LEGISLATIVE SERVICES AGENCY OFFICE OF FISCAL AND MANAGEMENT ANALYSIS 200 W. Washington St., Suite 301 Indianapolis, IN 46204 (317) 233-0696 iga.in.gov FISCAL IMPACT STATEMENT LS 7001 NOTE PREPARED: Jan 4, 2022 BILL NUMBER: SB 331 BILL AMENDED: SUBJECT: Education Scholarship Account Program. FIRST AUTHOR: Sen. Buchanan BILL STATUS: As Introduced FIRST SPONSOR: FUNDS AFFECTED:XGENERAL IMPACT: State & Local XDEDICATED FEDERAL Summary of Legislation: Program Administration: This bill authorizes the Treasurer of State to deduct up to 10% of funds made available for the Indiana Education Scholarship Account Program to cover costs of administering the program. It also establishes the Indiana Education Scholarship Account Administration Fund to support the administration of the program. The bill requires any amounts deducted by the Treasurer of State for administration costs to be deposited in the fund. Advisory Council: The bill requires the Treasurer of State to convene an advisory council for students with a disability of not more than six members, all appointed by the Treasurer of State. Application Process: It also requires an eligible student with a disability to choose in the application process whether the eligible student will receive special education services from: (1) the school corporation required to provide the special education services to the eligible student; or (2) a qualified school that provides the necessary special education or related services to the eligible student. The bill specifies the annual grant amount calculation for an eligible student based on the eligible student's application choice. The bill also makes a technical correction. Effective Date: Upon passage. Explanation of State Expenditures: Indiana Education Scholarship Account (ESA) Program: The bill will SB 331 1 increase state expenditures associated with the ESA Program, but the extent of the increase is unknown and is dependent upon the following: 1. The number of students, if any, who would participate in the program who would not have participated under current law. 2. Where the new student participants would have attended school under current law. 3. The appropriation for the program after FY 2023. The bill has three components that would either: A) increase the grant amount each student receives, or B) increase the potential number of participants in the program. The ESA Program Grant Amount Increase, Participants who Receive a Certificate of Completion, and Application Deadline sections below detail the potential fiscal impact of each of the three provisions. Any increase in state expenditures these provisions may generate will be subject to the $10 M appropriated to the Indiana Education Scholarship Account Program Fund for the ESA program in FY 2023. In FY 2024 and beyond, any change to the appropriation for the program would impact state expenditures. In addition to these provisions, the bill allows the Treasurer of State to potentially increase expenditures related to the administration of the ESA program and establishes the Indiana Education Scholarship Account Program Advisory Council. ESA Program Grant Amount Increase: The bill increases the grant amount for the program from 90% to 100% of the student’s home school corporation’s per-student basic tuition support grant, potentially increasing state expenditures. In FY 2023, this change would result in each program participant receiving an estimated $690 to $720 more than they would have received under current law. [See Additional Information for more details on how the grant amount increase could impact state expenditures]. Participants who Receive a Certificate of Completion: Under current law, once students graduate or receive a certificate of completion, they are no longer eligible for the ESA program. The bill would allow students who receive a certificate of completion to continue to be eligible for the ESA program and receive a grant up to the age of 22 in accordance with their individualized education plan, service plan, Choice special education plan, or Indiana education scholarship account education service plan. This matches what current law allows for public school students who receive a certificate of completion. Application Deadline: The bill requires the Treasurer of State to accept applications for the program through September 1 each year for the next school year. Under current law, the Treasurer of State is required to set the date by which an application for the program must be submitted for FY 2023. For FY 2024 and beyond, current law requires applications for the program to be submitted by April 1 for the immediately following school year. The provision could increase participation in the program beginning in FY 2023. If participation in the program increased, the impact on state expenditures is dependent upon where the students would otherwise have attended school. [See Additional Information for further details regarding the impact of additional participants in the program]. Any potential increase in program participation would be subject to the $10 M appropriated to the Indiana Education Scholarship Account Program Fund for the ESA program in FY 2023. Program Administration: The bill permits the Treasurer of State to transfer 10% of the funds in the Indiana Education Scholarship Account Program Fund to the newly established Indiana Education Scholarship Account Administration Fund for the purposes of administering the ESA Program. Under current law, the Treasurer of State is allowed to deduct up to 3% of the annual grant amount sent to ESA participants to cover SB 331 2 the costs of managing the ESA accounts and administering the program. Advisory Council: This bill establishes the Indiana Education Scholarship Account Program Advisory Council and provides the rules and duties of the council, including how the Treasurer of State may improve the Indiana Education Scholarship Account Program. The Treasurer of State must appoint up to six members to the council. The council must meet at least three times per year. The Treasurer of State will experience an increase in workload to appoint council members and review the findings and recommendations of the advisory council. This duty should be able to be implemented with no additional appropriations, assuming near customary agency staffing and resource levels. Additional Information- ESA Program: Under current law, beginning in FY 2023, the program would allow students with a disability who meet an income requirement and who enroll in a nonpublic school to receive a grant that is equal to 90% of the student’s home school corporation’s per student basic tuition support grant. Additionally, if the student chooses to receive special education services from an entity other than the student’s home school corporation, the student would be eligible to receive the special education grant the student’s home school corporation would have received for the student. Program Participation: If the bill expands participation in the program, the total statewide impact is dependent upon the number of students who would participate in the program that would not have participated otherwise and where the students would have attended school under current law. Students who would have attended a public school under current law that would participate in the program under the bill would result in little or no change in state expenditures. However, each student who would have been homeschooled or enrolled in a private school without a choice scholarship would increase state expenditures by an estimated $6,900 to $7,200 on average. Any student who would have received a choice scholarship and switched to the program would also increase state expenditures. Grant Amount: If, under current law, program participation was already going to reach the $10 M limit, the bill’s increase in the grant amount per program participant would require the Treasurer of State to accept fewer students into the program so that it could stay under the $10 M appropriation. While the total program expenditures would remain about the same, the state would lose the savings that it would have received under current law from public school students switching to the program, thus increasing state expenditures from the state General Fund. Explanation of State Revenues: Explanation of Local Expenditures: Explanation of Local Revenues: The bill will have an unknown impact on public schools’ state tuition support revenue beginning in FY 2023. If, under current law, the program’s participation was going to reach the $10 M appropriation, the bill’s increase of the grant amount would require the Treasurer of State to accept fewer students into the program so it could stay under the $10 M appropriation. That would mean some students who would have been in the program would likely go to a public school instead, increasing public school revenue from state tuition support. If, under current law, the program’s participation was not going to reach the $10 M appropriation, the bill would likely increase program participation. Many of the students who switched to the program would come from public schools, which would decrease state tuition support revenue for public schools. State Agencies Affected: Treasurer of State. SB 331 3 Local Agencies Affected: Public schools. Information Sources: LSA education database. Fiscal Analyst: Austin Spears, 317-234-9454. SB 331 4