Statehouse Update 19

June 23, 2009

LEGISLATIVE DEVELOPMENTS

House Passes Biennial Budget in Special Session

The House Ways and Means Committee voted the biennial budget out of committee on Monday, June 15th, after considering a number of amendments. The full House considered and adopted nine second reading amendments on Wednesday and passed the budget on a 52-48 vote on Thursday. Two changes were made to the appropriations for Indiana University in addition to those that were summarized in last week's statehouse report. Rep. Phil Phlum (D-Milton) requested and passed an amendment to authorize the $17.5 million Student Health and Wellness Center. Another amendment would revise the current limit on outstanding energy savings contract bonds from $10 million per university to $20 million per campus. IU believes that it could take advantage of the proposed higher limitation by potentially pursuing additional projects that would further reduce energy costs.

The budget process then moved to the Senate, which promptly began its work on Friday, as described in the next section.

Summary of Higher Education Provisions in Senate Appropriations Budget Bill

The Senate began deliberations on the biennial budget by quickly passing a budget out of the Senate Appropriations committee on Friday of last week. Second reading amendments were considered on Monday and several were passed, although none impacted IU funding. On Tuesday the bill passed the Senate 33-17 on a party-line vote.

The Senate budget is a traditional two-year budget while the House budget includes appropriations for one year. Higher education provisions are summarized below:

• University operating appropriations were cut by 4.2 percent across-the-board in FY 2010 and then re-allocated to the institutions via the new Commission for Higher Education funding formula. However, IU and Purdue campuses did not receive research support funding since a portion of our request for Indiana Innovation Alliance funds were separately appropriated. For FY 2011, appropriations are cut 2.5 percent across-the-board and again re-allocated via the ICHE formula. Net funding varies by campus, but system-wide, IU appropriations are 4.5 percent lower in FY 2010 and 1.5 percent lower in FY 2011.

• The bill includes language that indicates that a portion of state operating funds that were cut will be replaced by federal stimulus funds. The language permits 50 percent of the stimulus funds to be used for operating expenses and 50 percent for campus R&R projects.

• Indiana Innovation Alliance funding totals $13 million per year with $3 million for expansion of the Centers for Medical Education, $2.5 million for Purdue technology programs and $7.5 million for core research.

• R&R is funded at 50% of the current biennial formula amount totaling $25.2 million for IU's system.

• Capital project authorizations are only those recommended by the ICHE which include: Bloomington Life Sciences Lab Renovations at $10.0 million and Indianapolis Life Sciences Lab Renovations at $10.0 million

• SSACI's Frank O'Bannon and 21st Century Scholars grant programs receive a 3 percent increase.

SB 1 Continuing Resolution

In addition to HB 1001, the Senate also passed a continuing resolution bill that would permit state spending to continue after July 1 in the event that a biennial budget is not passed by the General Assembly. Specifically, the bill specifies that prior-year appropriations, or actual allotments by the State Budget Agency (if less than appropriations), would be appropriated until such time as the General Assembly adopts a biennial budget bill. It is important to note that the General Assembly has not failed to enact a budget prior to the beginning of a fiscal year in modern times and thus, a continuing resolution process is unprecedented.

Next Steps

On Tuesday, following Senate passage of their Budget Bill, the House promptly dissented on the bill. Thus, the process will now move to a Conference Committee to resolve differences in the spending bill. These conference committee negotiations between the House and Senate must be completed prior to the state fiscal year, which begins on Wednesday, July 1.