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 6320 NOTE PREPARED: Dec 15, 2023
BILL NUMBER: HB 1408 BILL AMENDED:
SUBJECT: Indiana Education Scholarship Account Program.
FIRST AUTHOR: Rep. Payne BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: This bill amends the: (1) definition of "eligible student" for purposes of eligibility
under the Indiana Education Scholarship Account (ESA) program; and (2) grant amount that an eligible
student may receive under the program.
Effective Date: July 1, 2024.
Explanation of State Expenditures: Summary- The bill expands the eligibility of the ESA program and
increases the grant amount awarded to ESA program participants. Those changes, described in detail below,
will likely increase state expenditures. The bill is also likely to require additional staff for the Treasurer of
State (TOS) to administer the program as expanded under the bill, estimated at about $76,000. However, any
expenditure increase resulting from the bill is limited by the appropriation for the ESA program in FY 2025
and beyond. HEA 1001-2023 appropriated $10 M to the program in both FY 2024 and FY 2025.
Additional Information -
Eligibility Expansion: The bill eliminates the following requirements for participation in the ESA program:
1. The student must have a disability for which the student has had an individualized education
program, Choice Scholarship special education plan, or a service plan developed.
2. The student must meet the same income eligibility requirements that are required for the Choice
Scholarship program.
These changes are likely to increase participation in the program beginning in FY 2025. The impact on state
expenditures is dependent upon where the students would otherwise have attended school. Students switching
from a public school to participate in the program would have only a minor impact on state expenditures.
HB 1408 1 However, students who are currently homeschooled or attending a nonpublic school without a Choice
Scholarship, but would now switch to the ESA, would increase state expenditures by a much larger amount.
[See Additional Information for more details on the per-student impact on state expenditures]. Any potential
increase in program participation would be subject to the appropriation to the Indiana Education Scholarship
Account Program Fund for the ESA program. In FY 2026 and after, any change to the appropriation for the
program would impact state expenditures.
Grant Amount Increase: The bill also changes the ESA grant amount an eligible student can receive in the
ESA program from 90% to 100% of the student’s home school corporation’s per-student Basic Tuition
Support Grant for the previous fiscal year. This would increase the grant amounts paid to each ESA
participant. Any state expenditure increase related to these provisions would be limited by the appropriation
for the program.
Administrative Costs: The TOS estimates that for each additional 300 students participating in the ESA
program, it would need one additional full-time employee. LSA estimates that the salary and benefits of each
additional employee would be about $76,000, including health insurance benefits. Under current law, the
TOS can transfer up to 5% of the appropriation for the ESA program to the Indiana Education Scholarship
Account Administration Fund, which is used to pay for the costs of administering the program.
Current Law ESA Program: Under current law, the ESA program allows 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 for the previous fiscal year.
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. FY 2023 was the first year the
program enrolled students. As of November 21, the TOS reports that 431 students are participating in the
program in FY 2024, up from 143 students in FY 2023. State expenditures for those students is about $5 M.
TOS can use up to $500,000 for administration of the program, bringing the program cost to an estimated
$5.5 M in FY 2024. Based on enrollment changes in other states that have programs similar to an ESA
program, the number of students will likely increase over the next few years. Currently, ESA account holders
can roll over up to $1,000 for every year of ESA program participation to the account for the next school
year. Any amount above this threshold reverts to the General Fund.
Per-Student Impact on State Expenditures: Under the bill, ESA participants would receive 100% of their
home school corporation's per-student Basic Tuition Support Grant for the previous fiscal year instead of the
90% under current law. This would increase the per-student cost of ESA participants by about $734 in FY
2025.
Explanation of State Revenues:
Explanation of Local Expenditures:
Explanation of Local Revenues: Public school revenue from state tuition support would likely decrease
under the bill as students who were ineligible for the ESA program become eligible for the ESA program
under the bill and switch to a nonpublic school. The number of students that would switch to the ESA
program is dependent in part on the appropriation for the ESA program, as that will limit the number of
students that can participate in the program.
HB 1408 2 State Agencies Affected: Treasurer of State.
Local Agencies Affected: Public schools.
Information Sources: United States Census Bureau; National Center for Education Statistics; Choice
Scholarship Program Annual Report, Indiana Department of Education, April 2021; LSA education database;
Department of Education; Treasurer of State.
Fiscal Analyst: Austin Spears, 317-234-9454
HB 1408 3