Indiana budget with $2 billion in reserves draws criticism

INDIANAPOLIS (AP) - Indiana's newly approved state budget anticipates the state keeping $2 billion in cash reserves, which Republican leaders maintain keeps the state protected in case of an economic recession.

The budget plan approved Wednesday night in votes along party lines projects that the reserves will amount to at least 11.5 percent of state spending. Democrats argue those figures are unnecessarily high and were reached by ignoring important needs.

Republicans rejected that contention, saying careful spending will allow Indiana to maintain a top-level AAA credit rating and business growth to continue to be encouraged.

"When the downturn in our economy happens, and it will, Indiana will be prepared for it," GOP House Speaker Brian Bosma said. "This was very purposeful."

The GOP spending plan increases base school funding by 2.5% each of the next two years, which Gov. Eric Holcomb and other Republicans say makes strides toward their stated goal of improving the state's lagging teacher salaries. But their funding proposals never came close to the 9% increase that education advocacy groups estimated was needed to boost Indiana's average teacher pay to the midpoint of neighboring states.

Senate Democratic Leader Tim Lanane of Anderson said Thursday more money could've been directed to schools and programs such as child welfare services and health screenings rather than just banking so much extra cash.

"We worship at this altar of a $2 billion surplus," Lanane said. "My gosh, we're talking about real people's lives."

An analysis provided by Democrats shows the GOP spending plan increases traditional public school funding by about 2% a year, while charter schools will see 10% more money and private school voucher funding goes up 9% the first budget year and about 5.5% the second year.

Bosma said it was important to be careful with spending, recalling how then-Republican Gov. Mitch Daniels cut $300 million in school funding following the 2007-2009 Great Recession.

"This was a prudent measure for Hoosier taxpayers, a prudent measure for schools," he said.

Another provision in the budget deal trims $70 million from Holcomb's request for an additional $572 million over the next two years toward allowing the state's troubled Department of Child Services to keep hundreds of new caseworkers.

Holcomb sought that money to match a boost of $286 million, or about 40 percent, that his administration transferred to the agency last year amid complaints about it being unable to handle a jump in the number of abused or neglected children cases.

Republican budget writers say the lower funding level is possible because growth in the agency's expenses and caseloads has slowed.

Democratic leaders, however, worry that it is too soon to trim back child welfare spending.

"I just don't want to go backwards," said House Democratic Leader Phil GiaQuinta of Fort Wayne. "That is the fear - if we let up on the progress that's been made, including taking back funding, then are we going to be right back where we started."