The Fiscal Effects of the Indiana Choice Scholarship Program. Working Paper No.11

The Indiana Choice Scholarship Program (ICSP), which began in fall 2011, is a state taxpayer-funded financial aid program that helps low and lower-middle income Hoosiers to send their children to the private K-12 school of their choice. This voucher program has been extremely popular among families, as the number of students receiving scholarships has increased from 3,911 students in academic year (AY) 2012 to 36,707 by 2020. This report addresses two questions regarding the fiscal effects of the ICSP up through and including academic year (AY) 2020: (1) The fiscal effects of the ICSP on the state of Indiana budget; and (2) The fiscal effects of the ICSP on local school corporation budgets (in Indiana public school districts are termed "school corporations"). The estimates in this report suggest that the ICSP has provided modest fiscal benefits to taxpayers to date--however, the fiscal savings per scholarship recipient are quite large. Therefore, as more students access the ISCP the savings to Indiana taxpayers will increase significantly. The major findings include: (1) The ICSP saved state taxpayers a total of $42.5 million in 2019-20. These savings translate to savings of $1,158 per scholarship student--a significant sum on a per student basis; and (2) The ICSP yielded a total of $60.6 million in savings to local public school corporations in 2017-18, which was the most recent year with complete data available. These savings to local school corporations were $1,709 per student. These findings are not surprising given that the average scholarship awards are below both total expenditures per student and state per pupil funding as well.