State Budget panel reviews Governor’s 2026–27 budget; members press on Medicaid waiver, teacher pay and public health cuts

The Indiana State Budget Committee met Jan. 16, 2025, at the Statehouse to consider the Governor’s Recommended Budget for fiscal years 2026–2027. Chairman Jeff Thompson called the meeting to order and the Committee approved the December 2024 minutes unanimously before hearing a presentation from Lisa Hershman, Secretary of the Office of Management and Budget, and Chad Ranney, State Budget Director.

Hershman and Ranney presented the broad outline of the recommended budget, which the administration said preserves a growing reserve while matching the Medicaid line to the Medicaid forecast. “The Medicaid funding listed in the recommended budget matches the Medicaid forecast,” Director Ranney said when explaining the administration’s baseline assumptions, noting the administration’s intent to keep a buffer against future economic headwinds.

Several members pressed administration officials on how the budget would address outstanding needs. Senator Fady Qaddoura asked specifically whether the Medicaid funding would eliminate the Pathways waiver waitlist, which he said contains more than 9,000 people; Ranney replied that the recommended Medicaid funding does not include eliminating the Pathways waiver waitlist.

Qaddoura also pointed to the Combined Balances Statement, saying the State’s surplus is projected to grow from about $2.5 billion in FY2025 to $2.97 billion in FY2026. He questioned why that projected growth coincides with only a 2% annual increase in public education funding and suggested transferring roughly $400 million of surplus toward education. Qaddoura urged the administration to consider higher teacher pay, citing Senate Bill 146, which would raise the minimum teacher salary from $40,000 to $45,000, and suggested a broader goal of $60,000–$65,000 for teacher salaries.

Representative Ed DeLaney raised concerns about a proposed $50 million annual reduction in the statewide public health program. He also asked about the Indiana Economic Development Corporation’s Readi program; Director Ranney said the Readi program is a below-the-line item in the budget and is expiring, with no continuation of appropriations in the recommended plan.

DeLaney also asked for the administration to provide cost estimates for any proposed increases in teacher salaries; Ranney said he did not have those numbers at the meeting but would seek them out. DeLaney warned that underfunded pension obligations and possible cuts in federal Medicaid under a new Presidential administration should be considered when setting state priorities.

Representative Gregory Porter supported restoring or prioritizing public-health funding, saying all 92 counties took advantage of the public-health grant and urging more investment in Pre-K programs. Porter also recommended moving the April budget forecast to March to allow the Committee more time to review numbers before legislative action.

Representative Craig Snow praised the administration for identifying potential cost savings, while Senator David Niezgodski emphasized the Committee’s responsibility to craft a budget that helps Hoosiers statewide. Secretary Hershman said the administration appreciated the feedback and looks forward to working with the General Assembly as the budget proceeds through both chambers.

Votes at a glance: the Committee approved the December 2024 minutes (motion by Representative Gregory Porter; seconded by Senator David Niezgodski) and adopted the meeting agenda (motion by Representative Gregory Porter; seconded by Senator Ryan Mishler); both motions passed unanimously. The meeting adjourned at 1:38 p.m.

Next steps: the recommended budget will proceed through the legislative process, where members and staff said they will continue to press for additional details (including cost estimates for teacher-pay proposals) and consider adjustments during hearings and forecast updates.