Legislature moving to cut public school funding to pay for private and religious school voucher expansion to wealthier families
02/04/2021

Multiple bills are moving through the Indiana General Assembly to expand Indiana’s largest in the nation private school voucher program, as well as create a voucher debit card program, known as Education Savings Accounts (ESA). The bills will cause the state to cut spending to traditional public schools, which serve 90% of the state’s kids.

With no research to show private school vouchers improve academic outcomes for our kids, Indiana should not expand the state’s voucher program to include wealthier families, while creating yet another, new government entitlement program in ESAs. All expansions and new programs would be paid for out of the funding for public schools that accept all students.

There is no link between vouchers and student achievement. There's no conclusive evidence that vouchers improve the achievement of students who use them to attend private school.

In fact, what research we do have shows that vouchers caused students more harm than good. When studying Indiana’s voucher program, researchers from Notre Dame found students fell behind on math. It also didn’t improve the students’ chances of enrolling in college.

The state has not conducted one independent qualitative study of Indiana’s voucher program, now in its tenth year.

Aside from academics, expanding the private school voucher program to wealthier families, many of whom already attend private schools, will be done at the expense of funding traditional public schools that serve 90% of our state’s students.

The proponents of the state’s private school voucher program billed it as a way to get low-income kids out of failing schools. One of the bills, HB 1005, would allow a family of four earning up to $145,000 to qualify for at least $5,500 per child. And, according to the Indiana Department of Education’s (IDOE) most recent voucher report, less than 1% of vouchers are being used by a student who would have attended an “F” school.

How did we get here?

VOUCHERS
Indiana created its voucher program in 2011. It was billed as a program for low-income families with some tie to the free and reduced lunch program. It had caps on numbers to start, but it only took two years to remove all the caps.

Originally, there were a few eligibility tracks to the program with the limit that students had to enroll for at least two semesters in a public school before qualifying for a voucher. That one didn’t last long. Over the years, lawmakers opened new tracks and now there are eight of them. HB 1005 and SB 413 would create a ninth.

The program began with a 50% voucher and a 90% voucher, dependent upon one’s income level. In 2019, lawmakers added a middle level (70%) voucher. HB 1005 and SB 413 would scrap these tiers altogether and give every level of income a 90% voucher.

Here is a summary of what we know about Indiana’s voucher program according to the IDOE’s latest report:

• The most recent annual cost of vouchers to the state (and public schools) is $173 million.
  • This does not include the revenue lost to the state through the state income tax credit lawmakers provide to wealthy taxpayers seeking a tax credit for contributions they make to scholarship granting organizations, which also fund tuition to private schools. This tax loophole costs another $16.5 million in lost revenue to the state.
• 57% of students taking a voucher are white.
• Fewer than 40% of students previously attended an Indiana public school.
• 81% of special needs students receiving a voucher choose their public school over the private school for these services.
• Nearly all of the 324 private voucher schools have a religious affiliation.

EDUCATION SAVINGS ACCOUNTS

HB 1005 and SB 412 seek to establish an education savings account program — a new big government entitlement. This is essentially a debit card account for every parent of a special needs student and foster child. HB 1005 would also include children of active duty military personnel.

This ESA program is a voucher program with a new name and process, rebranded.

Under the existing voucher program, the state is dealing with several hundred private schools and about 35,000 students. With ESAs, imagine multiplying that oversight to hundreds of thousands of individual consumer transactions. Administrative review and oversight just won’t happen — certainly not at any meaningful level.

Since this would be an entirely new program and state obligation, for which the legislature has not publicly studied in an open and contemplative forum, we are left to look at other states’ experiences.

In 2017, the Orlando Sentinel published an investigative report on Florida’s K-12 private scholarship program, Schools without Rules. The report lists example after example of lack of oversight, lack of transparency and an abundance of abuse.

These examples of lack of transparency, insufficient monitoring, fraud, financial abuse and low accountability cannot be dismissed as exceptions. Proposed bills establishing ESAs in Indiana fall into all these same traps by virtue of their vagueness in terms of the most fundamental components to this program.

One needs only look at the history of ESAs in Arizona that began in 2011, which also had the limitation that they would be available only to a certain segment of the student population (special needs, foster care, etc.). In 2017, Arizona expanded its ESA program to all students. Arizona, too, has had multiple issues with fraud and abuse of their ESA program.

Nevada created an ESA program in 2015 and repealed it in 2017. It never went into effect because the Nevada Supreme Court ruled the funding mechanism unconstitutional before its repeal.

According to Ed Choice, only five states have ESA programs: Arizona, Florida, Mississippi, North Carolina and Tennessee.

This is not a tested, studied, nor proven program. It takes from public schools and creates a huge new government entitlement at a time when Indiana won’t declare even a fiscal plan to fulfill its existing Constitutional obligation to its public schools or their teachers.

Indiana’s Constitution

The governor’s Teacher Compensation Commission spelled out how Indiana has fallen in rankings of per pupil funding and average public school teacher salary in the last 20 years.

These bills represent an abandonment of the system of common schools that our constitutional framers contemplated and in which they believed so much that they created an entire article in our state’s constitution dedicated to its existence.

ARTICLE 8. Education. Section 1. Knowledge and learning, generally diffused throughout a community, being essential to the preservation of a free government; it shall be the duty of the General Assembly to encourage, by all suitable means, moral, intellectual, scientific, and agricultural improvement; and to provide, by law, for a general and uniform system of Common Schools, wherein tuition shall be without charge, and equally open to all.

At the end of the day, fully and equitably funding our public schools is a fundamental constitutional duty.

Voucher Bills Dig School Funding Hole Deeper

When will the General Assembly seriously address the holes it has dug in public school funding?

Since 2017, the formula funding improved incrementally, but Indiana’s rankings nationally and relative to our neighboring states tell the story:

• Indiana is now last in the Midwest and 41st in the nation in per pupil funding.
• Indiana is now last in the Midwest and 38th in the nation in average teacher salary.

By Legislative Services Agency’s (LSA) accounting, HB 1005 would cost $202 million more over the biennium. And that number is based upon someone’s hunch that not everyone who is eligible will take the state up on this giveaway. In fact, LSA contends that about a quarter million kids would qualify for an ESA (about a quarter of all students) under the definitions in the bill.

To put these costs in perspective, a 1% increase in the funding formula for a year costs about $75 million. Two hundred million dollars represents close to a 1% increase in the school funding formula over the biennium. This is what the voucher expansion bills give away to unproven, unidentified providers and unstudied programs.

The governor’s budget suggests increases to education by 2% and 1%. HB 1005, and the combination of SB 412 and SB 413, would dramatically cut into those increases and create a whole new set of obligations that will be run and administered by the state treasurer’s office.

If any one thing signals that these bills are about the money and not the education — it’s that one fact. The state treasurer is going to set up this program, determine what costs are eligible, determine what third party provider is going to run it, interface with parents and determine how much of an administrative fee it will take.

This isn’t an education program. The ESA bills are a banking program.

Let’s do what’s best for kids. From what we know, kids are harmed after switching to vouchers. If anything, we’ve come to further realize, kids learn best in person at their public school.

Let’s do what is fiscally and constitutionally responsible. Funding multiple schools and adding yet another (ESA) isn’t either. Everyone knows, especially lawmakers, that once the government creates an entitlement program, it likely doesn’t go away. Those who have followed the voucher program know, too, that all we have done with this program is grow the number of tracks, expand the eligibility way outside of kids in poverty or in failing schools, and increase the voucher amount. Could that be because enrollment growth in vouchers had started to fizzle?

Our constitution calls for a common school system, let’s respect that rather than throwing more money at programs with a track record of waste, fraud and little accountability.

Let’s keep the promise made and finally address Indiana’s lagging funding and teacher pay. These bills will dig us deeper into a hole that future legislatures will struggle further to dig out.

Indiana cannot afford to pass these bills from any angle. We urge the legislature to oppose HB 1005, SB 412 and SB 413.