Indiana plans to use $300 million in surplus money to pay for capital projects at its public universities instead of issuing debt as originally planned.
Six colleges and universities will get money for building projects that were already in the state budget but had been earmarked for bond funding.
Gov. Eric Holcomb asked lawmakers for the money to pay cash up front after the state closed the last fiscal year in June with $300 million more than expected. Holcomb said paying cash will save the state $5 million a year in interest for 20 years.
Senators gave final approval on a 38-8 vote to the plan Thursday, with one senator from each party crossing party lines. South Bend Democrat David Niezgodski joined Republicans in supporting the bill, while Noblesville Republican Victoria Spartz voted against it. The House passed the bill earlier this month and Holcomb is expected to sign it. Republicans control the legislature and Holcomb is a Republican.
Legislators made some alterations to Holcomb’s original list of projects, adding two university projects in place of the governor’s original request to pay for construction of a new swine barn at the State Fairgrounds. The revised bill will fund buildings at Indiana University, Purdue, Ball State, the University of Southern Indiana, Indiana State, and the Columbus campus of Ivy Tech.
The latest revenue forecast forecasts the state will collect $250 million more over the next two years than was anticipated in April when lawmakers adopted the latest two-year state budget.
The updated forecast projects Indiana will end its current budget year on June 30, 2020, with $2.37 billion in reserves and $2.55 billion in the savings account by the end of the 2021 budget year.
Democrats opposing the bill wanted to use the surplus to put toward teacher pay while still using bonding for projects. Sen. Karen Tallian, D-Ogden Dunes, argued that with interest rates low, floating bonds is more economical and would free up millions of dollars for other priorities.
“There is absolutely no reason why the General Assembly can’t get our teachers more money this year,” said Tallian. “Otherwise, teachers will once again be forced to wait another year for any possibility of raises.”
Tallian and Sen. Eddie Melton, D-Gary, failed to get an amendment to the spending bill that would have freed up $100 million annually from state payments to the pension stabilization fund to add to the Teacher Appreciation Grant this year and next.
“This was the third opportunity this year, and sixth opportunity since last session, for the Republican supermajority to provide our teachers with additional dollars,” Melton said. “Our amendment would have followed a suggestion from Indiana Public Retirement System to smartly reallocate pension payments to provide new dollars to teachers now. Under our proposal, eligible teachers would have seen a 265% increase in their grant checks each year, without affecting state reserves or teacher pensions.”
The amendment was voted down along party lines 10-40. The Tallian and Melton teacher compensation bills, SB 306 and SB 413, still await committee hearings. The deadline for committees to take action on these bills is January 30.