In a unanimous 5-0 ruling, justices said the program is within the law. It allows children whose family income is below a certain threshold to use up to 90 percent of the money the state spends per pupil in public education toward tuition at a private school of their choice.
Proponents celebrated the decision, saying the voucher program allows families to select the school that most benefits a child's education.
Opponents, however, charge the program takes taxpayer money away from ailing public schools and gives it to wealthier private schools, often Catholic or Christian institutions.
The lawsuit, filed in 2011 after the state passed its voucher program, could be taken to the federal level though an appeal there would be a long shot, The Indianapolis Star said Tuesday. The U.S. Supreme Court in 2002 ruled in favor of school voucher programs and several other states have initiated them.
Indiana's program has proved massively popular, with nearly 10,000 families signing up. Some $38 million in state education money has been redirected to private schools, though the law mandates at least 10 percent of the cost per child that leaves must be redirected into a fund that benefits public schools. The fund totaled $4.2 million, the Star said.