INDIANAPOLIS – Gov. Eric Holcomb on Wednesday said K-12 schools will be “spared the knife” in terms of budget cuts, committing to full funding for the fiscal year starting in July.
He said prioritizing K-12 – it accounts for more than half the state budget – is only possible due to prudent financial decisions in recent years building up reserves.
“We worked very hard to get to yes,” Holcomb said of collaborative discussions with legislative leaders and state education officials.
Schools are expected to get a $183 million increase this year under the current budget starting July 1.
State agencies have already been asked to cut 15% – a savings of up to $900 million.
And higher education received a 7% cut – about $103 million.
Holcomb and key GOP leaders also affirmed that schools will receive full funding for students who choose to use a remote learning option related to COVID-19 concerns.
Current state law says if a student receives 50% or more of instruction virtually then the school district only gets 85% funding. The legislature will have to retroactively tweak the law when they return in January.
The governor said he hopes the news relieves some anxiety schools were feeling as they plan to reopen in the fall.
State Budget Director Zac Jackson told the State Budget Committee earlier in the day that Indiana will be short about $1.7 billion this fiscal year ending June 30. The state surplus of more than $2 billion will be used to close out in the black, since a balanced budget is required in Indiana.
Jackson estimated state revenue losses of $2 billion for fiscal year 2021. That's where the agency and higher education cuts come in. Federal COVID aid also will help some, though its uses are limited.
And Jackson said he could have to tap the tuition reserve fund next year to keep K-12 dollars intact.
He also told the committee that the State Budget Agency will have to augment the budget of the Department of Child Services this month by about $20 million to finish the year.
Ironically, Republican lawmakers refused to fully fund DCS's request in the current budget to save money.
The Holcomb administration is also tapping about $13.6 million for general expenses from a special transportation flexibility fund. It is money collected from sales tax on gasoline that was set to be shifted to roads instead of general government expenses.
But with revenues down, an escape hatch in the fund allows that money to be used for education, child services and Medicaid.