Analysis of Indiana Senate Bill 534 and House Bill 1591

February 8, 2017  |  Molly S. Stewart, Ph.D.

In conjunction with our ongoing research on school choice initiatives in Indiana and other states, CEEP examines the Indiana Senate Bill 534, which would establish a parent-managed scholarship account program available to students meeting at least one of three special education categories, and House Bill 1591, which would establish a similar account program available to all students legally residing in Indiana. HB 1591 includes provisions unrelated to this account program; the following analysis only includes the relevant provisions.

Senate Bill No. 534
Introduced by Senator Raatz. Synopsis: Special education scholarship account program. Establishes the Indiana special education scholarship account program (program). Requires the treasurer of state to administer the program. Establishes: (1) the special education scholarship account fund (fund); and (2) requirements and conditions for the program. Requires the department of education (department) to, on or before May 1 and January 1 of each year, provide the treasurer of state a list of the names of students with disabilities who require special education and for whom an individualized education program has been developed. Provides that any grant amount distributed to a taxpayer’s Indiana special education scholarship account and used for qualified expenses under the program is not included in adjusted gross income for state income tax purposes. Provides that money transferred from a student’s Indiana special education scholarship account to the student’s college choice 529 education savings plan is not included as a contribution for purposes of a credit against a taxpayer’s adjusted gross income tax. Requires the treasurer of state to: (1) annually request a parent of an eligible student or an emancipated eligible student who is participating in the program to complete a written survey; and (2) annually provide a summary of the survey to the governor and the legislative council. Continuously appropriates money from the fund and the accounts established within the fund for the purposes of the program.
House Bill No. 1591
Introduced by Representative Lucas. Synopsis: Education options account program. Establishes the education options account program (program). Requires the treasurer of state to administer the program. Establishes (1) the education options account fund; and (2) requirements and conditions for the program. Requires the treasurer of state to: (1) annually request a parent of an eligible student who is participating in the program to complete a written survey; and (2) annually provide a summary of the survey to the governor and the legislative council. Continuously appropriates money from the education options account fund and the accounts established within the fund for the purposes of the program.


Proposed Indiana Senate Bill 534 would establish a Special Education Scholarship Account Program (SESAP) allowing parents of students with disabilities to use public education funds for a mix of public and private education services, as well as monies to be used for current or future postsecondary expenses and savings for future disability-related services. Proposed Indiana House Bill 1591 would establish the Education Options Account Program (EOAP), which is similar to the SESAP except that it is available to all Indiana students, not only those in certain disability categories. This analysis summarizes the main points of the bills and highlights several potential policy issues as the bills are currently written. The purpose of this analysis is to provide policymakers and their constituents with a research-oriented perspective on the bills’ content and potential implementation issues. The analysis identifies that there are a variety of significant implications of the proposed programs.

Student Eligibility

Indiana Senate Bill 534 (SESAP)

The SESAP is open to all students in Indiana who have a disability under Section 504 of the Rehabilitation Act of 1973 and/or have an Individualized Education Program (IEP) under the Individuals with Disabilities Education Act (IDEA) or an individual service plan (ISP) under 511 Ind. Admin. Code 7-34. In 2015–2016, there were 156,910 students with special education needs in Indiana public school corporations and charter schools (IDOE, 2017) and 4,205 students classified as receiving special education services in accredited nonpublic schools (IDOE, n.d.). These numbers include students with IEPs or ISPs, but not students with only Section 504 plans (IDOE, 2016). According to the bill’s Fiscal Impact Statement, the total estimated number of Indiana students with special education needs will be 216,270 by fiscal year 2018; this number may not include students with Section 504 plans. Students are not required to have been previously enrolled in public schools to qualify, and there is no family income requirement for eligibility. This means that all families regardless of income would be able to participate.

Students who have a Section 504 plan but not an IEP are eligible, which is significant because Section 504 plans are not necessarily related to education-specific issues. Section 504 plans cover a broad range of “physical or mental impairment[s] that substantially limits one or more major life activities. . . . Physical . . . impairment means any physiological disorder or condition, cosmetic disfigurement, or anatomical loss affecting one or more of the following body systems: neurological; musculoskeletal; special sense organs; respiratory, including speech organs; cardiovascular; reproductive, digestive, genito-urinary; hemic and lymphatic; skin; and endocrine” (34 C.F.R. § 104.3(j)). The definition of a disability under Section 504 also includes an individual having previously had an impairment, or who is regarded as having an impairment (that is, incorrectly identified as having a disability). Students may have Section 504 plans if they have medical conditions such as diabetes, allergies, or a broken bone, even though these conditions do not require special education services under IDEA. In the 2011–2012 school year, the most recent data available from the Civil Rights Data Collection, 151,713 students in Indiana public schools were served under IDEA, and an additional 10,222 students in Indiana public schools were Section 504 stand-alone students (i.e., not also eligible for services under IDEA) (U.S. Department of Education, n.d.).

The bill requires the Indiana Department of Education to provide to the state treasurer annually a list of students eligible for the program under IDEA; it does not require the IDOE to provide a list of stand-alone Section 504 students. The bill does not clarify how students with Section 504 plans will be checked for eligibility by the treasurer.

Indiana House Bill 1591 (EOAP)

The program proposed in HB 1591 would allow all students legally residing in Indiana to participate, with no income requirements. In 2015–2016, there were over 1.1 million students in grades K-12 in Indiana (IDOE, n.d.). As mentioned in the bill’s Fiscal Impact Statement, all current Choice Scholarship (voucher) students would be eligible for the EOAP, which would award a slightly larger amount than the largest current voucher amount. The author perceives that the existence of the EOAP as currently written would make the Choice Scholarship Program superfluous.

Funding Mechanisms

The funding for each program comes from state appropriations and from state tuition support funds that would have been allocated to the student’s public school corporation of legal settlement (residence) under Indiana Code 20-43-7. The bills also include as funding sources “gifts, grants, and donations to the fund” and “interest and other earnings derived from investment of the fund” (SB 534 Section 7, Article 52, Chapter 4; HB 1591 Section 62, Article 52, Chapter 4, Sec. 1(b)). Unlike the Indiana Choice Scholarship (voucher) program, which awards either 90 percent or 50 percent of the per-pupil amount for the student’s corporation of legal settlement (Ind. Code 20-51-4-4), both proposed programs reallocate 100 percent of that amount as well as 100 percent of the state funds that would have been awarded to the corporation for providing special education services for that student (if applicable). Participating students in each proposed program would have the option to receive their special education and related services from their school corporation of legal settlement, a provision also included in the special education pathway of the Indiana Choice Scholarship program.

Cost to Taxpayers

As currently designed, neither program offers cost savings to state taxpayers; instead, they would allow all eligible students, including those currently enrolled in private schools, to start receiving public funds to pay for their private education. Under the Indiana Choice Scholarship, students with special education needs who met the income qualifications could receive a voucher; under the SESAP, any student with an eligible disability, regardless of family income, can use their full per-pupil funding from the state at a private provider. This point refers only to students that were placed in a private school unilaterally by their parent/guardian, and not by the IEP team; placements governed by an IEP are always publicly funded per federal law (IDEA, Part B, Sec. 612(a)(10)(B)(i)).

Under the EOAP, any student, regardless of family income, can use their per-pupil funding at a provider.

Accountability Mechanisms


Accountability provisions in these bills address several different program areas, including quality of providers, removal of providers in violation of requirements, and parent management of funds; accountability for either program does not include measures of academic achievement. The Indiana Department of Education must approve education service providers, with approval criteria to be determined by the State Board of Education (SBOE). In the SESAP, two entities which are automatically ineligible to be education providers include 1) non-accredited, nonpublic schools; and 2) the participant’s parent or guardian; this provision would prohibit some forms of homeschooling, but would potentially allow students to be educated by a cooperative of other homeschooling parents, provided that such an organization received approval from the SBOE. The Senate bill includes a list of products and services that may be paid for with account funds; in addition to approved education service providers, the list states that “educational therapies or services provided by a person licensed, certified, registered, or regulated in Indiana to provide the educational therapies or services in accordance with the eligible student’s (A) individualized education program developed under Ind. Code 20-35; or (B) service plan developed under 511 Ind. Admin. Code 7-34” (SB 534 Section 7, Article 52, Chapter 2, Sec. 10(a)(7)). The language governing provision of these services in HB 1591 is less restrictive: “(a) ‘Qualified special services’ means educational services and therapies chosen by parents for a student with a disability (as defined in IC 20-35-1-8) provided by a person licensed to practice medicine or therapy in Indiana. (b) The term includes occupational, behavioral, physical, and speech-language therapies” (HB 1591 Section 62, Article 52, Chapter 2, Sec. 11).

The only content requirements established by the programs require the parent (or emancipated student) to “provide an education for the eligible student in, at a minimum, the subjects of reading, grammar, mathematics, social studies, and science” (SB 534 Section 7, Article 52, Chapter 3, Sec. 4(b)(2)(B)), and there are no requirements for participating students to take any kind of standardized test or content assessment. Both bills include very similar content-related language.

The state treasurer is responsible for administering each program, which includes adopting any administrative rules necessary, randomly auditing individual accounts, and revoking approval for providers who have not met one or more of the requirements for providers. There are no stated processes in either bill for parents or students to file complaints with the treasurer or SBOE, and there is no mention in either bill of a process for informing parents that participation in this program waives their rights under IDEA (compare the statutes governing Ohio’s Jon Peterson Special Needs Scholarship Program: Ohio Rev. Code § 3310.53).

Administration of each program, including accountability mechanisms, is paid for by (up to) 3 percent of each quarterly distribution, which is deducted by the treasurer for this purpose (SB 534 Section 7, Article 52, Chapter 4, Sec. 3; HB 1591 Section 7, Article 52, Chapter 4, Sec. 3).


The requirement in SB 534 that therapies and services be provided by a licensed or otherwise qualified individual is a stricter requirement than the required teacher qualifications for students receiving special education services at nonpublic schools using a Choice Scholarship. Minimum teacher qualifications for nonpublic schools participating in the Choice Scholarship Program are based on the individual school’s accrediting agency, and schools serving Choice students with special needs do not have any additional requirements (Ind. Code 20-51-1-4.7; Ind. Code 20-51-4-1). However, the Senate bill does not specify the entity responsible for ensuring that services are in accordance with the student’s relevant plan. The public district is only responsible for providing an offer of services; if the parent does not opt to have the district provide the special education services, the district is no longer responsible for providing them. The Indiana Administrative Code does not specify any rules pertaining to a situation in which the parent declines to have any provision of special education services by the public district (511 Ind. Admin. Code 7-34). Although not stated, in order to continue to be eligible for categorical special education funding, a student’s needs would have to be reevaluated regularly. Current legal sources do not clearly define the processes for regular evaluation of parentally placed nonpublic school students not receiving special education services from the public district.

There are no requirements in either bill for collecting or reporting data on the academic performance of participating students, either by providers or by the IDOE.

Depending on which agency a nonpublic school receives accreditation from, accountability mechanisms may be stronger than those listed in statute. Accrediting agencies differ in required standards for practice as well as accreditation cycle. The SBOE accreditation cycle is a maximum of three years, with shorter time periods for probationary accreditation (511 Ind. Admin. Code 6.1-1-11).

Parent Involvement in Program Governance

The proposed bills also establish a Parent Appeal Board (SB 534) and “parent review committee” (HB 1591), respectively, consisting of parents and other stakeholders. However, the only purpose of these groups is to hear appeals from education providers that have been denied approval due to failure to meet the established SBOE criteria and not to hear appeals from parents regarding a program issue.

There are no additional guidelines in the bills for the duties or limitations of how each “parent” group should address appeals. For approved education providers that have violated the requirements of the program, the treasurer may unilaterally remove their approval status, and there is no appeal process for removed providers. The provider must wait at least two years to apply for approval again, and must meet any requirements set out for re-approval by the treasurer.

Consequences for Misuse of Funds

There are no references in either proposed bill to the method by which parents must demonstrate that all expenses are qualified, or by which the treasurer’s office will monitor parent use of the account, other than a requirement to audit accounts either randomly or of “a sufficient number . . . as needed to ensure compliance” (SB 534 Section 7, Article 52, Chapter 6, Sec. 1; HB 1591 Section 7, Article 52, Chapter 6, Sec. 1). The bills do include procedures by which the treasurer can freeze an account for misuse and by which the parent can appeal. The appeal procedures include a 30-day window in which a parent can petition the freezing of the account; a 30-day window from receipt of the petition in which the treasurer must hold a hearing; and a 30-day window after the hearing in which the treasurer will make a decision about the account in question. The proposed bills do not include any caveat for the student’s access to education services during the periods of petition, hearing, and decision. There are also no stated processes for the student returning to the corporation of legal settlement if the account is permanently terminated. The author interprets this language in the proposed bills to mean that a parent/guardian’s misuse of funds (accidental or intentional) will result in the student losing access to services due to the parent/guardian’s inability to continue paying for services.


511 Ind. Admin. Code 6.1-1-11

511 Ind. Admin. Code 7-34

Ind. Code 20-30-8-11

Ind. Code 20-35

Ind. Code 20-43-7

Ind. Code 20-51-1-4.7

Ind. Code 20-51-4-1

Ind. Code 20-51-4-4

Indiana Department of Education. (n.d.) State of Indiana state reports [Enrollment]. Retrieved from

Indiana Department of Education. (2016, December 5). Special education (DOE-SE) collection year 2016-2017. Retrieved from

Indiana Department of Education. (2017, January 10). Corporation enrollment by special education and English language learners (ELL). Retrieved from

Individuals with Disabilities Education Act, Pub. L. 108-446, 118 Stat. 2647 (2004).

Legislative Services Agency. (2017a, January 23). Fiscal impact statement [SB 534]. Indianapolis, IN: Office of Fiscal and Management Analysis. Retrieved from

Legislative Services Agency. (2017b, January 25). Fiscal impact statement [HB 1591]. Indianapolis, IN: Office of Fiscal and Management Analysis. Retrieved from

Ohio Rev. Code § 3310.52

Rehabilitation Act of 1973, Pub. L. 93-112, 87 Stat. 355 (Section 504).

U.S. Department of Education. (n.d.). 2011-12 estimations for enrollment. Civil Rights Data Collection.


The author would like to thank CEEP staff for their assistance: Thomas Sugimoto for fact checking, and Cate Racek for web design. She would also like to thank Janet Decker, Indiana University School of Education, Department of Educational Leadership & Policy Studies, for her review and feedback, and Anne-Maree Ruddy, Director for Education Policy and Senior Research Associate at the Center for Evaluation & Education Policy.

About the Author

Molly S. Stewart, Ph.D., ( is a Research Associate at the Center for Evaluation & Education Policy. Her research interests are in K–12 state and federal policy design, implementation, and monitoring, as well as financial and legal aspects of public education.

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