HB 1176 changesEducation matters.

What changed

+191 / −163 words · LargeConfidence: high

This bill comprehensively dismantles Indiana's Education Savings Account (ESA) program by removing the entire statutory framework governing these accounts. The changes eliminate eligibility requirements (including income thresholds tied to 400% of federal lunch program levels and residency restrictions), account establishment and termination procedures, restrictions on fund usage (including requirements to spend on core subjects or align with IEPs), testing requirements for participants, limitations on concurrent enrollment in state-funded schools, tax exemptions for distributions, annual rollover caps, and the statutory funds used to operate and administer the program. The bill removes all procedural requirements such as the September 1 application deadline, 30-day establishment windows, annual renewal provisions, and quarterly deposit schedules, effectively deconstructing the program infrastructure that enabled families to receive state grants for private education expenses. The repeal takes effect July 1, 2026.

Change log

• SECTION 12 > (4)

  removedhigh confidence

  Income eligibility criterion removed (400% of free/reduced lunch threshold)

  This section previously contained an income eligibility requirement tied to the federal free or reduced price lunch program threshold. The criterion limited eligibility to household members with annual income not exceeding 400% of the amount required to qualify for that federal program. The entire provision has been removed.

• SECTION 13

  removedhigh confidence

  Provision governing ESA account establishment and application deadlines eliminated

  This section, which set out procedures for parents or emancipated students to establish Indiana education scholarship accounts (ESAs), has been entirely removed. The removed text specified that applications must be submitted by September 1 for the following school year and required a written agreement with the department. The repeal takes effect July 1, 2026.

• SECTION 13 > (1)

  removedhigh confidence

  Removed requirement that ESA grants and interest be used only for qualified expenses, subject to subsection (i)

  This provision previously required that grant funds deposited in an eligible student's Education Savings Account (ESA), along with any accrued interest, could only be used for the student's qualified expenses, with this restriction being subject to subsection (i). The entire requirement has been removed from the statute.

• SECTION 13 > (2)

  removedhigh confidence

  Removal of requirement that CSA program grants in ESA accounts be used only for qualified expenses

  This section previously required that if an eligible student participates in the CSA program, any grant deposited in the student's ESA account (including accrued interest) must be used exclusively for the student's ESA qualified expenses. The entire provision has been removed from the law.

• SECTION 13 > (3)

  removedhigh confidence

  Provision regarding ESA account fund reversion upon termination removed entirely

  This section previously addressed what happens to money remaining in an Education Scholarship Account (ESA) when the account is terminated. The text specified that such funds do not revert to the state general fund and remain available for grants to other eligible students. The entire provision has been removed from the statute.

• SECTION 13 > (e)

  removedmedium confidence

  Removal of automatic agreement termination provision for eligible students

  A subsection that previously specified conditions under which an agreement would automatically terminate for an eligible student has been removed entirely. The text provided does not show what those termination conditions were, as the subsection appears to have been cut off mid-sentence in the BEFORE version. Without the complete text or any AFTER text for comparison, the full scope of what automatic termination triggers have been eliminated cannot be determined.

• SECTION 13 > (4)

  removedhigh confidence

  Requirement removed that ESA funds be used for core subjects or IEP/service plan

  This section previously required parents or emancipated students to use part of Education Savings Account (ESA) funds for study in reading, grammar, mathematics, social studies, or science, or in accordance with the student's individualized education program or service plan. The entire requirement has been removed, eliminating these restrictions on how ESA funds must be allocated.

• SECTION 13 > (i)

  removedmedium confidence

  Term 'individualized education program' removed from definition section

  The bill removes the defined term 'individualized education program' from what appears to be a definitions section. Without broader context, this could indicate the term is being eliminated, moved elsewhere, or replaced with different terminology. The removal is straightforward with no modifications to surrounding language visible in this isolated subsection.

• SECTION 13 > (ii)

  removedmedium confidence

  Reference to service plan under 511 IAC 7-34 deleted

  This section removes a reference to a service plan developed under 511 IAC 7-34. The deletion eliminates this regulatory citation from whatever list or provision it was part of. Without additional context about the surrounding text, the specific impact of removing this reference cannot be determined.

• SECTION 13 > (iii)

  removedhigh confidence

  Reference to 'choice special education plan developed under 511 IAC 7-49' deleted

  This subsection previously referenced a choice special education plan developed under the administrative regulation 511 IAC 7-49. The entire provision has been removed from the statute. No replacement language appears in the provided text.

• SECTION 13 > (iv)

  removedhigh confidence

  Section 504 plan reference removed from statute

  The provision referencing plans developed under Section 504 of the federal Rehabilitation Act of 1973 has been deleted. This removes explicit statutory mention of Section 504 plans, which are federally-required accommodations for students with disabilities. The deletion removes this specific category from what appears to be a larger list of educational plan types.

• SECTION 13 > (5)

  removedhigh confidence

  Removed requirement that eligible students not be enrolled in schools receiving state tuition support

  This provision previously prohibited eligible students from being enrolled in schools that receive tuition support under IC 20-43 (which typically covers traditional public schools receiving state per-pupil funding). By removing this restriction, the bill eliminates a barrier that previously would have disqualified students who were concurrently enrolled in state-funded schools. This change expands eligibility for whatever benefit or program this section governs.

• SECTION 13 > (6)

  removedhigh confidence

  Testing requirement for eligible students eliminated

  This provision required eligible students to take the statewide summative assessment appropriate for their grade level, or an alternative assessment specified in their individualized education program, service plan, choice special education plan, or Section 504 plan. The entire requirement has been removed from the statute.

• SECTION 13 > (b)

  removedhigh confidence

  Provision removed allowing separate ESA agreements per child with one-account-per-student limit

  This section previously allowed a parent with multiple eligible students to enter into a separate ESA agreement for each child, while limiting each student to one ESA account. The entire provision has been removed from the statute.

• SECTION 13 > (c)

  removedhigh confidence

  ESA account establishment deadline and ADM/choice scholarship restrictions eliminated

  This subsection previously established the deadline for parents or emancipated students to set up an ESA account (at least 30 days before fall ADM count day) and prohibited maintaining an ESA account if the student receives a choice scholarship in the same year. It also barred eligible students from receiving grants if they were already counted in a school corporation's ADM. The entire subsection has been removed, eliminating these timing requirements and restrictions.

• SECTION 13 > (d)

  removedhigh confidence

  Annual ESA agreement renewal provision removed

  The provision governing the duration and renewal of Education Savings Account (ESA) agreements has been removed entirely. Previously, this subsection specified that ESA agreements were valid for one school year and could be renewed annually while students were in kindergarten through grade 12, with accounts terminating upon graduation or completion of an individualized education program. The removal of this language eliminates these explicit duration and termination parameters from statute.

• SECTION 13 > (1)

  removedhigh confidence

  Indiana residency requirement removed as disqualifying condition for grant eligibility

  This section previously disqualified students from receiving grants if they no longer resided in Indiana while eligible for grants under section 2. The entire provision has been removed, eliminating the residency-based disqualification. This may allow eligible students to continue receiving grants even if they move out of state during their eligibility period.

• SECTION 13 > (2)

  removedhigh confidence

  Provision addressing ESA account non-renewal after 395 days removed

  This section previously specified that an ESA account could be terminated if not renewed within 395 days of being established or last renewed. It also addressed what happened to money in terminated accounts, stating funds would remain available for grants rather than reverting to the state general fund. The entire provision has been removed from the bill.

• SECTION 13 > (f)

  removedhigh confidence

  Elimination of mid-year termination option for education agreements

  This section previously allowed parents or emancipated students to terminate an education agreement during the school year by notifying the department. The entire provision permitting such mid-year termination has been removed, meaning agreements can no longer be ended before the school year concludes through this mechanism.

• SECTION 13 > (g)

  removedhigh confidence

  Tax exemption for ESA distributions used for qualified expenses eliminated

  This section previously provided that distributions to Education Savings Accounts (ESAs) were tax-exempt when used for qualified expenses, with the amount subtracted from adjusted federal gross income for state tax purposes. The entire provision is now removed, eliminating this tax treatment for ESA distributions.

• SECTION 13 > (h)

  removedhigh confidence

  Elimination of requirement for department to establish student test numbers for eligible students

  This section previously required the department to establish a student test number for each eligible student as described in IC 20-19-3-9.4. The entire subsection has been removed, eliminating this student test number establishment requirement. No replacement provision appears in the diff.

• SECTION 13 > (i)

  removedhigh confidence

  Restriction removed on ESA spending for certain students

  The provision prohibiting a specific category of students from using ESA funds for certain qualified expenses has been deleted. Previously, students described in IC 20-51.4-2-4(3)(B) were barred from using their ESA account money for expenses listed in subsections (a)(3), (a)(6), (a)(7), or (a)(9) of IC 20-51.4-2-9. This restriction no longer appears in the amended law.

• SECTION 14

  removedhigh confidence

  ESA account grant entitlement provision repealed

  This section previously established that eligible students maintaining an ESA (Education Savings Account) account were entitled to annual grant amounts until graduation or completion of their individualized education program. The provision specified that grants would be paid from the ESA program fund in quarterly deposits. The entire section is now removed from the statute.

• SECTION 14 > (b)

  removedhigh confidence

  ESA account rollover limit eliminated

  This section previously capped initial ESA account rollovers at $1,000 at the end of the establishment year, with subsequent years allowing rollover of $1,000 plus any prior rollover amounts. The entire rollover limitation structure has been removed from the statute.

• SECTION 14 > (c)

  removedmedium confidence

  ESA account termination provision deleted

  The bill removes language that previously specified when an eligible student's ESA (Education Scholarship Account) would terminate. The deleted provision established a termination timeline using 'the later of' language, but the specific termination conditions that followed this phrase are not visible in the provided excerpt.

• SECTION 14 > (1)

  removedmedium confidence

  Graduation date eligibility criterion removed

  The text that previously referenced "the date the student graduates high school" as a criterion has been removed. This appears to eliminate graduation date as a relevant trigger or endpoint in the context where it was previously specified. The removal suggests a simplification or broadening of whatever eligibility, duration, or timing provision this language governed.

• SECTION 14 > (2)

  removedhigh confidence

  Provision governing ESA account termination and fund reversion removed

  This section previously specified that ESA accounts terminate on July 1 of the year a student graduates high school and clarified that any remaining money (including interest) does not revert to the state general fund but remains available for grants to other eligible students. The entire provision has been removed from the bill.

• SECTION 15

  removedhigh confidence

  Indiana education scholarship account program fund provision repealed

  This section eliminates the statutory language establishing the Indiana education scholarship account program fund. The removed text had designated the fund's purpose as providing grants to eligible students under the ESA program and authorized use of appropriated money for grants as prescribed elsewhere in the chapter. No replacement language is provided.

• SECTION 15 > (b)

  removedhigh confidence

  Department's duty to administer ESA program fund eliminated

  The provision requiring the department to administer the ESA program fund has been removed entirely. This eliminates the statutory mandate for department administration of this fund. No replacement language is provided in this section.

• SECTION 15 > (c)

  removedhigh confidence

  ESA program fund provision removed

  This section previously established the composition of the ESA (Education Scholarship Account) program fund. The entire provision has been deleted from the statute. No replacement language is provided in this change.

• SECTION 15 > (1)

  removedmedium confidence

  Subsection on general assembly appropriations removed

  This section previously contained a subsection labeled '(1) Appropriations by the general assembly.' The entire subsection has been removed from the bill. Without the full context or content of what followed this heading, the substantive impact cannot be determined from the diff alone.

• SECTION 15 > (2)

  removedhigh confidence

  Provision removing interest deposited in ESA program fund from subsection (d)

  This section, which previously referenced interest deposited in the ESA program fund under subsection (d), has been removed entirely. The deletion eliminates this specific source or treatment of interest related to the ESA program fund. Without additional context about the broader statutory scheme, the full impact of removing this interest provision cannot be determined from this section alone.

• SECTION 15 > (d)

  removedhigh confidence

  ESA program fund investment authorization and interest deposit requirement eliminated

  This section previously authorized the treasurer of state to invest unused ESA program fund money in the same manner as other public funds, with interest returning to the fund. The entire provision has been removed, eliminating both the investment authority and the requirement that accrued interest be deposited back into the ESA program fund.

• SECTION 15 > (e)

  removedhigh confidence

  ESA program fund end-of-year reversion language removed

  The provision governing what happens to money remaining in the ESA program fund at the end of a state fiscal year has been eliminated. Previously, the law explicitly stated that such funds do not revert to the state general fund and remain in the ESA program fund. Removing this section means the fund's year-end treatment will be governed by other applicable statutes or default state fiscal procedures.

• SECTION 16

  removedhigh confidence

  Entire provision establishing Indiana education scholarship account administration fund removed

  This section eliminates the statutory provision that established the Indiana education scholarship account administration fund. The fund was designated to accept money for administering the ESA (education scholarship account) program. No replacement language is provided in this section.

• SECTION 16 > (b)

  removedhigh confidence

  Provision removing department's administrative authority over fund

  This section previously assigned the department responsibility to administer a fund. That assignment of administrative authority has been removed entirely. The nature of the fund and which department was responsible are not specified in the removed text.

• SECTION 16 > (c)

  removedhigh confidence

  Technical/conforming change

  Section (c) describing fund composition has been removed. This appears to be a structural deletion, likely part of broader reorganization or elimination of the fund provisions in SECTION 16. Without additional context showing what replaces this language or why it was removed, this represents a complete elimination of the fund composition clause.

• SECTION 16 > (1)

  removedhigh confidence

  Technical/conforming change

  This section removes a brief subsection heading that read 'Appropriations by the general assembly.' This appears to be a structural or organizational deletion, likely part of broader legislative reorganization, with no substantive policy implications evident from the text alone.

• SECTION 16 > (2)

  removedmedium confidence

  Interest deposit provision removed from fund

  A provision specifying that interest deposited in the fund under subsection (d) is included in the fund has been removed. This deletion eliminates explicit statutory language about interest deposits as a component of the fund. Without additional context about the broader section structure, this appears to be a substantive removal of a funding source or accounting provision.

• SECTION 16 > (d)

  removedhigh confidence

  Investment authority and interest accrual provision for fund removed

  This section previously authorized the state treasurer to invest fund money not immediately needed for obligations, following the same rules as other public funds. It also directed that investment interest be deposited back into the fund. The entire provision has been deleted.