Agencies returned more than $609 million in reversions to the General Fund in Fiscal Year 2023.
(Whitney Downard / Indiana Capital Chronicle)
This year’s fiscal closeout data shows that two-thirds of state agencies and offices sent less than 1 percent of the money allocated to them back to the state General Fund.
But a handful of agencies stood out for their reversions, or lack thereof. Indeed, the Office of Medicaid Policy and Planning alone accounted for 86 percent of the total reversions listed, or $526 million of its $609 million allocation.
That $526 million accounted for just a small portion — 17.2 percent — of the department’s overall General Fund budget of $3 billion. Others returned far greater percentages and some none at all.
Notably, the state’s list of reversions only details those returning directly to the General Fund and not those dedicated to separate accounts. Nor does it include an agency’s entire spending, which can include dedicated funds based on fees — like car registrations for the Bureau of Motor Vehicles — that don’t rely on General Fund tax dollars.
The fiscal year ran from July 1, 2022 to June 30, 2023.
Medicaid returns comprise bulk
When drafting the state’s two-year budget in 2021, lawmakers made a critical assumption: that the Public Health Emergency and accompanying supplemental federal match for Medicaid would end before the biennium was over.
Instead, the federal order continued longer than expected, meaning Indiana received millions more in federal funding in return for not striking any Hoosiers from the Medicaid rolls. Even though the Medicaid population swelled, Indiana spent fewer state dollars during that time period.
The enhanced match has since expired and the state is now undergoing the process of reevaluating Medicaid enrollees for eligibility.
Savings on Medicaid expenditures comprised the bulk of the General Fund reversions, along with a few smaller funds.
However, the amount of state funds dedicated to Medicaid continues to grow — to the alarm of Republican budget writers, who noted that expenses related to the low-income insurance program now made up 18 percent of the $44 billion two-year budget.
Democratic budget committee member Sen. Fady Qaddoura, of Indianapolis, urged his GOP colleagues to save those funds for coming Medicaid expenses, rather than leave them sitting in the General Fund.
“… In light of Republican concern that Medicaid growth is out of control, putting that money in the Medicaid Reserve Fund would have been a better way to establish long-term, robust support for the program,” Qaddoura said in a statement. “At a time when tens of thousands of Hoosiers, including children, are being kicked off Medicaid, we can’t do too much to provide a cushion of support for Medicaid.”
Few families use new ESA program
The Treasurer of State returned $8.9 million in unspent funds, or a whopping 76.6 percent of its $11.6 million overall budget — the highest reversions percentage across all agencies. Most of that amount is dedicated to the state’s Education Scholarship Accounts (ESAs), according to the agency.
Lawmakers created ESAs in 2021 to cover approved education costs for students with disabilities — such as transportation or specialized therapies — and dedicated $3 million the first year followed by $10 million in the 2023 fiscal year, the first year the program enrolled students.
The appropriation would be enough to fund about 1,300 ESAs, but the treasurer’s office reported that 143 students participated earlier this year. Because fewer kids signed up, the office reverted the money back to the General Fund.
“The Treasurer and our ESA team are working with the (General) Assembly to expand ESA eligibility so that more students can have access to those scholarship funds,” said Abhilash Reddy, a deputy general counsel and legislative director for the office.
When lawmakers sought to create a universal voucher program, the first version expanded the ESA fund to all students, meaning that the average student would be eligible to receive $7,500 per academic year. Bill author Sen. Brian Buchanan, R-Lebanon said another 300 families wanted to participate in the ESA program but were ineligible during the bill’s hearing in January.
The ultimate version of the universal school voucher program works through the state’s Choice Scholarships program, rather than ESAs, to expand eligibility to all but the wealthiest of Hoosiers.
ISP savings, trooper classes
Other agencies saw far smaller — but still significant — reversions, including the Indiana State Police (ISP). The department returned $5.9 million in funds, 2.8 percent of its General Fund allotment, mostly from a motor carrier fund and a benefit fund.
ISP Superintendent Doug Carter said that much of the funding acted as a sort of rainy day fund to pad the department’s budget in case of emergencies.
“(When I started), I initially was not in support of that. But I’ve come to find out over the years that it’s just a good collaborative effort and it’s a way for us to plan … for unexpected occurrences,” Carter said.
Notably, the ISP got a marked increase in the most recent state budget, earmarked to boost trooper salaries to start at $70,000 and shorten the matrix used for raises. Carter said the increases, set to take effort in the next paycheck since being enacted earlier this month, made a crucial difference in recruitment.
“We were able to see an increase in applicants in this last class … 48 people in the class that’s currently (training) now and they’re just finishing week number three,” Carter said. “That’s a big deal since we only graduated 12 last year.”
Carter said the department, which has roughly 1,100 law enforcement officers, hoped to hire an additional 100 troopers next year to close the 200-trooper gap.
