Education savings accounts, or ESA’s, are like scholarships, where 90% of what the state would pay per student would be given to parents in a bank account-like program. The parents can use the additional funds to pay for private school tuition or other education expenses, which in Arizona amounted to about $3,000 per pupil. The program was initially started as one to help special needs students, but was expanded to adopted children, children of military families and students from failing public schools.
The Heritage Foundation’s recent panel, “Education Savings Accounts: The Future of School Choice,” featured a panel discussion of several education policy analysts and experts. They discussed the growing impact of school choice, but specifically the use of education savings accounts (ESA’s) in public and private education.
Matthew Ladner, a senior advisor of Policy and Research at the Foundation for Excellence in Education, Tim Keller, the Executive Director of the Institute for Justice’s Arizona chapter and Jason Bedrick, a Cato Institute education policy analyst spoke at the panel event.
Heritage education policy expert Lindsey Burke introduced the topic and panel, pointing out how 17-year-old seniors “were no better off than seniors in the 70’s.” Also, she found that “American confidence in public schools decline” to 29% in a recent Gallup poll. In the 70’s, the confidence poll rating was 58%.
Ladner studied the demographics and found that current American educational spending is unsustainable. As of recent U.S. Census Bureau figures, Ladner found “gigantic increases in their elderly population and K-12 population at the same time” in several states. As the population grows, “there’s nowhere to put these kids right now” and he said, “it’s going to become more difficult to come up with the public dollars” that Americans are accustomed to.
For example, in the state of Florida, Ladner found that as of 2010, 2.9 million students are in the public school system, and that number will grow to 4.1 million. With an increasingly old population in the state, Florida will have “a future where public dollars are going to be in scarce supply but the demand for them will be much larger.”
To resolve this, Florida and the U.S. have to get “a public school system that is more effective as well as more cost-effective.” Ladner pointed out that “we spend on average about $12,000 per child per year and about a third of our kids are full grade level proficiency…that’s a system we can’t afford.” And, the people who will pay for the public education dollars are in school today, which means that states have to provide better quality education to children. This has to happen, said Ladner, in order for the future tax base to support upcoming expenses.
To counter critics that said education cannot be cheaper and more effective, Ladner pointed out the example of car prices and efficiency. In the 1970’s, car prices were high, but now, they’re relatively cheaper and yet more efficient. Ladner felt the same way about education, and admitted “public education is a permanent feature of American life.” With public education receiving significant public support and constitutional protection, Ladner said, “That does not however mean we have to run it and finance it like a Prussian 19th-century factory model.” Instead, Ladner believed that “we want parents to contract with education service providers.” And, research and history show that with these voucher-type programs and ESA’s, “public schools will not empty as a result.” Florida saw that since 2001, with their voucher program known as the McKay scholarship, only 6% of special needs students used the program and Ladner founds more children stayed in public education. He called this “real empowerment…it’s not that you have to leave. It’s that you can leave if you want.” Florida public school students “have made the biggest gains in the country,” in addition to other policy factors.
He said that school choice advocates, and especially Arizona’s ESA supporters, “want to give them the broadest array of options possible” for parents deciding education options for their children. Ladner liked how “parents are the ones that are economizing” with putting money aside for college, after receiving ESA money, because “we can’t go on spending $12,000 a kid.” He asked, “Do we want bureaucrats and lawmakers in Phoenix to economize for the entire system?” Ladner doubted that parents trust lawmakers to make the right choice for parents. He believed programs like the ESA “sets the stage for innovation. This creates an incentive where the normal school choice program does not.” And, it “is an incentive for people to create better and cheaper models because parents are the ones, they have the accounts…now we have set the correct institutional process by which we can get improvements.”
Bedrick reiterated similar points as Burke and Ladner, that “this is a platform that will allow us to revolutionize the existing education regime.” He pointed out how the ESA’s allow parents to spend about $3,000 per pupil, per requirements of the program, and the funds are awarded every three months. Parents have to submit their receipts to the state before the next payment period, but the program itself has made great strides in education. Ultimately, Bedrick said, the goal is to expand the program to other groups other than special needs, adopted children, military families and students in struggling public schools.
Quoting a recent Milton Friedman Foundation for Educational Choice study on ESA’s, the authors found that 34% of the students have developmental delays. Also, 65% used the ESA money for private school tuition and fees, 41% used it on education therapy, 33% used the money for tutoring, 33% for homeschool curriculum, and 17% on textbooks. The funds also covered karate classes (instead of physical education classes), Braille, speech therapy, swimming therapy, or an aide/paraprofessional. Parents have, in the words of Bedrick, “used this platform to better their children’s lives.” And, 75% spent less than $1,000 more than their allowance (or out of pocket) on other education-related expenses.
Parental satisfaction, said Bedrick, was important to separate how the ESA program has helped parents in education choices for their children. Bedrick found that 49% of parents were dissatisfied in total with their (previous) public school in the ESA survey, but that the ESA program is now a type of “mythical creature” of “100% satisfaction for a government program.” No respondents to the survey said they were strongly dissatisfied with the ESA program, unlike public schools where there were some strong dissatisfaction among parents. The ESA program has a favorable view because “it allows parents to maximum their value in such a way that voucher programs…simply don’t allow.” Bedrick said, “[The] lowest-income families were the least satisfied with their previous schools” and that “we see the lowest-income families benefit the most from ESA’s.”
How did the families find out about the ESA’s? One-third of the parents found out from a family or friend, one-fourth from private schools, one-tenth from the government website. The remaining 20% of parents found out about ESA’s from their children’s therapist, education lawyers or online support groups. However, the application was not as easy as they thought it would be: 22% of lower-income families felt it was slightly difficult as well as a good number of higher-income families.
Keller gave a summary of success stories regarding ESA’s, which only reiterated the points outlined by the panel.