Background/Footnotes: Indiana is home to the nation's first privately funded scholarship organization: the Educational CHOICE Charitable Trust created by J. Patrick Rooney, then-chairman of the Golden Rule Insurance Company in Indianapolis.[1] In 1991, its first year of operation, the organization gave scholarships to 746 children.[2] Other organizations that have joined the Educational CHOICE Charitable Trust in serving Indiana's children include the Northwest Indiana Children's Scholarship Fund in Gary and the Guardian Angel Society in Fort Wayne.

In 1997, the legislature enacted the Postsecondary Enrollment Options Act, which allows 9th and 10th grade "gifted and talented" students and junior and senior high school students to enroll in higher education courses for both secondary and college credit. Tuition is the responsibility of the student.[3]

Several choice bills were introduced in 1999. Senate Bill 89 would have provided vouchers to students in Indianapolis to attend another public school or an accredited private school. The vouchers would have been equal to the state's per-pupil funding. House Bill 1877 would have established tax credits for charitable donations to education foundations or public schools, as well as for personal expenses of students enrolled in public, private, or home schools. H.B. 2015, H.B. 2016, and H.B. 2017 would have provided tax credits for charitable donations to accredited private schools and public schools. All of these bills died in committee.[4]

In May 2001, then-Governor Frank O'Bannon signed S.B. 165, the state's charter school bill.[5] Under this legislation, local school boards and universities may authorize an unlimited number of charter schools, including both new schools and conversions from existing schools. The mayor of Indianapolis may sponsor up to five charter schools a year. Charter schools receive an automatic waiver from most state and local rules and regulations.[6] Ball State University and the mayor of Indianapolis have authorized most of Indiana's charter schools.[7]

In 2001, S.B. 105 was introduced to provide students with vouchers to attend another public school or an accredited private school within the Indianapolis school district. The voucher would have been equal to the per-pupil cost of educating the student in the Indianapolis school system. Parents would have been responsible for the transportation, fees, and tuition not covered by the voucher. The bill died in committee.[8]

Introduced during the 2002 session, the Education Improvement Tax Credit (H.B. 1389) would have provided tax credits for donations to organizations providing tuition scholarships or public-school support organizations. The taxpayer would have received a credit for contributions worth up to 75 percent of his or her tax liability or $1,000, whichever was less. For joint filers, the maximum credit would have been $2,000. A corporation would have received a credit for donations worth up to 75 percent of its tax liability or $100,000, whichever was less. Organizations receiving those donations could have provided scholarships of up to $3,300 to students. Public-school support organizations could have used the contributions to provide grants of up to $500 per student to public schools to help pay for textbooks, computers, or tutors. The aggregate amount of tax credits could not have exceeded $30 million in one year.[9] The bill died in committee.

Three tax credit bills were introduced in 2003, but no action was taken on them before adjournment. H.B. 2002 would have created tax credits for donations to scholarship organizations. Single individuals would have received a credit of up to $500, those filing jointly would have received a credit of up to $1,000, and corporations would have received the lesser of 10 percent of their adjusted gross income tax liability or $500. H.B. 1846 would have created a pilot tax credit program for 2004 and 2005. The maximum credit for families with household incomes under $35,000 would have been $2,000, and the maximum credit for those with incomes over $35,000 would have been $1,000. H.B. 1706 would have phased in tax credits over three years for contributions to scholarship organizations, donations to public schools, tuition expenses, and home-school expenses.[10]

S.B. 501 was signed into law in April 2003, revising Indiana's charter school law. Charters are now funded as a school district is funded: 35 percent comes from local property tax, and 65 percent comes from the state. Under S.B. 501 (now Act 501) charters are allowed to borrow money from the state for their first semester of operation or if the school has an increase in enrollment of at least 15 percent. The state can only have five charters approved by universities, and the mayor of Indianapolis can approve up to five charters. However, a mayor cannot save his or her unused charter approvals from year to year.[11] Indianapolis is the only U.S. city whose mayor has chartering authority.[12]

In August 2004, the Marion County school district, which has the authority to charter schools, submitted a charter application to Indianapolis Mayor Bart Peterson's office. This was an unprecedented decision by a group with chartering authority to attempt to charter a school through another chartering authority. If approved, the school would be the first charter school sponsored by the mayor outside of the Indianapolis public school system.[13]

In the 2005 legislative session, Representative Robert Behning (R-Indianapolis) twice introduced voucher legislation; both attempts failed. His first bill, H.B. 1009, would have provided vouchers to students who attend schools that do not meet annual achievement benchmarks under NCLB. The bill passed the House Education Committee and Ways and Means Committee in February but stalled in the full House.[14] The bill would also have provided tax credits to parents who send their children to private schools or incur out-of-pocket expenses for sending their children to schools in another district. So far, fourteen schools in the Indianapolis County Public School System have not meet annual standards, making their students eligible for assistance under H.B. 1009.

Representative Behning reintroduced the proposal later in the session as S.B. 281, and this time Democratic members amended the bill to remove its voucher provisions but left the tax credit.[15] Under the bill's tax credit provisions, a family of four earning less than $32,987 annually could have qualified for a credit of $1,000 per child for private school tuition or home-school expenses. After the bill moved to the House floor, it lost on a 54-45 vote.[16]

In the fall of 2005, the U.S. Department of Education awarded the state $2.5 million to distribute to charter schools for the 2005-06 school year. The funds can be used for planning expenses and supplies.[17]

In January 2006, Sen. Luke Kenley introduced S.B. 60, which would create a "public school transfer program." Parents and students could select a school of choice in any state district. The bill would also require that school districts provide parents annual performance reports. All parents except those of special education students would be responsible for transportation costs. The bill passed the Senate by a 30-17 vote on January 24 and was passed to the House where it will be considered by the House Education Committee.[18]

In 2006, Representative Behning introduced another school choice bill, HB 1381. This bill would create a tax credit for low-income families to assist them in sending children to full-day kindergarten. The Indianapolis Star estimates the tax credits would average $1,500.[19] The bill would create a one-year program, as legislators can use money from the state budget to assist families with kindergarten expenses next year. The bill passed the House Education Committee, but it was referred to the Ways and Means Committee on January 25, where it was voted down February 2, by a vote of 46 to 52.[20]

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