LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 7158 NOTE PREPARED: Jan 4, 2025
BILL NUMBER: HB 1326 BILL AMENDED:
SUBJECT: Student and Teaching Scholarships.
FIRST AUTHOR: Rep. Heine BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: This bill provides that a student must be at least three years of age to qualify for
a scholarship granting organization scholarship and removes income eligibility requirements. (Currently, the
student must be at least four years of age to qualify and be a member of a household with a certain annual
income.)
The bill provides that applicants enrolled in a transition to teaching program after June 30, 2024, may qualify
for certain scholarships if the applicant is a member of a household with an annual income of not more than
400% of the amount required for the applicant to qualify for the Federal Free or Reduced Price Lunch
Program. (Currently, the annual income threshold is $100,000 or less.)
The bill permits the Commission for Higher Education (CHE) to use the remaining balance allocated to
certain teaching scholarships or in certain teaching scholarship funds to fund additional specified teaching
scholarships.
Effective Date: July 1, 2025.
Explanation of State Expenditures: Eligibility for Transition to Teaching Scholarships: This bill changes
the household income limit for prospective applicants from $100,000 to 400% of the Federal Free or Reduced
Price Lunch Program. This is likely to increase the number of scholarship applicants and the number of
awards made under this program. [No more that $1 M of Next Generation Hoosier Educators Scholarship
(Next Gen) funding is to be used to provide Transition to Teaching scholarships unless excess money
remains in the Next Gen fund once scholarships have been awarded.]
Utilization of Scholarship Funds: This bill provides that, once the CHE has awarded scholarships under the
Next Generation Hoosier Educators Scholarship, William A. Crawford Minority Teacher Scholarship,
Student Teaching Scholarship for High-Need Fields, and Earline S. Rogers Student Teaching Scholarship
for Minorities programs, any remaining money in a given fund may be used to award additional scholarships
in the other programs named. This is likely to increase total expenditures on scholarships by the state, though
any increase in expenditures will be limited by the amount of money appropriated in the biennium and the
HB 1326 1 amount of money that would not have been spent under current law.
Rogers and High-Needs Scholarship funds are reverting, so unspent money reverts to the General Fund at
the end of the biennium. CHE expects the Rogers scholarship to exhaust funding before the end of FY 2025,
but the High Needs fund is on track to revert approximately $40,000. This bill would allow excess High
Needs money to be spent on Rogers scholarships in future biennia, increasing program spending and
decreasing reversions.
The Crawford fund is non-reverting but is anticipated to expend all appropriated money by the end of the
biennium.
CHE estimates approximately $4.7 M in unspent money in the Next Gen fund at the end of FY 2025, though
much of this is earmarked to support the expansion of Next Gen to allow up to four years of utilization per
student. It is unlikely that CHE would authorize additional expenditures from the Next Gen fund beyond an
amount that allows sustained expenditures on the Next Gen program.
Scholarship Granting Organizations (SGO): The bill eliminates the income requirement to be eligible for
a scholarship from an SGO, which is currently set at 400% of the maximum income to be eligible for free
or reduced-price lunch, and moves the minimum age requirement from four years old to three years old.
Scholarship granting organizations use donations to provide eligible students attending eligible nonpublic
schools a scholarship to help offset the tuition and fees the school charges. Those donations are eligible for
the school scholarship contribution credit, which is a 50% credit against the individual or entity’s state tax
liability and has a statewide cap of $18.5 M. While more students would likely take advantage of the SGO
scholarship under the bill, state expenditures would not be impacted.
Additional Information - Scholarship Granting Organizations: In FY 2024, SGOs received about $31 M in
donations, which were used to provide a total of $23 M in scholarships to $12,517 students.
Explanation of State Revenues:
Explanation of Local Expenditures:
Explanation of Local Revenues: SGO Scholarship Expansion: Students who switch from public schools
to an SGO scholarship would decrease public schools’ state tuition support revenue. However, any impact
is expected to be small and dependent upon the number of students who become newly eligible under the bill
and choose to utilize an SGO scholarship.
State Agencies Affected: Commission for Higher Education.
Local Agencies Affected: Public schools.
Information Sources: Department of Education;
https://www.federalregister.gov/documents/2024/02/20/2024-03355/child-nutrition-programs-income-eli
gibility-guidelines
Fiscal Analyst: Alexander Raggio, 317-234-9485; Austin Spears, 317-234-9454.
HB 1326 2