Indiana Chamber Assesses Impact of State’s Early UI Loan Payoff

Kevin 51916 UI Loan Payoff Quote

Indiana Chamber President and CEO Kevin Brinegar assesses the impact of the early payoff of the state’s federal unemployment insurance (UI) trust fund loan which occurred in November 2015:

“Employers now have $327 million in additional funds available for other workplace priorities. They can further invest in their organizations and employees, as well as add more jobs, instead of sending that money to Washington as an ongoing penalty for the loan being in place.

“This early payoff, strongly supported by the Indiana Chamber, was a common sense step taken by lawmakers and Gov. Pence to help employers and their employees. It has had among the greatest impacts of any public policy over the last year on the business community.”

Background
The early payoff was accomplished by temporarily borrowing from Indiana’s reserve funds. The Governor announced today that the funds have now been paid back by employers through their regular state UI payments.

Bill to Boost Teacher Pay Dies

96631972Due to significant misinformation from the teacher’s unions and lack of support in the Senate and Governor’s office, Chamber-supported SB 10 died in the House Thursday when it was not called for a vote.

Senate Bill 10 would have allowed school corporations to provide supplemental funding in excess of a teacher’s salary; this would have been extremely helpful in filling high-need positions.

The Indiana Chamber has always supported paying good teachers more. Being able to give administrators the flexibility to provide additional funding on top of salaries is an important step toward recruiting teachers in areas such as STEM subjects and special education. We believe this flexibility would have helped add another incentive to assist with Indiana’s teacher shortage.

The Senate killed a similar provision in HB 1004 last week and Senate President Pro Tem David Long (R-Fort Wayne) publicly asked House Speaker Brian Bosma (R-Indianapolis) to follow suit. The Governor’s office also had tepid support for the bill. In the end, due to the significant concern that the bill might not be signed by the Governor, Bosma decided not to put his caucus through a difficult vote.

We are very disappointed that a pro-teacher, pro-superintendent flexibility bill was not able to pass the Legislature this session, but still thank Speaker Bosma for his overall assistance on HB 1004 and SB 10.

Road Funding Bills, Regional Cities Funding Headed Down to the Wire

?????????????????????????????????????????????????????????????Several bills attempting to address Indiana’s transportation infrastructure and regional economic development are headed toward eleventh hour conference committee deliberations where differences in approach between House Republicans and Gov. Pence/Senate Republicans will need to be hashed out. It is a high-stakes game in an election year.

House Bill 1001 is the House Republicans’ original effort to create a long-term, sustainable and dedicated funding source for Indiana’s roads, highways and bridges. It attempts to address a near $1 billion annual maintenance shortfall through indexing existing fuel taxes to inflation, dedicating the sales tax on fuel sales to infrastructure (vs. the state’s general fund), increasing taxes on cigarettes to refill the state’s general fund coffers (which support the state’s Medicaid program), imposing fees on alternative fuel vehicles, and supplying local units of government with expanded fiscal tools and taxing authority for roads. The Indiana Chamber worked with legislators on this bill and supports this comprehensive, data-driven approach.

Senate Bills 67 and 333 (as they started in the Senate) reflect Gov. Pence’s and Senate Republicans’ desire to avoid any tax increases for roads this year and delay any major decisions on road funding until the 2017 budget year, while also giving some money and tools to local units of government. At best, these proposals are short-term fixes to a long-term problem and the Chamber prefers the House Republican legislation.

Add to this mix Gov. Pence’s request for an additional $42 million for a third Regional Cities grant award, and you have plenty of fodder for lengthy, contentious negotiations with a March 10 deadline looming. Leadership from both chambers has been meeting with the Governor and his staff to hammer out a compromise proposal. As of this writing, negotiations are occurring behind closed doors and in caucus discussions with both sides remaining far apart. Meanwhile, Democrats in the Legislature watch as Republicans battle among themselves over the “right” compromise package.

We anticipate that the third Regional Cities grant will be funded in some way and that some short-term road funds and expanded authority for local governments will emerge. Whether or not the tax increases in HB 1001 survive the negotiation is an open question. The Chamber will work with all parties to address the state’s road-funding needs in the most rational and comprehensive way possible.

Cook: Governors’ Races Unique, More Difficult to Handicap than Federal Races

Cook_CharlieCharlie Cook is editor and publisher of the Cook Political Report and a political analyst for National Journal magazine. Cook is considered one of the nation’s leading authorities on American politics, and The New York Times has called him “one of the best political handicappers in the nation.”

Cook will be the keynote speaker at the Indiana Chamber’s 2016 Legislative Dinner on February 9. (Get your tickets now!) I recently spoke with Cook for an evaluation of this very turbulent time in American politics.

Below is my final question (see his other responses about political surprises, Donald Trump and Bernie Sanders, and America’s infatuation with presidential politics) :

Indiana is already gearing up for the 2016 gubernatorial race – a rematch from 2012. Gov. Pence has been under heat on some social issues, and lately for the state’s stance on accepting refugees. John Gregg’s supporters have seen these as benefits to their chances. What do you expect in this race, and do you think Pence could be vulnerable?

Cook: I tend to delegate governors’ races to our senior editor Jennifer Duffy, so I’m not doing deep dives into these races. But I’ll say that Indiana went through a period where Democrats were very competitive and did well – like Evan Bayh, and Obama carried it in 2008.

But in 2012, Indiana wasn’t even in the top 10 to 12 competitive races presidentially. While governors’ races tend to be more independent of national politics and less straight party than Senate and House races, I think Indiana has reverted more to type and back into the pretty Republican column. It doesn’t mean a Republican governor is unbeatable and a race can get relatively close, but for a Democrat to get over the finish line, that’s awfully hard in Indiana.

It’s one thing to cover Senate and House races from Washington, but governors’ races have their own unique sets of issues and rhythms, so it’s hard for anyone from out of state to understand it.

Four Areas Where Gov. Pence’s State of the State Address Missed the Mark

?????????????????????????????????????????The 2016 session of the Indiana General Assembly may be short in time but, as usual, there is a long list of important issues. In outlining his priorities in the State of the State speech, however, Gov. Mike Pence fell short in four key areas.

First is civil rights expansion. After appropriately listening to Hoosiers since last spring’s public relations crisis, the Governor failed to articulate a clear vision. His words, depending on interpretation, bordered on telling legislators to do nothing at a time when action is needed.

The Indiana Chamber went through a similar lengthy listening process as public policy committees, the executive committee and the full board of directors (all comprised of representatives of member companies) debated the issue. Once a final determination was made, the Chamber communicated the decision that the members had voted to support the expansion of civil rights to protect sexual orientation and gender identity. Although not popular in all circles, similar clarity was needed from the Governor.

In the critical area of infrastructure funding, the Governor advocated against the only long-term solution presented thus far because it included several responsible revenue increases. As an organization that works each day to create and maintain the best possible business climate, the Indiana Chamber does not go looking for tax hikes. But in this case, they are necessary.

Third, on education, the “let’s take a step back on ISTEP” remark goes too far. Indiana already has a new test that measures our new, stronger standards. The test needs rebranded, not revised, and administered correctly to achieve the desired results.

Finally, there was no mention of work share, a common sense program to support employers and employees in an economic downturn. It will be needed at some point and the best time to implement it is now.

The Indiana Chamber has and will continue to communicate with the Governor and his staff our positions on these issues, which we believe are in the best interest of the state’s economy, employers and workers.

Student Scores: ISTEP and ‘National Report Card’

The Indiana State Board of Education (SBOE) met last month with the plan to set cut scores and finalize ISTEP grades from the 2014-2015 school year. As a reminder, setting cut scores is done by a panel of educators that determines the passing score for that year’s test. However, during that meeting, questions were raised regarding the differences between the online and paper-pencil versions of the exam. This was identified in a report submitted to the Indiana Department of Education in early October – yet that report was not provided to the test’s Technical Advisory Committee or the SBOE until right before the meeting. The SBOE then requested a comparison study done by its own test experts to determine any discrepancies. Sarah O’Brien, vice chair of the SBOE, had originally made this request back in July.

SBOE – after the comparison studies were in hand – set pass-fail benchmarks for the latest ISTEP scores. What’s anticipated is that a notable increase in students will see drops in their scores, with a portion falling below the pass line. While no one wants to see test scores go down, it is explainable as students and teachers were adjusting to the new, more rigorous academic standards and a new assessment that were adopted for the same school year. In other words, this drop is expected, and many other states have experienced similar decreases. In fact, Indiana’s scores were either on par or higher than other states that have recently adopted new standards and/or a new assessment. While the news of dropping ISTEP scores is disappointing, it is important to note that the changes to the standards will benefit students as they will be more prepared for college and career in the future. The Indiana Chamber appreciates all of the hard work of Indiana teachers and students.

Due to this somewhat turbulent transition year, Gov. Pence released a letter to Superintendent of Public Instruction Glenda Ritz and SBOE members recently stating that he is working with leadership in the Indiana General Assembly to have legislation drafted to ensure that the 2014-2015 test results would not negatively impact teacher evaluations or performance bonuses this year. The Chamber has a longstanding policy to support accountability and transparency for students and teachers but understands that unforeseen circumstances with ISTEP delays and testing issues would allow the need for this pause.

Positive news:

The recently-released National Assessment of Educational Progress (NAEP) scores – aka a “National Report Card” – shows that Indiana is achieving more than other states in all four categories:

  • Fourth grade math: Indiana 248; national average 240
  • Eighth grade math: 287; 281
  • Fourth grade reading: 227; 221
  • Eighth grade reading: 268; 264

Indiana is actually widening its advantage over other states. We commend our teachers and school administrators for their important role in helping our students reach these higher levels of achievement.

While our ISTEP scores are lower as expected, these NAEP scores reinforce that our students are achieving at a higher overall level than many of their counterparts. We expect that to accelerate going forward with the enhanced college and career ready standards in place.

Lawmakers Hear from INDOT on Road Funding; Gov. Makes $1 Billion No-Tax Proposal

30449450Two key events in recent weeks on the transportation front in Indiana: A long-awaited Indiana Department of Transportation (INDOT) study on long-term funding options for Indiana’s roads, highways and bridges was presented on Oct. 15 to the Interim Study Committee on Roads and Transportation; and just a few days before, on Oct. 13, Gov. Pence proposed a $1 billion, four-year plan for short-term transportation needs whose most prominent feature was no tax increases. INDOT Commissioner Brandye Hendrickson appeared with the governor at his announcement and testified before the interim study committee.

Hendrickson provided a broad overview of the state of Indiana’s roads and bridges during her testimony and INDOT’s study vendor, Cambridge Systematics, testified at length on the options available to the state to address long-term transportation funding, concluding that policymakers need to “decide what Indiana should invest in and how best to pay for it.” Both federal and state highway revenues are expected to decline in future years due to a number of factors, including increased fuel efficiency standards and more alternative-fuel vehicles hitting the roads.

All fuel excise tax revenues from the state’s highway fund are required for maintenance of existing infrastructure; no funding is available for expansion projects such as completion of I-69, adding lanes to I-65 or I-70, or new bridges across the Ohio River. Additionally, more than half of the state’s bridges are in the last 25 years of their useful life (50-plus years or older) and will need significant reconstruction or remediation in coming years.

Bottom line: The state needs more revenues to address a growing need for maintenance of existing infrastructure – let alone expansion of the state’s highway network.

Pence proposes a mix of bonding (debt), general fund appropriations and use of the state’s reserves in his “21st Century Crossroads” plan. His proposal would seek $450 million over three years to be appropriated by the General Assembly from the state’s general fund, $250 million to be used from the state’s reserve funds, $50 million from the state’s Next Generation Trust Fund (established by Major Moves monies) and roughly $240 million in new bond financing as existing debt gets retired or refinanced. The plan is short term in nature and, while tapping appropriate sources, needs the consent of the Legislature (where several Statehouse voices expressed reservations about the bonding aspect of the plan).

The Indiana Chamber would like to see a mix of increased fuel excise taxes, indexation, tolling, fees on alternative fuel vehicles and other tools based upon a “user fee” model discussed in the 2016 legislative session, along with the use of existing tax authority by cities, towns and counties to address the needs of local streets and county roads. Policymakers must make some hard choices with the support of the state’s business community to address the scale and scope of the challenge.

In short, the era of strategic investments fueled by the Major Moves program is over. The prevailing (default) practice of making stop-gap appropriations from the state’s general fund is not a reliable or strategic means to pay for future maintenance and upgrades to Indiana’s surface transportation network. Currently, we risk wasting strategic investments already made, and our roads and highways will deteriorate along with our reputation as “The Crossroads of America.”

Chamber Applauds Early Payoff of the Federal UI Trust Fund Loan

Indiana Chamber of Commerce President and CEO Kevin Brinegar comments on Gov. Mike Pence’s approval of an early payoff for the state’s federal unemployment insurance (UI) trust fund loan. This is to be accomplished by temporarily borrowing from Indiana’s reserve funds during the next eight months. The funds will be paid back by employers through their regular state UI payments:

“This allows Hoosier employers to save $126 per employee or an additional $327 million in total federal penalties for 2016. That’s very significant for the business community. That money now can be reinvested by growing companies and adding more jobs.

“In the last few weeks alone, we’ve heard from several hundred businesses all across the state about how important this early payoff is to them. They appreciate the efforts of lawmakers to place this option in the state budget and the State Budget Committee and Gov. Pence for their actions to make it happen.”

State Board of Education — New and Improved?

The revamped Indiana State Board of Education met on June 1 with very little fanfare or drama compared to previous board meetings. The new board follows the passage of SEA 1, authored by Sen. Travis Holdman (R-Markle), which required a change in
the composition as well as a reconstitution of the board.

While the Indiana Chamber was happy for a productive meeting in June, only time will tell if this cooperation will last long term with a majority of the board members being appointed by the Governor and with Superintendent Glenda Ritz’s recent announcement to run against Gov. Pence in 2016. They have very different philosophies when it comes to education policy.

As a reminder, the Indiana Chamber publicly supported the House version of the legislation that simply allowed the State Board to elect its own chair, HB 1609 authored by Rep. Jud McMillin (R-Brookville). We felt this was the most simple and straightforward way to fix the problems that had been occurring with the State Board over the past two years. However, the Senate version of the bill was the vehicle chosen to move through the legislative process so we worked diligently to make sure the bill was in the best shape possible.

The legislation, signed into law by Gov. Pence on May 7, included a 2017 implementation date for electing a new chair of the State Board, the creation of a vice chair of the board that shares agenda-setting responsibilities with the chair (which we expect to be elected during the July board meeting) and changed the makeup of the board itself. The Governor’s appointees decreased from 10 to eight, with two legislative appointees added – one by the Speaker of the House and one from the President Pro Tempore.

Gov. Pence reappointed the following three new members to the State Board:

  • Eddie Melton – a resident of Merrillville (First District), Melton works as manager of federal governmental relations and community relations at NIPSCO. He was also appointed by the Governor to serve on the Commission on the Social Status of Black Males and serves as the Midwest regional director on the American Association of Blacks in Energy.
  • Dr. Vince Bertram – a resident of Zionsville (Fifth District), Bertram serves as president and CEO of Project Lead The Way, the nation’s leading provider of K-12 STEM programs serving more than 6,500 elementary, middle and high schools across the country. Bertram is the former superintendent of the Evansville Vanderburgh School Corporation and was appointed by the U.S. State Department to be the STEM education expert for the United States Speaker and Specialist Program. Bertram also serves on the Indiana Chamber’s K-12 policy committee.
  • Lee Ann Kwiatkowski – a resident of Greenwood (Ninth District), Kwiatkowski currently serves as superintendent for school improvement at the Metropolitan School District of Warren Township in Indianapolis. She is also a former staffer at the Indiana Department of Education where she served in such roles as director of school turnaround, director of differentiated learning and director of the Title I
    program.

The reappointed members of the State Board include:

  • Dr. David Freitas – a resident of Granger (Second District) and has served in higher education for over 30 years including time spent as a university vice provost, dean of education at four universities and dean of the schools of business, fine arts and technology.
  • Cari Wicker – a resident of Uniondale (Third District) and a sixth-grade language arts and social studies teacher at Riverview Middle School in Huntington.
  • Sarah O’Brien – a resident of Avon (Fourth District) and a fourth-grade teacher at River Birch Elementary School.
  • Gordon Hendry – a resident of Indianapolis (Seventh District) who serves as first vice president of CBRE, Inc.
  • BJ Watts – a resident of Evansville (Eighth District) who teaches in the Evansville Vanderburgh School Corporation.

The Governor did not re-appoint Tony Walker, Troy Albert or Brad Oliver, while members Andrea Neal and Dan Elsener (the Indiana Chamber’s current chair of the K-12 policy committee) requested that they not be considered for reappointment.

Speaker of the House Brian Bosma (R-Indianapolis) appointed Dr. Byron Earnest to the board. Earnest was Indiana’s 2010 Teacher of the Year, is the current head of schools for Hoosier Academies and is the former principal for Manual High School in IPS. President Pro Tempore David Long (R-Fort Wayne) appointed Steve Yager of Fort Wayne, who is the former superintendent of Southwest and Northwest Allen County Schools.