INDIANAPOLIS— As Indiana leaders debate the state’s next two-year budget, philosophical differences over how much schools should get will become key.
Here’s one question that might help gauge where you stand: Do you believe it’s the state government’s job, as public schools’ primary financier, to keep education funding levels up with the rate of inflation?
That test seems fairly straightforward. If you think teachers deserve to start seeing cost-of-living pay raises again and schools need help shouldering increasing costs, you probably said yes. If you believe government ought to act more conservatively in uncertain economic times and schools need to continue to find ways to do more with less, your answer’s no.
Its implications, though, are huge when applied to the state budget-writing process.
Education absolutely dominates Indiana’s budget. The state is spending 63 percent of its general fund money on schools, universities and teachers’ pensions this year, and the vast majority of that money goes to K-12 public schools — who, in turn, use about two-thirds of it to cover “in the classroom expenses,” which generally means teachers’ salaries.
As a result, any debate over how Indiana ought to change the two-year, $28 billion spending plan that will expire June 30 and be replaced July 1 by the work product of this year’s legislative session has to start with education funding.
Only from there can policymakers hammer out everything else — including Gov. Mike Pence’s proposal to reduce Indiana’s individual income tax rate from 3.4 percent to 3.06 percent, as well as how to fund transportation and infrastructure and more.
Right now, two budget proposals exist, and they treat education funding differently.
Pence’s proposed spending plan would boost education funding by 1 percent in its first year, and then another 1 percent in its second year — although that year-two money would go only to top-performing schools, rather than being divided among them all through Indiana’s regular funding formula.
The new Republican governor likes to say his budget proposal “holds the line on spending,” and touted the fact it would increase the state’s spending by quite a bit less than inflation, which has averaged about 2.5 percent annually over the past decade, in his State of the State address.
“I believe the government budget should never grow faster than the family budget. Our budget is a full percentage point less than inflation,” he said. “By holding the line on spending, Indiana can continue to stand out as a beacon of fiscal restraint — a state that knows how to fund its priorities in a responsible way.”
Meanwhile, House Republicans offered a budget that would increase education funding by 2 percent in its first year, and another 1 percent — applied across all schools, rather than just top performers — in its second year.
That still isn’t enough to keep up with the cost of living, but it’s closer. It also accomplishes what House Speaker Brian Bosma, R-Indianapolis, said was a goal of Republicans in the House: Restoring education funding to its 2009 levels, before former Gov. Mitch Daniels put in place a 3 percent cut as Indiana weathered the recession.
Because it accounts for so much of the state’s spending, any discussion about Indiana’s next budget has to start with education. Historically, lawmakers have tried to give schools cost-of-living increases, and in bluer states than Indiana, failing to do so might be considered a budget cut.
Unfortunately, much of the debate right now is rife with misinformation. At times, some Hoosiers seem unclear about the differences between the state budgeting process and federal government spending.
The second-most expensive item Indiana funds, at 23 percent of its general fund spending, is health and social services. Most of that goes to cover the state’s share of a Medicaid program that currently is limited to those who are disabled, children, pregnant, or very, very poor. Also included here is funding for state hospitals and programs that help keep elderly Hoosiers out of nursing homes. This does not include any expansion of current services.
After that, accounting for 5.8 percent of the state’s general fund spending is public safety. This includes the Indiana State Police and the Indiana Department of Correction.
Everything else — from state parks to debt payments to the governor’s personal salary — comes out of the remaining 8 percent or so. And keep in mind: Daniels imposed steep cuts in all of those areas.
Still, when discussing Indiana’s budget, the starting point — the item that accounts for more than half of the state’s total general fund spending — is K-12 education. The first question to answer is how much schools deserve.