Research & Commentary: ESA Bill for Special-Needs Students Would Keep Indiana at the Forefront of the Education Choice Movement

Published January 23, 2017

A bill has been introduced in the Indiana Senate that would establish the Special Education Scholarship Account Program. If passed, the program would provide children with special needs and disabilities with an education savings account (ESA) that could be used to help pay for tuition at any accredited non-public school. The funds could also be used to pay for textbooks, educational therapies and services, tutoring services, online learning programs, or to cover fees required to take national standardized achievement tests, such as the SAT. The program would go into effect at the start of the 2018–19 school year.

The ESA’s funding level would be determined based on the eligibility level for the child’s school corporation, which is calculated using the average daily membership of that corporation. The amount of funding received would surpass the funding level students currently receive under the Indiana Choice Scholarship Program, the state’s voucher program. Per-pupil funding in Indiana for the 2016–17 school year is $5,088.

Only 50 percent of Indiana 4th graders and 39 percent of 8th graders tested “proficient” in math on the 2015 National Association of Education Progress (NAEP) test, also known as the Nation’s Report Card. Only 40 percent of 4th graders and 37 percent of 8th graders tested proficient in reading. These results show Indiana’s public school system is failing to educate roughly six out of 10 4th grade and 8th grade students to a proficient level in reading and mathematics.

Indiana’s sub-standard performance on NAEP underscores the desperate need for the state to expand school choice opportunities far beyond what is currently available. Too many public schools in the Hoosier State are failing to adequately prepare students for productive lives. Parents should be allowed to choose the schools their children attend and should not be penalized financially if that choice is a private religious or secular school.

In May 2016, EdChoice released a report examining 100 empirical studies on school choice programs. Eighteen of these studies used random assignment to measure outcomes, referred to in academia as the “gold standard.” The overwhelming majority of the available empirical evidence makes it clear educational choice offers families equal access to high-quality schools that meet their widely diverse needs and desires – and does so at a lower cost – while simultaneously benefitting public school students. 

Another EdChoice survey of parents with children enrolled in Indiana’s Choice Scholarship Program found that while 53 percent of respondents were either very (29 percent) or somewhat (24 percent) satisfied with the public schools they were leaving behind, a full 93 percent of school-choice parents were either very (81 percent) or somewhat (12 percent) satisfied with their child’s private school. “These results indicate that parents are leaving public schools because they are not the best fit for their children,” wrote the study’s authors. “Limiting choice solely to neighborhood public schools,” they continue, “would leave many parents not fully satisfied because they cannot access the best educational fit for their children. Making sure parents are as satisfied as possible should be the policy when providing an education, not limiting them to enroll their children in schools that are going to provide a less than complete education in the parents’ eyes.”

Educational choice programs can give all families a greater opportunity to meet each child’s unique education needs. Providing ESAs for students with special needs would keep Indiana in the forefront of the education choice movement. Ideally, allowing all students in the Hoosier State to receive ESAs would go even further toward more effectively educating children in the state. When parents are given the opportunity to choose, every school must compete and improve, which gives more children the opportunity to attend a quality school.

The following documents provide more information about education savings accounts and education choice.

A Win-Win Solution: The Empirical Evidence on School Choice (Fourth Edition)
This paper by the Friedman Foundation for Educational Choice details how a vast body of research shows educational choice programs improve academic outcomes for students and schools, saves taxpayers money, reduces segregation in schools, and improves students’ civic values. This edition brings together a total of 100 empirical studies examining these essential questions in one comprehensive report.

2016/17 School Choice Report Card
This report card published by the American Federation for Children scores 27 active non-special-needs voucher, scholarship tax-credit, and education savings account programs against ideal standards for program quality. The report is an excellent tool policymakers and researchers can use to help improve education programs and maximize student participation. 

Research & Commentary: Indiana School Choice Parental Satisfaction Should Lead to More School Choice–commentary-indiana-school-choice-parental-satisfaction-should-lead-to-more-school-choice?source=policybot
In this Research & Commentary, Heartland Policy Analyst Tim Benson examines an expanded, follow-up study to a 2014 report by EdChoice that examines why Indiana parents choose to take advantage of the state’s Choice Scholarship Program voucher and use it to send their children to private schools.

Competition: For the Children
This study from the Texas Public Policy Foundation claims universal school choice results in higher test scores for students remaining in traditional public schools and improved high school graduation rates.

Recalibrating Accountability: Education Savings Accounts as Vehicles of Choice and Innovation
This Special Report from The Heritage Foundation and the Texas Public Policy Foundation explores how education savings accounts expand educational opportunities and hold education providers directly accountable to parents. The report also identifies several common types of regulations that can undermine the effectiveness of the program and how they can be avoided.

The Tax-Credit Scholarship Audit: Do Publicly Funded Private School Choice Programs Save Money?
In this study, EdChoice Director of Fiscal Policy and Analysis Martin Lueken updates previous work examining the fiscal effects of private school choice programs on state governments, state and local taxpayers, and school districts. This report analyzes savings from tax-credit scholarship programs, which allow individuals and businesses to reduce their state tax liability by making a private donation to a nonprofit organization that provides scholarships for children to attend private schools of their choice. This audit examines 10 tax-credit scholarship programs operating in seven states between 1997 and 2014, which serve 93 percent of all students participating in tax-credit scholarship programs nationwide.

The Fiscal Effects of School Choice Programs on Public School Districts
In the first-ever study of public school districts’ fixed costs in every state and Washington, DC, Benjamin Scafidi concludes approximately 36 percent of school district spending cannot be quickly reduced when students leave. The remaining 64 percent, or approximately $8,000 per student on average, are variable costs, changing directly with student enrollment. This means a school choice program attaching less than $8,000 to each child who leaves a public school for a private school actually leaves the district with more money to spend on each remaining child. In the long run, Scafidi notes, all local district spending is variable, meaning all funds could be attached to individual children over time without creating fiscal problems for government schools.

How School Choice Programs Can Save Money 
This Heritage Foundation study of the fiscal impact of voucher programs notes Washington, DC vouchers cost only 60 percent of what the city spends per pupil in government schools. The study estimates if the states with the top eight education expenditures per pupil adopted voucher programs similar to the Washington, DC program, they could save a combined $2.6 billion per year.

How School Choice Can Create Jobs
Examining five South Carolina counties, Sven R. Larson found school choice programs were associated with gains of up to 25 percent in youth self-employment. Larson writes, “School Choice raises academic achievement and reduces the problems and costs associated with high school dropouts. But it also has a decisively positive impact on youth entrepreneurship and could provide a critical boost for the economies of poor, rural counties.”


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit School Reform News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

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