7/23 Torchbearer Weekly Policy Update
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- Indiana's fiscal outlook remains strong
- Indiana clarifies new absenteeism law
- Indiana budget cuts by 7% after inflation
- Indiana ILEARN shows math growth, flat reading
- Indiana seeks flexibility in federal education funds
- Indiana fiscal year 2025 ends strong with surplus
- New federal rules upend rural broadband initiative
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- Important Dates
Indiana's fiscal outlook remains strong
Indiana State Comptroller Elise Nieshalla highlighted the state's financial strength with a $2.5 billion reserve at the end of the 2025 fiscal year.
Why it matters: Indiana's fiscal responsibility is evident in its ability to maintain a stable financial footing despite economic fluctuations.
- The state ended with a $337 million surplus, exceeding expectations by $170 million.
- $160 million of the surplus came from advanced tax payments, impacting next year's revenue.
The big picture: Indiana's reserves can fund government operations for 40 days without new revenue, aligning with the advised 30-60 day range.
- The reserves are 11% of state spending, crucial for maintaining the state's AAA bond rating.
What they're saying: "Our reserve continues to serve as a practical safeguard," said State Comptroller Elise Nieshalla. However, Democrats argue that the fiscal closeout doesn't reflect the struggles faced by Hoosiers relying on state services.
What's next: With stagnant revenue growth expected, Indiana must navigate potential challenges from federal measures impacting state finances. More insights will be available in August. (Indiana Capital Chronicle)
🔍 Indiana clarifies new absenteeism law
A new Indiana law, Senate Enrolled Act 482, aims to enhance the reporting of chronic absenteeism in K-12 schools, but does not change local attendance policies or penalize families for excused absences.
Why it matters: Misinterpretations online have suggested the law strips protections for vulnerable students, prompting clarification from officials.
- Sen. Andy Zay emphasizes that local schools retain the flexibility to decide what counts as excused or unexcused absences.
- The law seeks to provide clearer statewide attendance definitions to better address absenteeism issues.
Details: The law requires schools to track and report absenteeism data more consistently to understand why students miss school.
- "Chronic absenteeism" is now defined as missing at least 10% of school days.
- Local schools still determine the categories for absences: excused, unexcused, or exempt.
What's next: More guidance is expected in the fall to help prevent absenteeism and promote attendance in Indiana schools.
- New statistics for the 2024-25 school year are anticipated to shed light on the current absenteeism rates. (Indiana Capital Chronicle)
🔍 Indiana budget cuts by 7% after inflation
Indiana's first biennial budget under Gov. Mike Braun reduces state spending by 7% after accounting for inflation and policy holdbacks, according to the Indiana Fiscal Policy Institute's analysis.
Why it matters: The budget, totaling $54.6 billion, spends 3% more than the previous cycle but sees a 5% decline in spending power. This could impact state and local services.
- K-12 education, the largest budget item, received a 4% increase, yet inflation effects and holdbacks negate substantial gains.
- The Institute highlights structural reductions, like the elimination of $320 million for free textbooks.
Details: Commerce agencies face the deepest cuts, with the Indiana Economic Development Corporation seeing a 30% decrease and several programs zeroed out.
- The Department of Workforce Development's budget decreased by 27%, absorbing duties of the dissolved Governor’s Workforce Cabinet.
What's next: Agencies like the Family and Social Services Administration will see increases, with Medicaid assistance receiving a $1.8 billion boost.
- Indiana State Police's budget will increase by 28% to address staffing shortages.
- The budget provisions became effective on July 1, marking the start of the 2026 fiscal year. (Indiana Capital Chronicle)
📈 Indiana ILEARN shows math growth, flat reading
Indiana's ILEARN assessment data reveals continued growth in math proficiency, but reading scores remain largely unchanged, according to the latest results.
Why it matters: While math scores have improved, there is a pressing need to address the stagnant reading levels among middle school students.
- Math proficiency in grades 3-8 increased by over five percentage points since 2021, reaching 42.1% in 2025.
- English/language arts proficiency remains at 40.6%, showing minimal growth over the past four years.
Details: Third-grade reading scores showed the most improvement year-over-year, while seventh-grade reading scores declined the most.
- Seventh-grade ELA proficiency dropped by 3.9%, the steepest decline of any grade level.
- Eighth-grade students posted the largest year-over-year gain in math, with a 3.1% increase.
What's next: Indiana will implement a "through-year" assessment model with three checkpoint tests and a shortened summative assessment to provide real-time data and earlier intervention for struggling students.
- New literacy and math interventions are being expanded statewide, including teacher training and targeted tutoring grants. (Indiana Capital Chronicle)
Indiana seeks flexibility in federal education funds
Indiana plans to request a waiver from the U.S. Department of Education to consolidate federal education funds into block grants, allowing schools to allocate money with fewer restrictions.
Why it matters: The proposal aims to streamline funding processes, reduce administrative burdens, and provide schools with more autonomy in spending.
- The waiver would eliminate specific federal program requirements, enabling funds to support a broader range of educational activities.
- Title I-A funding for low-income students remains exempt from this consolidation.
Details: The plan includes creating an "Innovation Fund" by combining competitive grants and school improvement funds to support diverse school types.
- Indiana's new A-F grading system could also serve as its federal accountability system.
What's next: Indiana will release the proposal details soon, followed by a 30-day public comment period before submission.
- The plan aligns with broader conservative goals for increased state control over education funding. (Chalkbeat)
Indiana fiscal year 2025 ends strong with surplus
The Indiana Fiscal Policy Institute's Fiscal Year 2025 close-out report reveals that the state exceeded revised revenue expectations by $170.6 million, ending the year with a $337 million surplus and $2.5 billion in reserves.
Why it matters: These results highlight Indiana's strong fiscal health, providing a benchmark for future financial planning.
- The surplus and reserves reflect careful budgeting and fiscal responsibility amid economic fluctuations.
Details: Despite a revised forecast predicting a $400 million shortfall, Indiana closed the year 0.8% above expectations.
- This positive outcome is crucial for setting financial benchmarks and planning for the upcoming fiscal year.
What's next: The Indiana Fiscal Policy Annual Luncheon, focusing on energy and economic development, will be held on September 16, 2025, at Newfields in Indianapolis.
- This event offers networking opportunities for policymakers, business leaders, and community members to engage in discussions about Indiana's fiscal policies.
Indiana's unemployment rate drops to 3.6%
Indiana's unemployment rate fell to 3.6% in June, marking the sixth consecutive monthly decrease, even as the state lost 3,900 private sector jobs.
Why it matters: Despite job losses, Indiana's unemployment rate remains below the national average, reflecting resilience in the job market.
- The state's labor force participation rate is 63.7%, higher than the national average of 62.3%.
Details: Indiana saw job gains in professional and business services, private educational and health services, and trade, transportation, and utilities sectors.
- As of June 30, the state had 86,381 open job postings, with 20,694 continued unemployment insurance claims filed by July 5.
What's next: Indiana continues to maintain a strong labor market, with opportunities for further growth across key sectors.
- The state's focus on expanding job opportunities aims to sustain economic momentum and address ongoing challenges.
New rules challenge Indiana broadband plans
Late-stage changes to the Broadband Equity, Access, and Deployment (BEAD) program require Indiana providers to rework proposals.
Why it matters: Thousands of Hoosiers may face delays in receiving improved internet service.
- The $41.6 billion BEAD program, including $868 million for Indiana, aims to expand broadband access.
Details: Indiana had nearly completed its selection process for broadband funding when new federal rules were introduced.
- Providers like NineStar Connect must now revise their bids, affecting 70% of the state’s unserved addresses.
What's next: The revised rules open opportunities for non-fiber-based technologies, attracting new providers.
- The application deadline is set for September 4, with technology-neutral criteria favoring lower-cost bids. (Indianapolis Business Journal)
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Important Dates:
No interim study committees have been scheduled to date.
The interim study committee calendar can be found here.