What would you do if your child was not thriving in his or her school environment? What if you could use the money your state sets aside for him or her to tailor a better educational fit? That is what Education Savings Accounts are for. Education Savings Accounts, also known as “ESAs,” empower parents to find a better fit educational solution an offer are a promising development in education reform.
Policy Circle co-founder, Kathy Hubbard, is joined by special guests John Kirtley from the American Federation for Children and guest editor, Jill Turgeon, to launch this brief. Listen to the 30 minute call below.
Preparing our children to be productive members of society begins with education. A challenge set before us as families, neighbors, job creators and educators is to prepare all children — with a variety of backgrounds and abilities — to be active contributors to our economy and society at large.
The 2018 Policy Circle Leadership Summit featured a panel titled “Why Creating Career Pathways Matters,” where panelist Mark Feinour, Executive Director of Support Services at Bank of America, shared how for more than 25 years his division has served as an in-house marketing and fulfillment operation, comprised of 300 employees with intellectual disabilities (here’s the playbook on how to create a productive work environment for people with different abilities). His remarks and those of others on the panel sparked interest among many Summit attendees regarding how children who face a variety of challenges — from intellectual disabilities to financial disadvantages — can obtain a “best fit” education that unlocks their potential.
Jill Turgeon, a Policy Circle member in Virginia and a Loudon County School Board member, came up with the idea of creating a primer on Education Savings Accounts, which are available in six states. The Policy Circle team thanks Jill for her substantial contribution to creating this primer, and for her passion for promoting better education for all. (If you have expertise in this or another policy issue, please contact Nicole, at email@example.com).
This primer is different from a typical Policy Circle brief, in that rather than providing an overview of a broad policy topic, it takes a deeper dive into a single aspect that might be a topic individuals in your circle might want to act upon.
In the meeting recap that your circle posts on The Policy Circle website, be sure to capture the questions that arise, and how your circle chooses to dig deeper for answers and solutions.
For more detail on early education, please read The Policy Circle’s brief on K-12 Education.
Read on to learn about ESAs and how you might bring this education option to your state.
What would you do if your child was not thriving in his or her school environment? What if you could use the money your state sets aside for him or her to tailor a better educational fit? Perhaps you could use the state dollars allocated for your child towards other services or approaches that your local school doesn’t offer?
That is what Education Savings Accounts are for.
Education Savings Accounts, also known as “ESAs,” enable parents to remove their children from public schools and use the state education dollars allocated to their children in order to directly purchase services or instructional supplies that better meet their children’s educational needs. States with ESAs place funds that ordinarily would go to the local public school into an account, much like a debit card, that parents can use to purchase approved educational services for their children.
As of 2020, over 20,000 K-12 students in the US were recipients of ESAs. Six states have ESA programs. As of 2018, 25 states have proposed legislation with the hopes of broadening educational offerings in their state.
According to the National Center for Education Statistics, the number of public school students requiring services under the Individuals with Disabilities Education Act grew from 796,000 in 1977 to 2,303,000 in 2012. One reason for the increase is that more students are being diagnosed with learning disabilities. Having choices in educational services allows them to receive a customized education experience that can meet their individual specific needs.
More choices in education can benefit many students, not only those who require special services.
Jeanet Carrasco and her son Ivan are an example of a family who benefited greatly from ESAs, as this report outlines. Ivan was a shy child who was a victim of bullying at his elementary school. He also struggled in reading, and got poor grades, which added to his frustrations. Jeanet’s efforts to meet with school leadership to address her concerns about her son were unsuccessful. Needless to say, she was devastated by Ivan’s difficulties.
However, she heard about Arizona’s Empowerment Scholarship Accounts (Arizona’s version of an Education Savings Account program), and found new hope for her son. With this account, she was able to enroll him in a private school that met his individual needs. He entered fourth grade reading at a second-grade level. After two years, he caught up with his peers, and by the time he was in the seventh grade, he was reading at an eighth grade level. For Ivan, as with many other students, the ESA provided what he needed to succeed: flexibility in educational offerings to meet his learning needs.
ESAs: The Basics
ESAs are funded from state education tax dollars, typically based upon the state’s average support per student.
As outlined in the The Policy Circle’s brief on K-12 Education, the US Department of Education states it contributes roughly 8% of the elementary and secondary education budget, with state and local governments funding the remaining 92% (with states on average funding 47.1% and local districts 44.6%).
The amount of state education dollars that each state allocates to ESA recipients varies. A small portion of the state allocation is used to administrate the ESA program (usually 10%). Each state determines what services are eligible for purchase through ESA funds.
Only state funds are allocated to students who use the ESA. The remainder of the locally-budgeted per-pupil funds (i.e. local tax funds) stays in the local public school system.
ESAs primarily serve students with special needs, but more ESAs are starting to include children of military families, as well as those who meet income requirements. Some states provide universal funding. As of 2017, over 15,000 K-12 students in the US were recipients of ESAs.
ESAs are not vouchers. Vouchers are funds for tuition payment at an educational institution other than the traditional public school. An ESA is money that is set aside for parents to use on any approved educational expense. It can be used simultaneously for multiple learning options — for example tutoring, occupational therapy, and other strategies to support learning.
Generally, if parents don’t use all of their ESA funds, they can rollover for the following year, and can even go toward college tuition.
ESAs: The History
Parent choice in education has long played a crucial role in addressing the requirements of students with varying academic needs. For years, the state of Arizona had been a leader in pursuing alternative options to traditional local public schooling. In addition to many smaller local initiatives such as open enrollment policies and charter/magnet schools, the state adopted two small pilot voucher programs in 2006. Arizona courts later ruled these programs to be unconstitutional.
The state legislature then passed Lexie’s Law, a corporately-funded tax credit scholarship program to help fund private school scholarships for children with disabilities. Under this legislation, corporations and insurance companies may claim a tax-credit for donations to private charities that award scholarships to children who are eligible for these voucher programs. However, this program proved difficult to fund, which left parents and legislators looking for another way to offer parents more educational options. In 2011, Arizona lawmakers passed the nation’s first law establishing ESAs, called the Arizona Empowerment Scholarship Account program.
Through this program and other ESA programs, parents receive a set amount of money based on the state’s portion of per-pupil education funding (formulas vary from state to state). This is often a debit account, which they can use for a variety of educational expenses, including private school tuition and fees, online courses, extracurricular activities, and private tutoring. The balance of the state funds for that student are used to cover administrative costs associated with the program’s oversight, making ESAs essentially cost-neutral. To ensure that there is no double funding, students enrolled in an ESA program are not allowed to concurrently attend public school.
This chart below demonstrates the ESA’s eligible money versus overall public funding per pupil.
Below is a general timeline of how ESAs developed:
- The first state to enact an education savings account program
- For students with special needs and circumstances
- In 2017, the governor signed an expansion of the program that would eventually make it open to nearly all of Arizona’s K-12 students (this expansion is on hold pending legal challenges)
- Created for students with special needs
- Parents can use the funds to pay for a variety of educational services, including private school tuition, tutoring, online education, home education, curriculum, therapy, postsecondary educational institutions in Florida and other defined educational services
- Allows Mississippi students with special needs to receive a portion of their public funding in a government-authorized savings account with multiple uses.
- Gives parents of students with special needs access to an Individualized Education Account (IEA).
- An IEA can be used for a variety of educational expenses, including private school tuition, private tutoring, learning therapies and more.
- The nation’s first universal ESA program.
- Allows parents to remove their children from their assigned public schools and access a portion or all of their children’s public education funding to pay for services like private school tuition, curriculum, learning therapies, tutoring, and more.
- The program did not receive any funding in 2017 due to a partisan standoff in the Nevada Legislature. In the end, the standoff resulted in the bill dying and funding previously earmarked for the ESA being transferred back into the public education fund, with a portion allocated to a tax credit scholarship.
- Enacted in 2017 to begin providing funding to students in the 2018–19 school year
- Serves some students with special needs and can be used in conjunction with the state’s two voucher programs
- Provides families funds to pay for a variety of educational services.
ESAs: How they Work, Who can Use Them and How to Measure Success
Each state has their own set of guidelines for which students are eligible for ESAs, and similarly, each jurisdiction has their own way of administering the program, including which services are eligible to be purchase with ESA funds. However, in general the programs operate in a similar manner.
Public schools are funded through a combination of local, state, and federal resources. Specific state allocations can be found here.
The level of funding for an ESA is determined using the per-pupil state funding amount. From this amount, a small administrative fee (usually 10%) is retained to cover the expenses related to overseeing the program. The balance of the funds is placed into an account for use by parents to pay for educational expenses such as tuition, supplies, tutoring, specialized educational services, etc. These items are audited by the servicing entity (typically a contracted third party) to ensure that the funds are being used properly. Unused funds can be rolled over for later educational expenses such as college tuition.
A few states have legislation that allows both state and local funding to go towards ESAs.
See this video from EdChoice for an overview on how ESAs work.
Who can use an ESA?
Each state determines the specific eligibility requirements for their respective ESA program. So far, the primary benefactors of ESA’s have been students with special needs, as well as students with challenging circumstances, such as children in military families, who tend to move frequently, and those who are in foster care. There are some states who have proposed a model of universal eligibility — where any student would have access to ESA funds — but they have faced legal challenges in doing so. Two examples are Nevada and Arizona. In 2016 Nevada passed a bill that provided this universal expansion of eligibility, but it was rescinded in 2017 due to a political standoff. Arizona passed legislation in 2017, but is currently at a standstill due to a debate on the legality of expanding the program to all students. A vote to resolve the debate is expected in the fall of 2018.
Current Engagement at the Local, State, and Federal Levels
There are six states that currently utilize ESAs: Arizona, Florida, Mississippi, Nevada, North Carolina, and Tennessee.
In addition to these six, other jurisdictions have recently discussed or are currently considering legislation to name a few:
- Virginia- In 2015, HB 2238 passed in the House, but was killed in the Senate by a tie-breaking vote. In 2016 HB 389 passed both the House and Senate, but was vetoed by the governor. In 2017 HB 1605 passed both the House and Senate, but was again vetoed by the governor.
- New Hampshire- In the spring of 2018 SB 193 was narrowly defeated. One of the main concerns from the opponents was the constitutionality, which was an issue that was established as “passing constitutional muster” at both the state and federal levels.
- Texas- In 2017 SB3 passed the Senate. When it was sent to the House, it was referred to committee, where the bill died.
- Iowa- House Study Bill 651 was introduced in early 2018, and received a recommendation for approval from a subcommittee. However, due to lack of support, the bill’s sponsor pulled the legislation.
Washington, DC- In December of 2017 legislation was introduced to create the Educational Freedom Accounts Act, which is modeled after Arizona’s Educational Empowerment Scholarship Account. As of August of 2018, this bill is still in committee.
How to Measure Success
Two factors are metrics to determine ESAs’ success: parental satisfaction and academic progress. In a 2012 parent survey conducted by the National Center for Education Statistics, data showed that parents were more satisfied with educational options of choice, as opposed to traditional public schools of assignment. Only 56% of parents whose child attended a public school of assignment were satisfied with the school, as opposed to 81% who had children attending a private school.
A 2013 survey commissioned by the Friedman Foundation for Education Choice (now EdChoice) and performed by the Goldwater Institute found that 71% of parents using ESAs were very satisfied. 90% were very satisfied or satisfied.
As with most choice options, if ESA-driven choices are not working for that child, the parent can return the child to traditional public school at any time.
The second factor in determining success is academic progress. Currently, traditional public schools use tools such as standardized tests to determine academic success. Some lawmakers want to require these same standardized assessments for students who use ESAs. However, it should be noted that students with special needs typically use alternative assessments, so the requirement of typical standardized tests would be inappropriate for a majority of students using ESAs. If legislation is included to utilize academic progress as a metric of success, careful steps should be taken to ensure that the assessment used to determine this progress fairly reflects the students’ abilities. For example, in the case of special needs students, the same alternative assessments that are used in the traditional public schools should also be used when assessing students utilizing the ESAs. That said, there is varying opinion as to whether or not academic progress should be used to determine is ESAs are successful.
Jonathan Butcher, education director for The Goldwater Institute, said that “lawmakers should avoid mandating that students take a uniform statewide test as those tests are often not in sync with private-school and customized curricula.” Children have been receiving educational services via private schools and homeschooling for years without overly restrictive accountability legislation, thus as educational choices expand through ESAs there is little reason that should change.
Proponents, Opponents and Impact on Local Schools
Local public schools are part of the fabric of a community. This often leads to a community desire to protect local schools. In distressed communities in particular, a lack of public transportation to attend schools outside of a given neighborhood increases the need for good local public school options. Opponents of ESAs believe that allocating funds to students through ESAs could take from necessary funding for students who remain at public schools.
Funding for ESAs is based on data related to the average cost per pupil (CPP). This figure is derived from taking the operational budget of a school system and dividing this figure by the total number of students which it serves. A majority of the students who benefit from ESAs are students receiving specialized services, and the cost to educate these students at the public schools is far higher (typically at least double, and sometimes triple or more) than a general education student. And so, when only the average cost (not actual cost) is used to determine the funds transferred to ESA students, the local school district is actually bestowing less money to the ESA for these students than typically would be used within the public school. This also allows them to have their choice in educational services, leaving more funds available for use by students in the public system.
ESAs also introduce competition, which some find lacking in our public education system. This can lead to improvement from new ideas and fresh approaches. The observation of how ESAs have a positive impact on a child’s progress can provide valuable insight to our public school system as they work to meet the educational needs of its students.
Some of the earliest proponents of ESAs were The Institute for Justice and The Goldwater Institute who helped in the development and implementation of Arizona’s Empowerment Scholarship Account, the nation’s first ESA. Since then, other education choice advocates such as EdChoice, The Heritage Foundation, The Foundation for Excellence in Education, and the American Legislative Exchange Council (ALEC) have worked to promote ESAs. However, the biggest and most important proponents for Education Savings Accounts are the parents and students who benefit from this access to choice in academic services. Ivan’s story referenced above is just one of many success stories. Another example can be found in this video.
As stated above, there is a desire and need for high quality local schools, particularly in distressed communities. Those who oppose education choice options, such as ESAs, often cite the concern of privatizing public education and argue that funding for ESAs is diverting already scarce resources away from public schools. One fear is the “slippery slope” supposedly created by initially opening up ESAs to special needs students, especially in some states, but then losing public students to private options. Finally, they contend that there is a lack of accountability in students assessment and progress. For more on concerns regarding ESAs see the National Education Association, Save our Schools Arizona, and the National Coalition for Public Schools websites.
Policy Considerations and Advocacy
ESAs place funds in the hands of parents and caregivers who best know their child, and their individual needs for a lifelong success in learning.
When a state develops a policy regarding ESAs, the following dimensions should be considered, as outlined by Goldwater Institute Education Director Jonathan Butcher who shared the following policy recommendations for lawmakers in a 2017 article:
“Eligibility. Just as every child can attend a local public school, so should every child be eligible for an education savings account.
Allowable Expenses. A variety of learning options, such as private-school tuition, online classes, personal tutors, and college expenses, to name a few eligible uses in states with account laws, should be allowable uses for account holders.
Because every child is unique, lawmakers should include the widest range of possible account uses because different students can benefit from different instructional practices.
Achievement. Standardized tests are a limited measure of a child’s achievement. Therefore, lawmakers should not require account holders to complete a single uniform state test in order to remain eligible for an account.
State policymakers should equip parents to be responsible for their child’s academic accountability. For example, lawmakers could require families to choose a nationally referenced standardized test, college entrance exam, or Advanced Placement test in math and reading each year. For students attending a private school, account holders should be allowed to satisfy this requirement by taking the annual assessment of the school’s choice or by choosing a different test outside school.
Fraud Prevention. To prevent misuse of the accounts, lawmakers should create a 1-800 number for individuals and businesses to report suspected fraud, along with an online fraud-reporting form. State auditors or inspectors general should conduct annual reports on how parents and students are using the accounts, including incidents of misspending.
Homeschooling. Families should be allowed to homeschool without using an education savings account, just as they can use an account to buy educational materials and instruct a child in their home. Arizona pioneered a provision that protects homeschooling families that do not want to use an education savings account from being affected by changes to laws governing the accounts.”
Advocating to introduce ESAs in a state
ESAs are implemented at a state level, so the next step to go deeper on this topic is to assess the current status of and readiness for ESAs in your state.
A few questions to ask and get answered are:
- What choices do parents have in your state to seek education for their children outside the schools assigned by their zip code?
- What initiatives have lawmakers passed to empower families to choose education programs that best fit their child needs? What has failed and why?
- Who are the organizations and groups that are involved in the “one size does not fit all” education movement?
To answer these questions, EdChoice’s website can be a starting point to find out what is happening in your state.
For your next Policy Circle meeting, you may want to consider learning more about how education is governed in your state:
- Identify the government programs in education your state by searching on the following terms: “ [yourstate].gov education”
- Look on your State government website ([yourstate].gov) for State Agencies – then follow Education to find the boards that govern education in your state. (For example, in Illinois there are the Illinois State Board of Education, the Illinois Higher Education Board, the Board of Educational Labor Relation, and a Community College Board.)
- Your state may also have a separate General Assembly website where you can find out the State House and Senate Committees that focus on education (Subcommittee on Charter Schools, on Athletics, on Special Issues, etc.).
- Learn about your lawmaker’s stance on education: on your state General Assembly website you should be able to find your lawmaker, the committees that they are on, the bills that they sponsors to see where education is on their radar. To find out who your state representatives are you can go to ivoterguide.com, openstates.org, or commoncause.org (note that these organizations also may have a lobbying arm).
- Ballotpedia.org is also a good source of associations, ballot initiatives, elections, school boards etc.
You can also share this primer to discuss ESAs with other parent groups.
When you have a small group, set up a meeting with your state representatives to discuss their views and understanding of ESAs. Legislators often wait to hear from constituents about their priorities, including possibly to introduce ESAs legislation in their states.
For more information on ways to get involved in education reform here’s a primer on advocacy.
What Success Looks Like
While passing legislation to support more ESAs may be the ultimate goal, there are many outcomes for success that can be achieved along the way.
Through your conversations you may gain valuable insight into the views of school board members or legislators and which spark the desire for more conversation of this and other education related issues.
You may find that legislators are open to the idea. If this is the case they now know that there is constituent support and you can work with them to raise awareness and build momentum to introduce legislation. Even if legislation does not pass immediately, the leaders will be more aware of the issue.
Discussing with friends and neighbors the idea of parent choice in education is also worthwhile. You will likely discover others who share your passion for expanding options in education. You never know when another policy discussion related to education will arise. Having a network in place will be invaluable.
Thought Leaders and Resources
The Heritage Foundation: www.heritage.org/education
American Enterprise Institute: www.aei.org
The Policy Circle is a 501(c)3 educational organization and does not engage in lobbying.
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