Education

How Do ESAs Work?

Education Savings Accounts (ESAs) represent the gold standard for school choice policy. The purpose of an ESA is to allow education tax dollars to follow the student rather than a specific designated school. An ESA provides parents with the flexibility to customize the best education for their children. This includes not only choosing which school their child attends, but also purchasing other educational services, thus affecting the overall quality of education which they receive. The flexibility of an ESA is what makes it different than a regular school voucher. A voucher is designated for a specific purpose, mostly to pay for tuition, but an ESA can be used for a variety of purposes and even be carried over from year to year for future educational expenses.

 

Some of the educational services ESAs can help cover include:

  • School tuition and related fees
  • Online instruction
  • Tutoring
  • Curriculum materials and other supporting tools
  • Specialized educational services for children with disabilities
  • Utilize unused ESA funds to help pay for higher education

 

ESAs provide parents with a “deposit of public funds into government-authorized savings accounts with restricted, but multiple, uses.” The dollar amount of an ESA varies depending on how the program is established. The amount is based on the state cost per pupil. Arizona’s ESA program is funded at 90 percent of the state portion of school funding. As an example, recent ESA proposals in the Iowa legislature, if passed, would have provided on average between $4,042-$5,613 per student. For Fiscal Year 2021, the state cost per pupil in Iowa is $7,048.

 

Policymakers can design an ESA either to be utilized by parents with children who have special needs or learning disabilities, families with lower incomes, or they can be universal. The best ESA policy is universal, which means all children would benefit. ESA programs are also designed with accountability mechanism to prevent misuse of funds.

 

Currently five states (Arizona, Florida, Mississippi, North Carolina, and Tennessee) have an ESA policy. Arizona’s ESA program is considered one of the best policies in the nation. Arizona’s Empowerment Scholarship Account is the most flexible in terms of what parents can use the money for. On average, families get $6,100 per child (non-special needs or non-kindergarten).

 

Opponents of ESAs often argue that they deprive public schools of both students and resources. This argument is not true, because ESAs “affect public schools’ funding and resources in the same way they’re affected when a student leaves because their family moved to a new district.” In addition, “public schools get to keep almost all of the federal and local tax dollars and usually a portion of the state funds allocated for each child.”

 

It is often assumed an ESA will create a mass exodus of students leaving public schools. Martin Lueken, Ph.D., Director of Fiscal Policy and Analysis at Ed Choice, argues that “participation rates for the majority of private school choice programs are below 10 percent.”

 

Arizona’s ESA policy is not detrimental to either public school enrollments or budgets. A study of Arizona’s ESA program found “district schools are 15 times likelier to ‘lose’ a student through competition with another public school than to an ESA, among eligible populations.” In addition, Arizona’s ESA program also discovered that “the largest group of ESA-eligible students in particular—those with special needs—only 2.9 percent participated in the program as of FY 2019.”

 

Corey DeAngelis, Director of School Choice at the Reason Foundation,  argues that education should be funding “individuals instead of systems to empower families — just like we do with several other taxpayer-funded initiatives, including Pell Grants, the GI Bill, pre-K programs, and more.”

 

An ESA policy will not harm public education, but it will destroy roadblocks that hinder education and open opportunities for all children to learn and succeed.

 
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