The Senate Appropriations committee amended and approved Indiana’s $46.8 billion two-year budget Thursday, so the bill advanced for consideration by the whole Senate.

In House Bill 1001, the biennial budget, the majority of new money was allocated for Medicaid, Department of Child Services, and Department of Corrections. Through the budget’s end in 2027, the state will see $3 billion in reserves, said Senate Appropriations Chair Sen. Ryan Mishler, R-Mishawaka.

“When you don’t have any money to spend, you look for efficiencies, transparencies, a little bit of oversight,” Mishler said. “We felt like we fully fund government services and the pensions, but there’s some oversight and some transparency in here as well.”

The majority of the budget — 47% — will fund K-12 education, while 22% will go toward Medicaid. Then, 9% of the budget will go to higher education, 6% to public safety, 5% to child services, 4% to health and human services, 3% to general government, and 2% each for capital projects and other, Mishler said.

The state’s Medicaid costs have increased following a nearly $1 billion shortfall as a result of a misprojection in the program. Comparatively, 15% of the state’s budget in 2021 went to Medicaid, 18% of the state’s budget in 2023 went to Medicaid, and the current budget allocates 22% of state funding, Mishler said.

The budget fully funds Medicaid forecast of $10 billion over the biennium period, which reflects a $2.1 billion increase to Medicaid, Mishler said. Additionally, in the 2023 budget, Medicaid went up by $2.3 billion and then halfway through the current budget cycle the state had to fund nearly $1 billion as a result of the shortfall, he said.

“So when I’m screaming about Medicaid, please listen, because that’s the problem we’re having right there, Medicaid growth,” Mishler said. “In four years, that’s a $5.3 billion increase, so Medicaid has more than doubled in four years alone.

With that, Mishler defended the state’s approach to Senate Bill 2, which addresses Medicaid and initially placed a program cap before it was amended.

“What we’re trying to do is make sure those that need it the most get it. With this growth, we just can’t sustain it because the growth is greater than our entire revenue growth,” Mishler said.

For K-12 education, the state budget allocates $18.9 billion for tuition support, which reflects a $870 million increase in tuition support compared to fiscal year 2025, Mishler said. The K-12 budget also reflects the funding for average daily membership, or student attendance, to increase from $8,347 in fiscal year 2025 to $8,827 in fiscal year 2027.

The Senate and House Republicans split on funding virtual students: House Republicans sought to increase the reimbursement from 85% of an in-person student to 100%. The Senators proposed a cut to 70% as Mishler raised concerns about virtual schools.

The budget also reflects an increase of $208 million for special education funding and $9 million for the non-English speaking program, Mishler said.

Higher Education will maintain funding at $4.4 billion, Mishler said.

For the Department of Child Services, Mishler said the budget increases funding by $174 million, and requires the department to give $2 million per year to Boys and Girls Club Indiana Alliance and $375,000 per year to All Pro Dad, a nonprofit co-founded by former Indianapolis Colts coach Tony Dungy. All Pro Dad has received state funding since 2021 for various efforts including recruitment of more foster parents, but it’s unclear how effective the program has been, according to an Indiana Capital Chronicle report.

In public safety, the budget reflects a $120 million increase for the Department of Correction, provides free state park admission to Gold Star families and increases the sheriff’s per diem to $42 a day, Mishler said.

For economic development, the budget funds residential housing infrastructure assistance at $25 million, raises the IEDC global tax cap credit from $250 million to $300 million and creates the beginning farmers tax credit at $1 million, Mishler said.

Further, the budget funds manufacturing readiness grants at $10 million, maintains sports corporation funding at $750,000, provides $10 million over the two-year period for Sports and Tourism bid fund, creates the Hoosier Workforce Investment Tax Credit with $4 million, Mishler said.

Under government efficiency, the budget requires the budget director to withhold 5% of each agency’s appropriations with exceptions for Family and Social Services Administration and the Indiana Department of Child Services to avoid losing matching grant funds. It requires an annual travel report for governor, governor’s cabinet, lieutenant governor and separately elected officials.

The Senate amendment to the budget passed 11-1. The bill as a whole passed 10-3, and heads for consideration by the whole Senate.

Sen. Fady Qaddoura, D-Indianapolis, offered two amendments, which failed, to address Medicaid waiver lists and to fund curricular materials for public education as a separate line item outside the education funding formula.

Mishler said he did not support funding for curricular materials outside of the education formula because when he previously supported it “the schools” went on to “throw (him) under the bus.”

Sen. Rodney Pol, D-Chesterton, proposed an amendment, which failed, to increase funding for child care to eliminate the waitlist for funding available from the federal Child Care and Development Fund program.

“The investment that I see here is obviously worth the return on investment,” Pol said.

Pol proposed an amendment to increase the aggregate amount of state tax credits awarded under the affordable and workforce housing tax credit from $30 million to $60 million. The amendment also failed.

Qaddoura said he supported the amendment to the budget because it improves funding for Medicaid and funds programs “we deeply care about,” but he couldn’t approve the whole budget because it doesn’t adequately address public education and Medicaid waitlists.

While public education may see an increase in the budget, Qaddoura said it’s unclear how that increase will hold up in light of the property tax relief the legislature approved Thursday.

Qaddoura said the legislature hasn’t considered using cigarette tax and alcohol tax to fund mental health and legalizing marijuana to create another revenue stream for the state.

Sen. Lonnie Randolph, D-East Chicago, said he didn’t support the budget because of its “shortcomings.”

akukulka@post-trib.com