By Whitney Downard
Indiana Capital Chronicle
Much of the newly introduced budget from Senate Republicans closely aligns with the one proposed by their House counterparts, but the two caucuses diverged when it came to key education priorities.
Some oversight provisions over state officials and a public health program were also added.
The Senate Appropriations Committee voted to accept an amendment into the budget, or House Bill 1001, on a 10-3 vote, adopting the language proposed by members of the Senate Republican caucus.
Republican budget writers in the House, and even Gov. Mike Braun, signaled their desire to eliminate eligibility requirements for the school voucher program, meaning that even the wealthiest Hoosier students attending private schools would get state dollars.
Senate Republicans opted instead to stick to the status quo, restricting vouchers to those whose income is equal to or less than 400% of the federal benchmark for free or reduced-price school lunches.
“That’s $170 million that we’d have to add in to cover those students that we just didn’t have,” said Sen. Ryan Mishler, R-Mishawaka. “… it’s not that we don’t want to do the vouchers. It’s just, ‘How do we pay for them?’”
Democrats split when it came to voting for the amended bill, as Sen. David Niezgodski of South Bend was in support while his three colleagues voted the new budget down.
“There’s a good amount of great things that are in here … I believe that the wisdom was properly used to not extend the universal voucher,” said Niezgodski. “I have a strong feeling there’s not going to be a concurrence on this between the two versions; so I think there’s a lot of room to work with.”
The difference for funding virtual students was even more stark between the two versions: House Republicans sought to increase the reimbursement from 85% of an in-person student to 100%. Senators, on the other hand, proposed a cut to 70%, alluding to concerns about accountability amid an ongoing corruption investigation into a now-closed virtual school.
“They always come back at a higher number and we negotiate that out,” Mishler acknowledged. “But we just felt there’s still some issues in the virtual space and so we just weren’t real comfortable.”
“There just seems to be a lot of issues with some of the virtual school programs and I think we need to get a handle on that before we consider increasing any of that,” he added.
Mishler said K-12 schools would see a 2% increase each year — with additional dollars to offset curriculum costs, though schools have previously shared concerns about whether the funds would be sufficient.
Katie Jenner, the Braun cabinet official overseeing education, will have additional discretion when it comes to funding specific programs, such as a dropout prevention effort, under an $86 million “Freedom and Opportunity” line item.
Her department will also take responsibility for two scholarship accounts for special education students and their siblings as well as career and technical training. Both were previously housed with the Treasurer of State’s Office.
Other changes
Another crucial difference between the two plans: how much senators opted to hold back in reserves. House lawmakers dropped slightly below 12% in both years — or 11.9% in the 2026 fiscal year followed by 11.6% the next year.
In contrast, the Senate budget puts reserves at 13.2% the first year and 13.6% in the 2027 fiscal year. That is about $3.1 billion and $3.2 billion in respective years.
Mishler attributed that decision to the small structural surplus, or budget leeway, in the second year at just $245 million — below the $400 million minimum he’d prefer.
“I just felt, ‘Let’s just keep those strong.’ Because with that low structural surplus in year two, if we have any trouble (but) we have a pretty decent reserve … we’ve got some room to maneuver,” Mishler said.
Similar to earlier versions of the budget, spending increases were largely absorbed by three different line items: Medicaid, the Department of Child Services and the Department of Correction.
Sen. Fady Qaddoura, D-Indianapolis, said he voted against the bill partly because it didn’t dedicate additional funds to get Hoosiers off of waitlists for Medicaid waiver services.
“We have more than 10,000 Hoosiers on a program (and) they have to wait until probably the next budget session, if not longer than that,” said Qaddoura.
Republicans defeated Qaddoura’s suggested edit directing some additional state resources to the waitlists, wary of Medicaid’s unsustainable growth. The state allocation for the government program has more than doubled in the last four years to more than $5 billion.
In response, Mishler has pitched Senate Bill 2, which would impose work requirements on certain Medicaid beneficiaries, as a way to reduce the rolls and preserve services for the neediest.
“If we don’t make those changes, we’re going to have a lot of trouble with trying to fund K-12. It’s going to start eating more into K-12 because that’s what we’re seeing,” Mishler said.
After two years of expanded eligibility to subsidize child care costs for low-income families, the Child Care Development Fund will also return to its previous qualifications.
Families of four making between roughly $41,000 and $48,500 annually will no longer have access to the funds, which will be reserved for those making less.
In addition to the lack of a payment for public service retirees, Niezgodski named the CCDF language as one of his biggest disappointments.
“I’d like to see those dollars come back up. I think that it’s not asking a lot to bring them back to where they were,” Niezgodski said.
Final details
The new budget also includes annual travel reports from the governor, governor’s cabinet, lieutenant governor and other statewide elected officials. The change comes on the heels of Secretary of State Diego Morales’ unannounced 10-day trip to India, which was paid for by undisclosed donors.
That portion of the bill would require such offices to report the purpose and location of each trip “taken in an official capacity,” total travel expenses and “the state fund used to pay for each trip taken.” It’s unclear whether trips like Morales’ would be included.
Republicans also recently took Morales to task for printing state maps that one senator said looked like campaign materials. The budget now provides that all secretary of state dedicated funds are subject to General Assembly appropriation, similar to how the legislature oversees fees into the Attorney General’s settlements fund.
The Senate version also puts new restrictions on public health funding, limiting the amount spent on administrative work and requiring that “funds may only be used for (Indiana) residents who are legal citizens.”
But the bill is far from finalized.
Notably, the budget also doesn’t include any increases to cigarette or alcohol taxes, which were previously floated as ways to bolster the state’s slim revenue growth.
“We have a lot of members that don’t want to do a tax,” Mishler said. “We’re telling the locals, ‘You’ve got to do more with less.’ How do we then go out and pass a bunch of taxes?”
A new two-year revenue forecast is scheduled for April 16, which could shift how much money lawmakers have to spend.
“At this point, I’d be happy if (the numbers) were the same and didn’t go down,” said Mishler.
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The Indiana Capital Chronicle is an independent, nonprofit news organization dedicated to giving Hoosiers a comprehensive look inside state government, policy and elections. The site combines daily coverage with in-depth scrutiny, political awareness and insightful commentary.
