child up to age 5 with one book each month.
A one-time $10 million budget commitment to Martin University, Indiana’s only predominantly Black institution.

Salary raises for state police

To support Indiana State Police and other law enforcement officials, Holcomb also proposed raising the starting salary of state police troopers to $70,000. The governor’s administration noted that the current starting salary for state officers is $53,690. That’s “significantly below” other law enforcement agencies in the state, according to the Indiana State Police Alliance.

Increasing salaries is expected to cost about $36 million more per year.

Holcomb is seeking an additional $160 million per year to increase salaries for other state employees, too. He’s hoping such a move will help attract and retain more state workers.

Other public safety asks include:

A $6 million per year increase to the Secured School Safety Grant fund. Bumping the fund to $25 million per year will cost the state $1.6 million annually when factoring in federal dollars.
A $24.2 million investment in a regional firefighter training infrastructure “to provide a consistent and standardized firefighting training model across the state.”
A state investment of $10 million over the next five years to purchase needed equipment and gear for volunteer firefighting organizations.

New money available for county health initiatives

Asking for less than the Governor’s Public Health Commission originally suggested, Holcomb is pursuing $120 million in fiscal year 2024 and another $227 million in fiscal year 2025 to increase public health services across the state.

Stakeholders reduced their initial ask to $120 million from $243 million for the 2024 Fiscal Year after receiving a tepid response from budget writers, proposing a phased-in approach for distributing monies to counties. In 2025, proponents asked for the full amount, though Holcomb’s ask still falls under the recommended threshold.

House Democrat Leader Phil GiaQuinta. Photo from official website

About 80% of that funding is earmarked specifically for Indiana’s 92 counties. Under the proposed model, each county would have the option to participate in the statewide program, which intends to “build from the ground up” and redesign health infrastructure. The remaining funds would financially bolster a myriad of public health needs across the state, including staffing, disease prevention, emergency preparedness, EMS services and child health screenings.

A funding formula based on a per-capita system and social vulnerability index has already been crafted to determine how much each county is eligible to receive. Counties will have a local share of 20% to participate.

The program would replace the state’s current Local Health Maintenance Fund, which is currently only funded at $6.9 million per year.

Other public health agenda items include:

Piloting four mobile crisis teams in 15 counties.
Developing crisis stabilization units via grants for pilot programs that ensure Hoosiers have a safe place to receive care.
Investing $4.25 million over the next two years to promote veteran wellness, reduce risk, increase protection and improve effective treatment and recovery.

In 2023, the governor said he will further launch a new Treatment Finder Program to connect Hoosiers battling drug addiction with treatment programs. To do that, state and local municipalities will use the more than $500 million received in the coming years from the national opioid settlement.

Getting more Hoosiers to fill high-skill, high-pay jobs

Holcomb’s agenda also highlights investment in adult education to reduce the number of working-age adults without a high school diploma or workforce training. The governor seeks to:

Invest an additional $12 million over two years for education programs to help eliminate a waiting list of 8,000 people who are seeking more training opportunities.
Expand the Excel Center programs model to several new Indiana cities by increasing funding by $3 million in 2024 and $11 million in 2025.
Increase funding from $1 million to $1.5 million annually for the Graduation Alliance, an online education program for adults to achieve a diploma or credential.
Support the development of a Department of Workforce Development Unemployment Insurance pilot program that incentivizes recipients — up to $4,000 per person — to complete their diploma or equivalency. That’s estimated to cost about $4.4 million annually.
Increase the Workforce Ready Grant investment to $6 million a year at DWD, $6 million a year at the Indiana Commission for Higher Education and maintain the Employer Training Grant investment at $17 million annually.
Relocate veterans to Indiana through INVETS by doubling funding to $2 million annually.

More incentives to attract businesses to Indiana

The governor’s agenda additionally focuses on diversifying the Indiana Economic Development Corporation (IEDC) “toolkit” to keep the state competitive for future growth.

Sen. Greg Taylor, D-Indianapolis (From the Indiana Senate Democrats website)

Doing so includes renewing a $300 million per year “deal closing fund,” as well as an additional $300 million per year tax credit cap, meant to attract new businesses and jobs to Indiana.

Holcomb also wants the state to make a one-time, $150 million into an ongoing revolving loan fund for state land purchases similar to a large innovation project being developed in Boone County.

“There’s nothing eminent domain about this,” Holcomb said. “This is others stepping forward to say, ‘Wait a second, we have an ideal location for such a venture. And we’re looking for a partner with the state.’ And oftentimes, the state can go in and play this role, working every step of the way with the local community.”

Holcomb’s 2023 agenda further seeks an expansion to the Manufacturing Readiness Grant Program by doubling the funding to $40 million over two years. He also wants lawmakers to increase the Indiana Destination Development Corporation’s funding by $20 million — up from $6.8 million currently — to attract tourism and retain college students as they transition to the workforce.

Another round of READI

Holcomb will request an additional $500 million to fund another round of the Regional Economic Acceleration & Development Initiative (READI).

He’s also asking for an additional $50 million for Next Level Trails and $25 million for additional land conservation efforts.

The governor said the state will continue its partnership with the state’s food bank network by increasing funding from $1 million to $2 million each year, as well.

Finally, Holcomb said he’s still seeking roughly $1.25 billion in the current fiscal year to finish four ongoing capital projects that have largely been delayed by supply chain issues and inflation-induced price increases. Those are a new Westville Correctional Facility, a new state archives building, the co-location of the state’s blind and deaf schools, and a new state park inn at Potato Creek State Park.