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The court issued a broad ruling on the use of school vouchers, which give low and middle income families money to use towards private schools.
One of the most sweeping school voucher programs in the country has been upheld as constitutional by the Indiana Supreme Court on Tuesday.
The court said the voucher program, which gives families up to $4,500 of public tax money to send their children to private schools, is allowed to continue, handing a big victory to conservatives and former Gov. Mitch Daniels.
In a 5-0 decision, the court dismissed the lawsuit brought by opponents including the state teacher's union, who argued that nearly all of the funds were used to pay for religious schools.
The court said it did not matter where the money went as long as it was decided by the parents, not the state.
"Whether the Indiana program is wise educational or public policy is not a consideration," Chief Justice Brent Dickson wrote.
The funds from the voucher program "do not directly benefit religious schools but rather directly benefit lower-income families with school children."
The issue could be taken to federal court but a 2002 US Supreme Court ruling upholding a similar voucher program in Ohio makes any further appeal unlikely.
"It's the end of the constitutional debate," Robert Enlow, President and CEO of the Friedman Foundation for Educational Choice told the Indiana Star Tribune.
"Anyone who says it not legal in state of Indiana no longer has a leg to stand on."