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Indiana state budget and finances
- 1 Federal Aid to State Budget
- 2 Fiscal Years 2014-15 State Budget
- 3 Fiscal Years 2012-13 State Budget
- 4 Budget transparency
- 5 Budget background
- 6 2009-2010 budget crisis
- 7 Accounting principles
- 8 Stimulus
- 9 Public Employees
- 10 See also
- 11 External links
- 12 Additional reading
- 13 References
|Indiana state budget|
|Date signed:||May 10, 2011|
|GF expenses:||$28.3 billion|
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Indiana operates on a biennial budget cycle. Its fiscal years starts on July 1 and it is currently in FY2013
Indiana started a new budget biennium, FY2012-13, on July 1, 2011. The legislature passed a $28.3 billion budget for the biennium and Gov. Mitch Daniels signed the buget into law on May 10, 2011. Highlights of the budget include that it does not raise taxes or fees, increases education funding and its creation of a taxpayer refund provision. At the end of FY2012, the state reported a surplus of $2.15 billion, an amount equal to 15.9% of expenditures.
Indiana has a total state debt of approximately $37,127,700, when calculated by adding the total of outstanding official debt, pension and other post-employment benefits (OPEB) liabilities, Unemployment Trust Fund loans, and the FY2013 budget gap. The debt total is less than the prior year's total of $38,710,138,000.
Indiana's total state debt per capita is $5,697.12.
Federal Aid to State Budget
The chart below represents how much of the state’s budget comes from the federal government. The number is the corresponding ranking in relation to the rest of the nation (if #1, the state receives the highest percentage of federal funding in the nation):
|Indiana||28.54% (#29)||31.46% (#33)||34.89% (#32)||34.53% (#30)|
- Figures were calculated by dividing each state’s intergovernmental revenue into its general revenue.
Fiscal Years 2014-15 State Budget
On Jan. 15, 2013, Gov. Mike Pence introduced his proposed $29 billion biennial state budget. The proposal spends $14.4 billion in FY2014 and $14.6 billion in FY2015. It increases state funding by about $200 million each year, or roughly 1.4 percent.
Highlights of the governor's budget include:
- a $790 million cut in the state's personal income tax, although lawmakers have not been enthusiastic about the idea;
- a $267 million structural surplus in 2014 and a $237 million surplus in 2015, in addition to the state's $2 billion reserve;
- shifting excess state reserves used to pay down pension liabilities to create a new transportation investment fund;
- increasing Medicaid funding by $200 million each year, although it does not include funds for Medicaid expansion under the federal Affordable Care Act. ;
- increasing K-12 education spending and higher education aid by 1 percent each year;
- $64 million in grants for schools that perform well on a trio of state metrics;
- $35 million more for the embattled Department of Child Services to hire more caseworkers and other staff.
Fiscal Years 2012-13 State Budget
- See past state budgets
The FY2012-13 state budget as enacted can be found here.
The state ended FY2012 with a reserve balance totaling $2.15 billion, an amount equal to 15.9% of expenditures. The state received $383 million, or 2.8 percent, more revenue than it anticipated in FY2012, and it spent $275 million) less than was anticipated in the budget that was passed in April 2011.
The surplus money will flow back to the state, with $360 million used to further strengthen INPRS Pensions and another $360 million will go toward the Automatic Taxpayer Refund, meaning that each taxpayer will get more than $100 next year.
A report released on Aug. 3, 2011, by the State Budget Agency showed that the state had received $23 million more in tax revenues coming in than expected for the first month of FY2012, which is 2.3 percent more than was projected in an April forecast that legislators used when drafting the state budget.
Budget as passed
On April 29, 2011, the Indiana state legislature approved a two-year budget of $28.3 billion total. Before passage of the budget, the state faced a $1 billion gap between the state's revenue and expenses, including the need to build up reserves by $500 million. Gov. Daniels signed the budget into law on May 10, 2011.
The budget freezes spending on universities and most state agencies and maintains current Medicaid and horse racing programs. It increases school funding over the biennium by approximately about $150 million, boosting spending by 0.5% in 2012 and 1% in 2013. The budget increases funding in key areas such as K-12 education, student financial aid, Medicaid and pensions, while reducing General Fund appropriations for most executive branch agencies by 15 percent compared to FY 2011 appropriations. The budget increases funding in key areas such as K-12 education, student financial aid, Medicaid and pensions, while reducing General Fund appropriations for most executive branch agencies by 15% compared to FY 2011 appropriations. The Appropriations in the FY2012 state budget can be found here. The state spends more than half of its budget on education.
The budget include a taxpayer refund provision that, if state reserves exceed 10 percent of budgeted spending, half the extra money will go to pension funds and the other half will be returned to taxpayers. The budget spends less than it takes in and should all go according to the plan, the state will end the biennium with $1 billion in reserves. 
Lawmakers designated $6.26 billion for FY 2012 and $6.31 billion for FY 2013 for K-12 tuition support from the General Fund. On a calendar year basis, K-12 tuition support was increased 0.5% for 2012 and 1.0% for 2013.
The Indiana State Budget Committee held hearings in November and December 2010. Committee Chair State Sen. Luke Kenley estimated that lawmakers will need to reduce current spending approximately $1 billion to avoid a tax increase.
State Budget Director Adam Horst said the state is spending about $13.9 billion per year in FY2011, and revenues in FY2012 will reach only $13.4 billion even with the projected growth. Revenue forecasts released mid-Dec. 2010 anticipated that the state will take in $13.4 billion in fiscal year 2012 and $13.9 billion in 2013. Those are increases over current revenues, but current spending is about $13.9 billion, meaning that if spending stays the same, Indiana will likely spend about $500 million more in the first year of the budget than it generates.
The Indiana Fiscal Policy Institute, a nonpartisan government research group, estimated that the state's deficit for FY2012 could hit $1.3 billion if the economy does not drastically improve or if deeper spending cuts are not made. The deficit is due in large part to increased teacher, police and firefighter pension payments as well as statutory increases in Medicaid.
For FY2012, Indiana devoted 32.3% of its total spending to K-12 education, down from 34.0% in FY2009.
|Fiscal Year||Total Spending||Education Spending||Percent Education Spending|
|2009||$51.2 billion||$17.0 billion||33.2%|
|2010||$51.7 billion||$17.2 billion||33.2%|
|2011||$52.3 billion||$17.6 billion||33.6%|
|2012||$18.4 billion||$25.3 billion||33.8%|
Legislative Budget Proposal
Indiana lawmakers reached an agreement on a state budget on April 28, 2011, and planned to vote April 29, 2011, on a two-year, $28 billion state budget before the end of the session. The compromise includes no tax increases but also avoids large cuts to most programs. It increases K-12 education funding by 0.5 percent in 2012 and 1 percent in 2013. Pensions and Medicaid would also see increased funding. If current revenue forecasts hold up, a $1 billion surplus would remain at the end of the biennium.
The Senate Appropriations Committee approved on April 18, 2011, a $28 billion budget that would end the biennium with more than $1 billion in reserves, more than both the House version and the version proposed by Gov. Daniels. Under the Senate plan, schools would receive an additional $150 million in the budget cycle. The budget proposal also uses a performance-based formula to divide some higher education money among colleges meeting goals, ends a tuition freeze at state colleges, gives extra money to all school districts with at least 500 students as an incentive for smaller districts to consolidate, and freezes lawmakers' pay for two years. The proposal also includes creation of a committee to study the labor issues surrounding the five-week boycott from House Democrats earlier this session, including a right-to-work bill that would prohibit union membership from being a condition of employment.
On March 30, 2011, the Indiana House approved a $28 billion, two year state budget plan that that would maintain overall education funding level from FY2011 while shifting more money to growing suburban school districts. It now goes to the Senate for consideration. The budget has no tax increases. Nearly half of the state spending would go toward K-12 education, but it differs from the governor's proposal in that it does not restore school funding of about $450 million ordered by Gov. Mitch Daniels. It also rejects the governor's call for a 3% increase in funding for colleges and universities, instead maintaining the same funding amount from FY2011.
Right to Work and Legislative Walk Out
On Feb. 22, 2011, amid a protest by 4,000 against House Bill 1216 that would limit collective bargaining, Democrats in the Indiana House of Representatives did not show up, and instead followed the example of Wisconsin Senate Democrats and fled to Illinois.
The walk out by Democrats prevents action on the bill because a two-thirds majority needed for a quorum; Republicans hold 60 of the 100 seats in the House. Without the Democrats present, the House could not have a quorum. On March 3, 2011, Republican House members moved Thursday to fine missing Democrats $250 a day beginning on March 7, 2011, and increased that figure to $350 per day on March 21, 2011. On March 29, 2011, Republicans proposed some final changes to a bill that affects labor union jobs and wages, and the Democrats then returned to Indiana. The legislative session ends April 29, 2011. Democrats will have to pay more than $100,000 in fines, which will go into the House's budget.
The Democrats' absence prevented the House from voting on House Bill 1468, the so-called Right to Work bill that would give members of private-sector unions the right to opt out of unions and not pay dues.
In Indiana, all employees covered by a contract must belong to the union if a union bargains for a group of employees at a workplace. The bill would have barred unions and companies from negotiating a contract that requires non-union members to pay fees. The right-to-work bill died when it failed to clear the required legislative procedural hurdles. Republicans could attempt to reintroduce right-to-work and other bills by inserting the proposals into other bills later in the session, but risk triggering another stalemate. Gov. Daniels said at the end of 2010 that while he agrees philosophically with the legislation, lawmakers should not pursue it. Daniels said it was a big issue that needed a state-wide debate and noted no Republican had run on this in the November election.
Despite killing the bill that would have prohibited union membership from being a condition of employment, Indiana Democrats did not return to their home state. They remain in Illinois in an attempt to thwart other parts of Republican Gov. Mitch Daniels' agenda, including restrictions on teacher collective bargaining. The state Senate passed a bill that will narrow the scope of public school teachers' collective bargaining right, but the measure cannot take effect until it is voted on by the House, and that will not happen until lawmakers return. In the fourth week of their absence, the Democrats said that they want changes to bills that use tax dollars to fund private school tuition and which impact collective bargaining for labor unions, but Republicans said they will not negotiate any changes. Indiana requires a quorum of lawmakers present to pass all legislation.
Governor's Proposed Budget
Horst presented Governor Daniels' budget to the State Budget Committee on Jan. 13, 2011. The budget proposal calls for spending $13.76 billion in FY2012, and about $13.98 billion in FY2013. At the end of the biennium, the state will have a surplus of about $725 million, bolstered in part by shifting $200 million in unused accrued interest from the state’s Public Deposit Insurance Fund that has languished since the 1930s.
Under the proposed budget, K-12 education funding will remain the same. The funding was not cut in part because of the cuts made in the prior two years, with schools having lost $300 million in state aid since the prior budget was enacted in 2009.
Senate Minority Leader Vi Simpson said schools face mounting health insurance and utility prices, coupled with inflation and other demands and thus need about a 2 percent increase in funding to handle rising cost
The governor's proposed budget cuts higher education funding by approximately 9%.
The governor's proposed budget increases overall Medicaid funding, but eliminates some optional Medicaid services such as dental care, hearing aids, podiatry services and chiropractic services.
The state Medicaid actuary projected Indiana's share of the program's costs will rise by about 25% in FY2011-12, which is $1.46 billion and $1.84 billion respectively, and by nearly 9%, or $2.00 billion, in FY2013 should services remain the same. Sen. Luke Kenley said the General Assembly likely will cut some optional Medicaid services rather than resort to raising taxes.
The Department of Corrections requested a $667.4 million budget for FY2012, which is an increase of 1.3% from what the department spent in FY2011, but less than it requested for in the previous budget cycle, due to spending cuts ordered by Gov. Mitch Daniels. Rep. Peggy Welch, a member of the State Budget Committee and the budget-writing House Ways and Means Committee, told a hearing that prisons are "going to be a big issue in the 2011 session." 
Indiana's public deposit insurance fund (PDIF) was created after during the 1930s to replenish money invested by schools, cities and other public entities if a bank holding those funds failed and the Federal Deposit Insurance Corp. didn't cover the full losses. Because new state regulations provide another form of backup insurance, the governor state that using the PDIF as a source of revenue to fund other state expenses is "a perfectly appropriate suggestion."
Article 4, Section 18 of the Indiana State Constitution requires that the “title” of a bill be read on three days in each legislative chamber prior to a final vote on the bill.
Indiana has a transparency website, the Indiana Transparency Portal. Lawmakers said that the website is intended compile Indiana budget data, spending reports and other financial information that previously had been spread across multiple sites. The website, however, does not include updated numbers on exactly what cuts have been made since Republican Gov. Mitch Daniels ordered millions of dollars in reductions after the budget was approved by lawmakers and has been criticized for not showing where taxpayer money goes under job incentives through the Indiana Economic Development Corporation.
- See also: Evaluation of Indiana state website and Constitutional provisions regarding reading of bills
Indiana has a database of contracts, available from the Indiana Department of Administration. The State's Active Contracts listing provides an up-to-date list of all professional services contracts in which the state is currently a party.
The following table is helpful in evaluating the level of transparency provided by Indiana Active Contracts:
|State Database||Searchability||Grants||Contracts||Line Item Expenditures||Dept/Agency Budgets||Public Employee Salary|
|Department of Administration, Active Contracts|
|Indiana Transparency Portal|
- Line item expenditures are searchable.
- Contracts are available.
- State employee salaries are searchable.
- Department and agency budget documents are posted.
Support for creation of the database
Governor Mitch Daniels created the contracts website with an Executive Order in 2005.
Multi-Measure Budget Transparency Profile
The Institute of Government and Public Affairs at the University of Illinois has created a multi-measure transparency profile for Illinois, which measures state transparency as of September 2011 using indicators from a range of organizations. These indicators measure both website transparency and other recognized facets of governmental transparency. In addition, IGPA presents four unique indicators of non-transparency based on the observation that transfers or reassignments between general and special funds can obscure the true fiscal condition of a state.
The Indiana General Assembly meets annually and has a biennial budget. The governor submits the budget to the legislature in accordance with IC 4-12-1-9(a): Before the second Monday of January, in the year immediately after preparation, the budget report and the budget bill shall be submitted to the Governor by the budget committee. The Governor shall deliver to the house members of the budget committee such bill or bills for introduction into the House of Representatives.
Indiana is required to pass a balanced budget by statue stating that "no law shall authorize any debt to be contracted", except for "casual deficits" which must be covered by loans "as may be necessary to meet the demands of the state." Indiana law prohibits the state from carrying a deficit from one year to the next. State law creates a spending cap under Section 4-10-21-2, but an exemption from the State spending cap for appropriation exists under Section 4-10-21-7.
Indiana maintains seven major governmental funds: the General, Motor Vehicle Highway, Medicaid Assistance, Major Moves Construction, State Highway Department, Property Tax Replacement and Tobacco Settlement Funds. The State budgets all seven major funds in addition to more than fourteen other non-major funds.
- $26.2 billion FY 2009 (listed as a comparison)
- $26.9 billion FY 2010
- $26.9 billion FY 2011
- $14.4 billion FY 2009 (listed as a comparison)
- $13.6 billion FY 2010
- $14.1 billion FY 2011
General Fund 2009-10
|Category||FY2009 Amount in millions Actual||FY 2010 Amount in millions Estimated|
|Budget Stabilization Fund||365||369|
Fiscal 2010 Tax Collections Compared With Projections Used in Adopting Fiscal 2010 Budgets (Millions)
|Sales Tax Original Estimate||6,132|
|Sales Tax Current Estimate||5,932|
|Personal Income Tax Original Estimate||4,289|
|Personal Income Tax Current Estimate||3,776|
|Corporate Income Tax Estimate||800|
|Corporate Income Tax Estimate||547|
The following table provides a history of Indiana's expenditures and gross domestic product (GDP).
|Fiscal Year||Expenditures (billions)||GDP (billions)|
|2000||$31.2 ||$194.4 |
|2001||$33.8 ||$195.2 |
|2002||$36.3 ||$205.0 |
|2003||$37.8 ||$215.4 |
|2004||$39.3 ||$228.3 |
|2005||$42.0 ||$232.8 |
|2006||$44.0 ||$238.7 |
|2007||$46.1 ||$246.4 |
|2008||$48.2 ||$254.4 |
|2009||$50.5* ||$262.7* |
- NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.
See Indiana state budget (2008-2009) for more details.
2009-2010 budget crisis
- See also: State budget crisis, 2009-2010
Gov. Mitch Daniels, 2010 State of the State Address
Indiana faced a budget shortfall of approximately $1.8 billion for FY 2010.  The fall in revenues has forced Daniels to make hundreds of millions of dollars in budget cuts, including: $150 million from higher education and $300 million from public schools. In the "2010 State of the State Address" Daniels emphasized the need to "streamline state government."
Despite the state's looming deficit and failing revenues, Gov. Daniels said, "we will not make this recession worse by adding one cent to the tax burden of our fellow citizens." The General Assembly recently approved a ballot measure for the statewide 2010 ballot, widely supported by Gov. Daniels, which will let voters decide whether to amend limits on property tax bills into the state constitution.
Among the budget cuts announced by the governor in order to reduce the state's looming budget deficit were slaugherhouse inspections, however, on February 1 the governor reversed his decision. The planned cut included cutting the inspection budget by less than 50%.
Ryan Kitchell has been Indiana’s OMB Director since 2007. The Legislature, at the Governor's request, created a new organization within state government called the Office of Management and Budget ("OMB"). The OMB brings together the financial and auditing functions of Indiana. The Director of the OMB is the state's CFO.
- Accounting for all of the State's funds
- Overseeing and disburse county, city, town, and school tax distributions
- Paying the State's bills
- Paying the State's employees
- Administrating Indiana’s Deferred Compensation Plan.
Indiana has received $4.1 billion in federal stimulus funding between February 2009 and June 2013.
According to 2011 Census data, the state of Indiana and local governments in the state employed a total of 396,207 people. Of those employees, 285,401 were full-time employees receiving a net pay of $1,080,098,963 per month and 110,806 were part-time employees paid $110,693,731 per month. More than 62% of those employees, or 246,905 employees, were in education or higher education.
As of July 2010, the Indiana state government employed its smallest workforce since 1982. Special committee approval must approve any new hires.
State employees' salaries were frozen in 2009 and through 2010.
- State Budget Solutions, Indiana
- Indiana Policy Review Foundation
- Indiana State Budget Agency
- Indiana Government spending
- Indianapolis Business Journal "Daniels signs 80 bills into law, including budget" May 10, 2011
- Forbes "Ind. gov signs 80 bills into law, including budget" May 11, 2011
- Release by Tim Berry, Indiana Auditor of State "Indiana State Government Reports $2.15 Billion Reserve Balance" July 12, 2012
- State Budget Solutions "State Budget Solutions' third annual State Debt Report shows total state debt over $4 trillion" Aug. 28, 2012
- State Budget Solutions “Report reveals aggregate state debt exceeds $4 trillion” Oct. 24, 2011
- State Budget Solutions "State debt more than $37,000 per private worker, $13,000 per capita" Oct. 2, 2012
- Tax Foundation "Federal Aid to State Budgets," Accessed August 23, 2013
- US Census Federal Aid to State and Local Governments
- Tax Foundation' "Monday Map: Federal Aid to State Budgets. Accessed October 15, 2013
- The South Bend Tribune "Pence submits lean state budget with new tax cut" Jan. 16, 2013
- The Indianapolis Star "Indiana Gov. Mike Pence budget raises education, Medicaid, transportation spending" Jan. 15, 2013
- The Indianapolis Star "Even with hefty surplus, budget questions loom for Indiana" July 29, 2012
- Businessweek "Indiana tax revenues better than expected for July" Aug. 3, 2011
- The Louisville Courier Journal "Indiana lawmakers pass two-year state budget" April 29, 2011
- [The Chicago Tribune "Ind. governor, lawmakers eyeing insurance fund" Dec. 29, 2010]
- List of Appropriations
- The Boston Globe "Ind. senators consider changing tax refund" Jan. 19, 2012
- Businessweek "Annual Indiana budget hearings to begin Wednesday" Nov. 12, 2010
- Bloomberg "Ind. may cut Medicaid services to check costs" Dec. 15, 2010
- Bloomberg "Indiana schools hope to avoid cuts in next budget" Dec. 17, 2010
- Businessweek "Report: Ind. government finances in big trouble" Sept. 10, 2010
- The Journal and Courier "Where would Statehouse candidates cut state budget?" Oct. 3, 2010
- State Budget Solutions "Throwing Money At Education Isn't Working" Sept. 12, 2012
- USGovernmentSpending.com "Indiana Government Spending Chart - Total Spending" Aug. 4, 2012
- http://www.usgovernmentspending.com/spending_chart_1997_2017ALb_13s1li111mcn_20t USGovernmentSpending.com "Indiana Government Spending Chart - Education Spending"Aug. 4, 2012
- The Courier Press "Indiana lawmakers reach consensus on state budget" April 28, 2011
- Businessweek "Senate panel OKs new budget with more school money" April 18, 2011
- Businessweek "Indiana House backs GOP state budget plan" March 31, 2011
- NPR "State Budget Fights - Wednesday, Feb. 23rd Edition" Feb. 23, 2011
- The Wall Street Journal "Indiana Democrats Block Action on Union Bill" Feb. 22, 2011
- USAToday.com "Indiana Democrats return, now back to work" March 29, 2011
- The Wall Street Journal "Political Fight Over Unions Escalates" Feb. 22, 2011
- Indianapolis Star "Exodus: Dems trigger Statehouse showdown" Feb. 22, 2011
- [MSNBC.com "Wis. stalemate: Deal struck, cops sent to Dem homes" Feb. 24, 2011]
- Reuters "Several U.S. states consider union limits" Feb. 25, 2011
- The Indianapolis Star "Indiana House Democrats begin their 4th week of walkout" March 14, 2011
- The Indianapolis Star "Daniels presents state budget; cuts target higher ed, Medicaid" Jan. 13, 2011
- Businessweek "Ind. lawmakers face choices to rein in prison cost" Nov. 30, 2010
- Article 4, Section 18
- Indiana Transparency Portal (ITP)
- "New Ind. website pulls together state budget data" Aug. 31, 2010
- Indianapolis Business Journal "Indiana state budget website gets new features" March 14, 2011
- Indiana performance reviews
- Contract Portal
- Employee Salaries
- Transparency Portal Budget Information
- Transparency profile for Indiana
- 50-state comparison
- State Profiles
- National Association of Budget Officers, "Budget Processes in the States," 2008
- Indiana Budget Analysis
- Indiana State Budget Agency, “2009 - 2011 As-Passed Budget,” August 31, 2009
- National Governors Association and National Association of State Budget Officers Fiscal Survey of States June 2010
- US Government Spending,"Indiana State and Local spending," retrieved March 10,2009
- Huffington Post, "Gov. Daniels Criticizes State Aid Package He Pushed Back in February", August 9, 2010
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Cite error: Invalid
- MyWabashValley.com,"Governor Optimistic Despite Budget Cuts," January 19, 2010
- Associated Press,"APNewsBreak: Daniels Backs Away From Planned Cuts," February 1, 2010
- Indiana's NewsCenter,"Governor Rethinking Some Budget Cuts," February 2, 2010
- Office of Management & Budget (OMB)
- State Auditor
- Indiana Finance Authority, “Indiana Finance Authority Members,” retrieved October 21, 2009
- Indiana OMB Web site, retrieved October 21, 2009
- Indiana State Auditor Web site, retrieved October 21, 2009
- Tim Berry
- Recovery, "Stimulus Spending by State"
- 2011 Indiana Public Employment U.S. Census Data
- NPR.com "Credit Scares: Thriftier States Reduce Red Ink" July 22, 2010
State of Indiana
|State executive officers||
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