Topics: Miller College of Business, Research

June 16, 2021

School Choice In Indiana Leads To $88 Million Savings

Researchers at Ball State University have found that Indiana’s school choice options resulted in a savings of almost $90 million in the 2019-20 school year.

School Choice and State Spending on Education in Indiana,” a policy brief from Ball State’s Center for Business and Economic Research (CBER), studied 2019-20 transfer data on students at traditional public school districts and charter schools, as well as students attending private schools utilizing the Indiana Choice Scholarship Program.

The study found aggregate spending on primary and secondary education in Indiana decreased by more than $88 million — or about 1 percent of the state’s general fund spending on education — in the 2019-20 school year due to school choice.

CBER director of research Dr. Dagney Faulk, who co-authored the brief with CBER director Dr. Michael Hicks, said these findings are a key piece to the puzzle as Hoosier taxpayers and lawmakers try to get a better grasp on the advantages and disadvantages of the use of vouchers, charter schools, and open enrollment programs.

“As of yet, we don’t have much information about the academic impact of school choice in Indiana, but this analysis examining the fiscal impact shows that choice has resulted in savings to the state because more students transfer out of districts with the highest levels of per-student funding than into these districts,” Faulk said.

Charter and voucher programs allow students to attend schools other than the traditional public school in the school district where they live, while open enrollment allows students to attend a traditional public school outside of their home district. According to the CBER policy brief, each of these choice programs impact state funding available to the public school districts in which students live.

Districts losing students experience a decrease in state funding, for example, but can offset some or all of those losses by accepting transfer students from other school districts.

According to the study:

  • During the 2019-20 school year, 64,685 students (5.7 percent of public and private school students) transferred from their school district of legal residence to another traditional public school.
  • In contrast, 44,965 students (3.96 percent of public and private school students) attended charter schools and 36,700 students (3.2 percent) attended private schools using a Choice Scholarship (voucher).
  • During the 2019-20 school year, if transfer students had attended the public school in the district in which they lived, state funding for these students would have totaled $876.7 million. With choice, the state spent $788.5 million funding the schools these students actually attended, a difference of about $88.2 million that year.

Faulk and Hicks also found that overall inflation-adjusted state spending on K-12 education in Indiana has decreased since 2010, and the distribution of spending has changed with private schools participating in the Choice Scholarship program, and with charter schools receiving a larger share of overall spending.

“While this study makes clear that the current level of school choice saves tax dollars, significant expansion of choice, particularly private school vouchers, would not result in additional savings,” Hicks said.

Since its inception in 1970, Ball State’s Center for Business and Economic Research has been a trusted source for high-quality, nonpartisan, data-focused research, analysis, and visualization. For more on this study, contact Dr. Faulk and Dr. Hicks.