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Schools are required to allow students to be released for religious programs. This does not mean schools do not have the ability to create policies that protect the school's instruction time.
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IC 20-33-2-19 Attendance; public school children; religious instruction
Sec. 19. (a) When the parent of a student who is enrolled in a public school provides written notice, the principal shall allow the student to attend a school for religious instruction that is conducted by a church, an association of churches, or an association that is organized for religious instruction and incorporated under Indiana law.

(b) After receiving notice under subsection (a) and subject to subsection (c), the principal shall work in a collaborative manner with the parent or entity offering religious instruction to provide assistance in determining a period or periods for the student to receive religious instruction. An entity offering religious instruction to a student as described in this subsection shall, as applicable, work in a collaborative manner with the principal to ensure the period or periods in which the student receives religious instruction are the least disruptive to the instructional time (as defined in IC 20-30-2-1) of the student. The notice is valid only for the school year in which it is provided.

(c) The period or periods that a student receives religious instruction under this section may not exceed the following:

(1) For students in elementary school, one hundred twenty (120) minutes in total in any week.

(2) For students in public secondary school, the amount of time that is equivalent to attending one (1) elective course at the public secondary school during the week.

(d) An entity providing religious instruction that receives students under this section:

(1) shall maintain attendance records and allow inspection of these records by attendance officers; and

(2) may not be supported, in whole or in part, by public funds.

(e) A student who attends a school for religious instruction under this section shall receive the same attendance credit that the student would receive for attendance in the public schools for the same length of time.

(f) A public secondary school may award academic credit to a student who attends religious instruction under this section if the following conditions are met:

(1) The entity that provides religious instruction to a student of a school corporation under this section agrees to do the following:

(A) Conduct an expanded criminal history check and expanded child protection index check regarding each employee or contractor of the entity who is likely to have direct, ongoing contact with students of the school corporation who are children within the scope of the individual's employment or contract services.

(B) Hold liability insurance coverage for services or transportation provided outside school property (as defined in IC 20-33-8-5).

(2) The governing body of the school corporation adopts a policy that allows the awarding of credit. A policy adopted under this subsection must provide the following:

(A) Classes in religious instruction are evaluated on the basis of purely secular criteria in substantially the same manner as similar classes taken by a student at a nonpublic secondary school who transfers to a public secondary school are evaluated to determine whether the student receives transfer credit for the classes. Secular criteria may include the following in addition to other secular criteria established by the governing body:

(i) The number of hours of classroom instructional time.

(ii) A review of the course syllabus that reflects the course requirements and materials.

(iii) Methods of assessment used in the course.

(iv) Whether the course is taught by a licensed teacher.

(B) The decision of whether to award academic credit is neutral as to, and does not involve any test for, religious content or denominational affiliation.

(C) A provision that a student who attends religious instruction under this section shall first seek to use a time period during a student instructional day (as defined in IC 20-30-2-2) that is not devoted to student instructional time to attend religious instruction. If a student is not able to attend religious instruction at a time other than during student instructional time, the student may not be released to attend religious instruction for an amount of time per week that exceeds the amount established in subsection (c).

A student may be awarded a total of not more than two (2) elective academic credits under this subsection.

All school districts, regardless of whether they are required by law to allow released time, should implement good policy and be prepared for when a released time program may approach the district. The time to set the policy is before an active program is pressuring the district. Research polices the district can implement to protect teachers' and students' instruction time. Set polices that limit disruptions to students and the ability for proselytization to occur, impacting other students of faith or no faith. A more detailed write-up on school board policies can be read here.