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Indiana’s stable budget forecast buoys hopes to avoid school funding cuts

Student cubbies in a classroom Thomas Gregg Neighborhood School, an elementary school in Indianapolis, Indiana. —April, 2019— Photo by Alan Petersime/Chalkbeat

The revenue forecast serves as the starting point for crafting the state’s two-year budget.

Alan Petersime/Chalkbeat

Indiana’s revenue is expected to remain stable over the next two years, increasing the chances lawmakers maintain steady funding for schools despite the economic turmoil caused by the coronavirus. 

The state projects about $34.95 billion in revenue over the next two years, a marginal increase from the most recent $34.6 billion budget, according to a forecast released Wednesday. That financial picture could change in the coming months, but for now, lawmakers said they were cautiously optimistic.

“The way today is playing out, a flatline is a win, even in K-12, when other states are making drastic cuts,” said Republican Sen. Ryan Mishler, chair of the appropriations committee. “In Indiana, I don’t think you’re going to see a cut in K-12 like other states.”

The revenue forecast serves as the starting point for crafting the state’s two-year budget. The state will release a second forecast in April before lawmakers approve a final budget for 2021-22 and 2022-23. 

Earlier this year, Indiana spared schools when cutting other state agency budgets because of steep declines in state revenue. In the months since, district leaders have braced for potential losses next year. But even while the virus continues to rage, Indiana’s economic outlook has improved. 

That’s part of a national trend that has helped states avoid cuts to school funding that education leaders and advocates initially feared. 

The tepid revenue forecast could undermine any momentum for increasing school funding to pay for raises for teachers. The forecast comes on the heels of recommendations from a state teacher pay commission, convened by Gov. Eric Holcomb, which called for increasing state funding for schools by hundreds of millions of dollars each year. That funding increase is essential to boost average salaries in the state to $60,000 per year, the report found. 

With so little wiggle room in the next budget, there is not much chance lawmakers will give schools a funding increase on that level, said Denny Costerison, executive director of the Indiana Association of School Business Officials. But under the circumstances, even a flat budget is encouraging, he said. 

“It definitely could’ve been worse,” Costerison added. “This is workable.”

Cash-strapped districts are facing new and costly challenges posed by the virus, including finding a way to help students catch up on education interrupted by the pandemic. But some educators will be relieved if lawmakers can avoid cuts.

Superintendent Travis Madison, who leads the Barr-Reeve school district, has been hoping that funding will remain stable while girding himself for the possibility it could decline.

Madison was pleased with the revenue projection and optimistic that it could help legislators “keep things on the even keel” for schools without making other cuts, “because everybody’s hurting — businesses and schools alike,” he said.

A small rural district in southern Indiana, Barr-Reeve recently passed a referendum that will increase property taxes for schools. With that money, the district likely will be able to continue giving teachers annual raises if the state maintains funding, Madison said.

In response to the forecast, legislative leaders touted their fiscally conservative stewardship in prior years, which helped Indiana accumulate reserves that it has tapped during the pandemic — putting the state in a stronger fiscal position than many others. 

Some lawmakers have hinted that schools could see a small increase in funding this year. 

“Funding K-12 education is always the top priority for lawmakers,” Senate President Pro Tem Rodric Bray, a Republican, said in a statement. “It is our goal to fund K-12 above what we provided in the last budget. However, at this point in time, it’s too early to commit to increases for anything in the budget.”

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