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 6261 NOTE PREPARED: Nov 30, 2023
BILL NUMBER: SB 161 BILL AMENDED:
SUBJECT: Education Matters.
FIRST AUTHOR: Sen. Randolph Lonnie M BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
DEDICATED
FEDERAL
Summary of Legislation: This bill increases the maximum amount of the income tax credit for an individual
employed as a teacher for amounts expended for classroom supplies from $100 to $1,500 per taxable year.
This bill also provides that a student may be suspended or expelled only upon:
(1) A determination that the student's suspension or expulsion will prevent or substantially reduce
the risk of interference with an educational function or school purposes, disruption of the school
learning environment, or physical injury to the student, other students, school employees, or school
visitors; and
(2) In the case of an expulsion, a determination that all other available and appropriate disciplinary
and behavioral interventions have been exhausted.
The bill provides that notice to a parent of:
(1) A student's suspension or expulsion must include the rationale for the length of the suspension
or expulsion; and
(2) The right to appear at an expulsion meeting must include the behavioral and disciplinary
interventions attempted, if any, and the rationale for the length of the expulsion.
The bill provides that if a student is suspended, the student must be provided:
(1) Appropriate and available support services, as determined by the school, during the suspension
period; and
(2) An opportunity to receive credit for completion of make up work.
Effective Date: January 1, 2024 (retroactive); July 1, 2024.
SB 161 1 Explanation of State Expenditures: Department of State Revenue (DOR): The DOR will incur additional
expenses to revise forms, update instructions, and modify the existing tax processing system to implement
this bill. The DOR’s current level of funding and resources should be sufficient to administer this tax credit.
Explanation of State Revenues: The bill modifies the public school educator expense tax credit. It increases
the maximum income tax credit a teacher receives for classroom supply expenses from $100 to $1,500. The
modification is effective beginning in tax year 2024. The bill is estimated to reduce state General Fund
revenue by between $24 M and $84 M annually beginning in FY 2025.
Additional Information - This bill increases the tax credit for teachers’ un-reimbursed classroom expenses.
The nonrefundable credit equals the lesser of $1,500 or the total amount paid by teachers for classroom
supplies during the taxable year. The bill ties the definition of classroom supplies to the current federal
definition of classroom supplies eligible for a federal income tax deduction for classroom expenses. This
change expands the state credit to cover certain expenses for professional development courses related to the
curriculum or to the students that the educator teaches. The credit must be claimed in the tax year of the
qualifying expenses. Unused credits may not be carried forward or carried back. The credit may not exceed
the amount of the individual’s Adjusted Gross Income (AGI) Tax liability. Revenue collected from the
Individual AGI Tax is deposited in the state General Fund.
The lower bound estimate assumes average teacher spending of $628, equal to the average amount reported
spent by public school teachers on un-reimbursed classroom supplies in the National Teacher and Principal
Survey conducted by the National Center for Education Statistics adjusted by the consumer price index to
2023 dollars. The lower bound also assumes a similar number of tax filers continue to claim the state credit.
In tax year 2021, 41,907 state income tax filers claimed the credit. The upper bound estimate assumes the
number of filers claiming the state credit increases to equal the number of Indiana federal income tax filers
who claim the federal educator expense deduction, 58,990 for tax year 2020. The upper bound estimate
assumes the maximum $1,500 credit provided by this bill. Both estimates allow for some taxpayers to have
insufficient tax liabilities to exhaust the full value of the nonrefundable credit. Both estimates also allow for
some taxpayers to spend less than the current $100 credit limit.
Explanation of Local Expenditures: Support Services: Beginning in FY 2025, this bill requires public
schools to provide support services to students during their suspension period. This represents an
indeterminable expenditure increase for public schools that do not currently offer support services to their
students. [In FY 2023, public schools reported providing services throughout the length of the student’s
suspension in 56% of in-school suspensions and 31% of out-of-school suspensions.]
Policy Changes: Provisions in this bill require public schools to provide to parents the rationale for the length
of the student’s suspension or expulsion. The bill also requires public schools to discuss additional topics
during the expulsion meeting with the student’s parents. These provisions should be able to be implemented
with no additional appropriations, assuming near customary staffing and resource levels.
Additional information -
Expelled and Suspended Students: This bill will likely reduce the number of suspended or expelled students.
This may offset some of the costs associated with this bill. For reference, among public school students in
FY 2023 there were:
• 3,112 instances of expulsion;
• 90,930 instances of in-school suspensions; and
SB 161 2 • 138,965 instances of out-of-school suspensions.
Explanation of Local Revenues:
State Agencies Affected: Department of State Revenue.
Local Agencies Affected: Public schools.
Information Sources: Department of Education; LSA Education Database.
LSA Income Tax Database; Internal Revenue Service, Statistics of Income Tax Stats - Historic Table 2: State
Data Tax Year 2020; Internal Revenue Service, Educator Expense Deduction; National Center for Education
Statistics,
https://nces.ed.gov/surveys/ntps/tables/ntps1516_20180404001_t1n_rev.asp.
Fiscal Analyst: Kelan Fong, 317-232-9592; Camille Tesch, 317-232-5293.
SB 161 3