Legislators propose expanded vouchers, ESA’s

Indiana legislators are proposing a huge expansion of the state’s private school voucher program, extending eligibility to families that make well over $100,000 a year.

The legislation, House Bill 1005, would also create state-funded Education Savings Accounts that certain K-12 students could use for various educational services, including private school tuition.

Indiana Statehouse

House Republican leaders listed the bill among their top legislative priorities last week, but details were not available until Thursday. The lead author is Rep. Bob Behning, chairman of the House Education Committee and the primary architect of Indiana school-choice policies for the past 10 years.

Under HB 1005, families that make up to three times the limit to qualify for reduced-price school meals – which is over five times the federal poverty level — would become eligible for vouchers in 2022-23. For a family of five, that’s $170,274 a year, more than three times the median household income in Indiana.

Families would also receive more generous voucher funding under the legislation. Currently, only the lowest-income families receive a full voucher, worth 90% of the per-pupil funding that their local school district gets from the state. Higher-income recipients get 50% or 70% of that amount.

Under HB 1005, all families with vouchers would receive 90% of local per-pupil state funding. In effect, families that make several times as much as the average Hoosier household could get about $5,500 per child from the state to pay private school tuition.

Schools that receive vouchers are largely unregulated and may discriminate against students, families and staff on the basis of religion, disability, home language, sexual orientation and gender identity.

In Indiana, students can qualify for vouchers through several pathways. In practice, nearly any student who meets income guidelines can qualify after being awarded a privately funded scholarship by a state-approved scholarship granting organization.

In addition to expanding the voucher program, HB 1005 would create a state K-12 Education Savings Account program for special-needs students, children of active-duty military and disabled veterans, and children in foster care. The state would fund the accounts with what Indiana provides the student’s local school district in per-pupil funding. The accounts could also receive tax-deductible private donations.

ESA’s could be used to pay for private school tuition, mentoring and tutoring services, college and university fees, online courses, career education and other education-related costs. A student could not have both a voucher and an ESA.

The legislation would take Indiana significantly closer to the libertarian dream, first laid out in the 1950s by the economist Milton Friedman, of a fully privatized education system in which schools compete for students the way businesses compete for customers. It would also cost a ton of money.

In 2019-20, Indiana spent $172.8 million to provide vouchers to over 36,000 students attending more than 300 private schools, nearly all of them religious schools. HB 1005 would increase that spending significantly, at a time when the COVID-19 pandemic has hit the state’s economy hard and lawmakers have said they will do well to keep school funding at its current levels.

Education funding tends to be a zero-sum game in Indiana. If private schools and other privately operated education services get more state funding – as HB 1005 envisions – it’s likely to mean less money for public school districts and charter schools.

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