Education Savings Accounts Touted

Special Report - October 9, 2012
A new report from a national school choice advocacy organization calls Education Savings Accounts (ESAs) “the way of the future,” that could incentivize greater “innovation in schooling practices” aimed at improving outcomes, while also lowering costs. The Friedman Foundation for Educational Choice released its report, “The Way of the Future: Education Savings Accounts for Every American Family,” this month. ESAs, consisting primarily of state funds for a qualified child’s education, are managed by the child’s parents, and “can be used to pay for multiple educational services, including “public and private schools, online education programs, certified private tutors, community colleges, or universities.” The report emphasizes that ESA programs must be developed in such a way as “to provide reasonable state oversight, fraud prevention, academic transparency, and equity.”

The authors of the report highlight several concerning features of America’s current K-12 education system that help underscore the need for new and varied approaches to education in America, including:

• Low turnout and lack of information in school district elections leaves room for education unions to wield undue influence in the selection of education bureaucrats.
• A decrease in the efficiency of public schools funding, demonstrated by the inflation-adjusted cost per pupil of $9,391 in 2006, compared to only $4,060 in 1970.
• The hiring of non-teachers at a far higher pace than the hiring of teachers in recent years.
• Flat or nearly negligible increases in student academic performance since 1970, despite a dramatic decrease in student-teacher ratios (22.6 students per teaching in 1970 and 15.4 students per teacher in 2009).
• Persistent “extraordinary gaps in [student] achievement based on race and income.”

Arizona created the first education savings account program, called Empowerment Scholarship Accounts (ESAs). The program helps participating children cover educational costs “through use-restricted debit cards” that consist of funds primarily deposited into a child’s account by the state of Arizona. Any funds not used for K-12 expenses like private school tuition, online programs, or community college classes, can be saved for college in a 529-college savings program. The report especially emphasizes the importance of this last characteristic. The program started by only opening ESAs to students with disabilities who were attending public schools. Starting in 2013, it will open to any student in a public school or school district earning a D or F, as well as foster care children, and the children of active duty military members who opt for a non-district or charter school education. Eligible students are then entitled to an ESA in which “Arizona deposits 90 percent of state funding that would have otherwise gone to the child’s public school.” The funds may be used for specific and limited uses, such as private school tuition or fees, textbooks, educational therapies or services from a licensed or accredited provider, online education programs, post-secondary admissions exams, tuition, or fees, qualified 529 college tuition program contributions.

After a comparison of vouchers and ESAs, the report concludes, “ESAs can create a much deeper level of systemic improvement” than school vouchers by allowing “parents to build a customized education to match the individual needs of every child.” It argues that the decentralization of education funding that is experienced with the introduction of ESAs that give parents more control over the direction of education funding will force education providers to “compete based on both quality and cost” and “provide powerful incentives for educators to deliver high-quality services at the lowest price possible.”

In 2011, the North Carolina General Assembly established an educational tax credit of up to $3,000 per semester to help offset qualified educational expenses for special needs children, whose educational needs cannot be met in the state’s public schools.

“Most parents take seriously their responsibility to be the first and primary teachers of their children,” said Bill Brooks, president of the North Carolina Family Policy Council. “Policymakers should recognize that parents want real choices when it comes to educational opportunities for their children.”

Related resources:
Parent Power In Education - September 25, 2012
NC Voters Support School Choice - September 20, 2012
25 New Charter Schools Approved - September 10, 2012
NC Supporters Support Charter Schools - July 19, 2012
Moms Support School Vouchers - May 22, 2012
School Choice Lowers Crime - April 5, 2012
Special Need Tax Credit Available - February 23, 2012
Record School Choice Expansion - January 30, 2012
NC Voters Support Charter Schools - July 19, 2012
Positive Charter School Closings - December 22, 2011
SBOE Approves Charter Fast Track - September 2, 2011
Charter School Checkmate - FNC - July 2010
Charter School Myths Debunked - January 7, 2010
Charter Schools Close Achievement Gap - October 5, 2009
Charter Schools Have Financial Benefits - November 7, 2008
Tax Credits for Special Needs Children - June 11, 2008

Copyright © 2012. North Carolina Family Policy Council. All rights reserved.