How federal cuts will affect Indiana
The state of Indiana receives more than $20 billion from the federal government annually, or 44% of its budget, and is the third-most reliant state — behind only Louisiana and Mississippi, according to an analysis from the left-leaning Center on Budget and Policy Priorities.
…Those dollars are at risk. Dozens of governmental departments and agencies, and their associated funding streams, have been slashed — complicating the state’s efforts to craft a two-year budget in the 2025 legislative session.
That $20-plus billion is roughly as much as the state of Indiana’s portion of spending from its general fund, which was $22.5 billion in 2024. In terms of non-government dollars, state revenues are expected to be modest-to-stagnant over the next two years.
- In 2024, the State Budget Agency reported that Indiana received almost $23.4 billion from the federal government, with funds expected to stay relatively steady over the next few years. Over half of that funding, or $14 billion, went to Medicaid while the state Department of Education got nearly $1.8 billion.
- Another big earner was the Division of Family Resources, which got $1.9 billion. Those education dollars primarily go to schools with a high number of low-poverty students or students with special education needs.
- The Family and Social Services Administration, which oversees Medicaid, gets $16.8 billion of its $24.1 billion budget from the federal government, as outlined in its December budget presentation. That 70% includes dollars earmarked for Medicaid, which provides coverage for more than 1.9 million Hoosiers, as of January.
- Within Medicaid, a particular target for cost-cutting could be those Hoosiers covered by the Affordable Care Act. The Healthy Indiana Plan covers this expansion population in Indiana, paying for the medical care of more than 752,000 Hoosiers.
- The state covers its 10% share of those HIP costs using a combination of provider and cigarette taxes, rather than dipping into general funds. The federal government pays for the rest.
- One-quarter of rural residents rely on Medicaid and nearly half of rural hospitals operate in the red, as written by researchers with Purdue University.
- Roughly half of Indiana’s births are covered by the government program and 38% of the state’s rural hospitals are at risk of closing.
But Medicaid isn’t the only target.
- According to data from the U.S. Office of Personnel Management, 24,499 Hoosiers work for federal agencies, including 18,284 for various military or defense departments.
- Other jobs include in air traffic control, veterans administration, census bureau, social security and federal prisons.
- USAID programming also supports research grants for the nations higher education institutes, such as the five-year $14.2 million Partnership for Higher Education Reform with Indiana University, which focuses on Vietnam.
- Educators relying on federal grants to fund their health research are scrambling after a temporary block to dollars from the National Institutes of Health.
- Purdue University received $67.2 million in 2024, a fraction of the statewide total of $392.2 million.
- Much of that funding was flagged for Indiana University’s Indianapolis campus, which got $246.3 million.
Purdue has set up its own tracking page for updates on federal funding as well as lawsuits.
