Jason Riley: The Next Step is Education Savings Accounts

March 1, 2017

 

(Guest Post by Matthew Ladner)

Jason Riley weighs in on ESAs, federalism and parental choice in his Wall Street Journal column today:

After years of federal overreach through No Child Left Behind, Common Core and Obama administration “guidance” on lavatory usage, the states—where Republicans now occupy 33 of the 50 governors’ offices—are not only reasserting local control of K-12 education but reimagining it.

In addition to this charter progress, education reformers see prospects for more private school choice in the form of education savings accounts, or ESAs, which they describe as the next step in school choice. Under an ESA system, money that would otherwise go to funding a child’s public-school education is instead placed into a restricted-use bank account, from which the family can withdraw to spend on a variety of education-related services. Like vouchers, ESAs allow the money to follow the child. But ESAs don’t limit education options in the way that vouchers do. Instead, families can use money in the account for tuition, textbooks, tutoring, test preparation, transportation, Advanced Placement courses, online learning and even college savings accounts.

Jason Bedrick, a policy analyst at the research organization EdChoice, told me that along with allowing families to tailor spending to the education needs of their children, ESAs can control costs. “Moving from a coupon or voucher model to a bank-account model helps guard against tuition inflation like we’ve seen in Pell Grants,” he said. With ESAs, “there’s no price floor. If you’ve got a $5,000 voucher, no school is going to charge less than $5,000. With an ESA, there’s a lot more competition because private schools are not just competing against each other and against public schools but also competing against other sorts of education opportunities.” In other words, a parent with an ESA has the ability to hold both public and private schools accountable.


The Florida Legislature Renames Florida ESA for Senator Gardiner over his humble objection

October 20, 2016

(Guest Post by Matthew Ladner)

In this time of cynical politics it is refreshing to see something as fantastic as this floor debate in the Florida Senate.  Earlier this year the sponsor of a bill to expand Florida’s ESA program for special needs children offers an amendment on the floor to rename the program after Senate President Gardiner, a special needs father and advocate and the original sponsor of the legislation. Gardiner objected and appealed to the Senator to drop his amendment, noting that he had promised to send the bill over to the Florida House without amendment.  Not to be thwarted, the Senators secure a release from this promise from the Speaker of the Florida House, and then the Senate co-sponsors the amendment 39-0.

There is still some good in this world Mr. Frodo- and it is worth fighting for.

UPDATE: I am told that after all of this Senator Gardiner still refused to allow the program to be named after him, so the legislature named it after his family instead.


TXESA

September 20, 2016

(Guest Post by Matthew Ladner)

The Texas Public Policy Foundation, the Texas Business Leadership Council and Excel in Ed teamed up to publish a new white paper by yours truly called The Yellow Rose The Achilles Heel of Texas: Improving College Eligibility Rates through K-12 Savings AccountsBottom line: only a minority of Texas public school students get prepared for even a moderately selective college or university, and the percentage moves to catastrophically low levels when looking at the ethnic minority student groups which now constitute a large majority of Texas students. Meanwhile an annual 90k+ of new students per year has been driving resources out of the classroom and into debt, with no end in sight and an aging population that will slow revenue growth and create new costly problems in health care and pensions.

Judging from the number of applications received in the first year of NVESA, enrollment growth in Texas could be substantially slowed by a universal ESA program, which would give the public system a chance to focus resources away from the debt spiral of constantly building new facilities and then surrounding them with portable buildings. We could expect such a system to have the well-established positive effects for both participating and non-participating students, but also represents an opportunity for low-income students especially to save and build assets for future higher education expenses.

 

 


AFC video on the Need for Choice among Native American Children

August 11, 2016

(Guest Post by Matthew Ladner)

Just in case you need a reminder about just how horrible the federal government has been in education (and to Native Americans more generally) this new video serves as a helpful reminder. The American Federation for Children created the below video on Arizona Senator John McCain’s federal efforts and Arizona State Senator Carlyle Begay’s efforts to expand options for reservation children. I am rooting for America’s Underdogs:


Debunking a Brazen Lie about Education Savings Accounts

July 24, 2016

pants-on-fire1

(Guest Post by Jason Bedrick)

An article in the Texas Tribune regarding the push for education savings accounts contained an incredible whopper from the state teachers’ union lobbyist:

Monty Exter, a lobbyist for the Association of Texas Professional Educators, said education savings accounts are worse than vouchers because there is no good way to control how parents spend the money. The states that have implemented such programs have included no provisions that allow them to reclaim money if parents spend it on “a flatscreen TV or a bag of crack,” he said.

“Who’s to say that a laptop isn’t an educational expenditure, but who’s to say that it is? Who is going to police that?” he said. “Are we going to pay someone at the state level to monitor this program, and how much is that going to cost?”

Frankly, he should be embarrassed to be peddling a lie that is so easily debunked.

*All* of the existing ESA laws in Arizona, Florida, Mississippi, Nevada, and Tennessee contain financial accountability provisions to ensure that parents are spending the ESA funds only on approved educational expenses, which are clearly defined in law.

Like any government program (e.g., district schools), there is bound to be some amount of fraud. Fortunately, due to the tight financial controls, Arizona (the first state to enact an ESA law) has been able to recover misspent ESA funds. Moreover, an independent auditor recently determined than less than one percent of Arizona’s ESA funds were misspent, as the Goldwater Institute reports:

Last year, the state deposited nearly $26 million in families’ education savings accounts. The auditor uncovered misspending that totaled less than 0.8 percent of the distributed funds—an unacceptable amount, because any fraud involving taxpayer money and children is unacceptable. But it’s a manageable amount. The department of education should follow through on the auditor’s recommendations, as the agency stated it would in its response letter, and continue to improve the ways parents and students find quality learning opportunities with education savings accounts.

Arizona parents have spent more than 99% of ESA funds on approved educational products and services, and 100% of ESA parents surveyed in 2013 reported being satisfied with their child’s education.

The Texas teachers’ union needs a new talking point.


Mississippi ESA Update: The Magnolias Are Blooming

July 21, 2016

magnolias-white

(Guest Post by Jason Bedrick)

Back in February, opponents of educational choice criticized Mississippi’s new ESA program for attracting fewer than half the number of students with special needs as there were slots available, claiming that this showed that the program was a “failure.”

Well, surely they will now issue a press release declaring the ESA program a success now that it is oversubscribed for next year. Empower Mississippi has the details:

Yesterday the Mississippi Department of Education (MDE) conducted a lottery to award the remaining 175 scholarships for the Special Needs Education Scholarship Account (ESA) program. This year a total of 425 scholarships will be awarded to students in Mississippi.

The lottery drawing, held at MDE’s temporary headquarters at the South Pointe Business Park in Clinton, utilized a random number generator to determine the 175 recipients. There were 304 approved applications in the lottery competing for the available slots. Those that did not receive a scholarship, along with those that continue to apply, will have their name put on a waiting list for future openings.

Last year, in the first year of the program, 251 of the 434 available scholarships had been awarded by the beginning of the school year. Because of the rolling application process, and the available slots, that number increased each quarter last year. This year the program will be at maximum capacity of 425 students at the beginning of the year.

Enrollment in the program has grown by 70 percent over a one-year period and the number of approved applications has increased by more than 120 percent during the same time period.

special-needs-esa-enrollment

Source: Empower Mississippi

Next step: raise the cap on participation!


Going bold in Missouri with Education Savings Accounts

July 19, 2016

(Guest Post by Martin F. Lueken)

Last year, Missouri was one of 18 states that introduced legislation to create an education savings account (ESA) program for families. While it didn’t ultimately become law, it’s stoked the conversation about educational choice in the state and how we can empower families to find schooling options that work for their kids.

Under an ESA program, state officials deposit money into an account for education expenses for children who sign up for the plan. Parents can spend the money on a host of education expenses ranging from books to special needs services, online education, tutoring, SAT and ACT preparation or private school tuition. Parents can also roll over unused funds and use them in the future to pay for college tuition.

Currently, there are five K-12 ESA programs operating in five states – Arizona, Florida, Mississippi, Nevada, and Tennessee.

ESAs are a new and promising innovation with lots of potential because they move beyond just giving parents a say in what school their children attend. ESAs empower parents to tailor an educational experience that they want for their own children.

In essence, it expands on what Nobel Laureate and economist Milton Friedman’s vision of providing parents with freedom to choose the school that best suits their children’s needs. Going a step further, ESAs allow parents to unbundle educational goods and services and choose the ones that best meet their needs. School choice is getting an upgrade.

Critics of ESAs and other school choice efforts like to allege that the programs will “siphon” resources from public schools or harm students in some way. Fortunately, school choice has been around long enough to have produced a large body of research to learn from.

Researcher Greg Forster, for instance, systematically reviewed 100 empirical studies. His findings: school choice affects all of these areas mentioned above in a positive way. Students who choose score higher in reading and math, are more likely to graduate and are more likely to succeed in college. They also are more likely to learn civic values. Moreover, increased competition from school choice makes students remaining in public schools better off. When students choose, schools also tend to become more integrated. And not a single study found that school choice cost taxpayers any money.

Although greater educational freedom for Missouri families would be reason enough for many to adopt a program, some, including taxpayers and legislators, want to know how an ESA program would affect the state’s bottom line – a legitimate concern. A paper I recently co-authored with Mike McShane, Director of Education Policy at the Show-Me Institute, estimated the fiscal impact of a broad-eligibility ESA program on Missouri taxpayers and public school districts. This program would be funded by tax credits for private donations, in which nearly all Missouri K-12 age children (88 percent) would be eligible. We considered a program that is capped at $50 million in its first year, which is a drop in Missouri’s $5.7 billion K-12 education budget’s bucket.

Using a variety of circumstances to make our estimates, we found that state government and local school districts combined would save between $8 million and $58 million per year under an ESA program. The school districts alone would save $21 million to $40 million per year. The state – which is footing the bill by issuing tax credits – could save up to $18 million annually.

What does this mean? For starters, public school districts would have more resources for each student who remains in public school (as well as other tangential benefits such as smaller class sizes and better matches between Missouri students and schools).

Overall, however, Missourians and their children would have little to worry about and a whole lot to gain. The Show-Me State has tried many things to improve their schools, especially in the areas that struggle the most, with little success. It’s time to go bold, and try something that’s already a demonstrated success. It’s time for Missouri to create an education system fit for the future.

Update: rephrased for clarity

Martin F. Lueken is the Director of Fiscal Policy and Analysis at the Friedman Foundation for Educational Choice.