Debunking a Brazen Lie about Education Savings Accounts

July 24, 2016

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(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

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(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.

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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.


Virginia Legislature Passes Education Savings Accounts Bill

March 7, 2016

(Guest Post by Jason Bedrick)

Great news in Virginia via Virginia Delegate Dave LaRock’s office:

Parental Choice Education Savings Accounts HB389 has passed the Senate with a 20-19 vote, and is heading to the Governor!

Richmond, VA – Today, the Senate voted 20-19 to pass​ House Bill 389,​ which​ will​ establish Parental Choice Education Savings Accounts​ for children with special needs. After hearing impassioned debate​,​ ​legislators ​asking for​ help​ for​ children with special needs, who are sometimes ill-served in a public school setting​, won the day. The Governor will now decide if this will become law in Virginia.

Dave LaRock, the patron of House Bill 389 commented, “Education Savings Accounts offer educational opportunity to children with special needs, regardless of their circumstances in life. These unique children often face challenges which most will never fully appreciate. We owe it to them to provide access to academic resources best suited for their particular needs. We are working to lower the barriers so these kids can reach their full potential.”

LaRock added, “Parental Choice Education Savings Accounts are a proven example of problem solving through smart innovation, not endless appropriations. American voters overwhelmingly support school choice programs for good reason. It’s time to give the people of Virginia what they are asking for, more education freedom through Education Savings Accounts.” He added, Most important of all, through these accounts, countless parents and children with disabilities in Virginia will be given the help they desperately need.”

Education Savings Accounts are supported by former Virginia Secretary of Education, Gerard Robinson; former U.S. Deputy Assistant Secretary of Education, Dr. Barry Stern; former Virginia State Board of Education Vice President and former Virginia Delegate, Winsome Sears; current and former School Board members from around the Commonwealth; as well as several candidates for statewide office in Virginia.

While the victories in both chambers of the legislature are deserving of Matt Ladner’s patented BOOOOOOOOOOOOOOOOOMs, the bill still faces one very large obstacle: Gov. Terry McAuliffe. Will he do what’s right for Virginia students with special needs? We shall soon find out…

 


Let a Thousand Magnolias Bloom: ESA Enrollment in Mississippi

February 5, 2016

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(Guest Post by Jason Bedrick)

Citing low enrollment and bogus “research” that excludes the mountain of random-assignment studies, one anti-choice group says Mississippi’s education savings account program for students with special needs is a “failure.”

Of the more than 50,000 children with special needs in Mississippi public schools, 251 were qualified and approved to receive vouchers. Of those, only 107 appear to have used them, .0018 of one percent of Mississippi’s children with special needs.

The research claim clearly doesn’t hold water (unsurprisingly, the only gold standard study they cite is the recent one from Louisiana) but what about the low enrollment? Is this a program that parents don’t really want? Or perhaps there just aren’t enough private school seats for parents?

First, it’s pretty rich that a group that opposes educational choice cites low enrollment as a reason it is “failing.” If enrollment was high, do you think they would see that as a sign of success?

Second, the ESA program is still in its first year. As Empower Mississippi demonstrates in this helpful chart, programs that start small can grow significantly over time:

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As Empower Mississippi notes, detractors were probably quick to declare Florida’s McKay scholarships a “failure” when only two students used them in the first year, but after experiencing 1,505,100% growth in the next decade and a half, I doubt anyone is making that case anymore.

That said, detractors might be right that there aren’t enough private school seats right now. However, one of the purposes of educational choice is to expand the market. Greater demand should spark greater supply, if the price is right. Unfortunately, that’s a big “if.” The Magnolia State’s ESAs are currently funded at only $6,500 per year. Funding is tied to the state’s base student cost rather than the cost for students with special needs, as Arizona does.

If Mississippi lawmakers want to see greater supply in private school seats for students with special needs — and empower parents to use the ESAs to tailor their child’s education using tutors, online courses, educational therapy, etc. — then they should make sure that the ESAs are adequately funded.

[UPDATE: Grant Callen of Empower Mississippi wrote to let me know that I got one very important detail wrong: the image I used originally was of a Japanese Magnolia, not the North American Magnolia that is Mississippi’s state flower. I stand corrected!]


Ludacris Endorses ESAs

January 28, 2016

(Guest Post by Matthew Ladner)

Our pal Mike P. may be feeling a bit squeamish about ESAs, but rapper/actor LUDACRIS is ALL IN BABY! From the Atlanta Journal Constitution:

“Regardless to social status, all children should be able to access a great school,” said Ludacris. “Education savings accounts empower all children to be able to access a great education.”

!!!BOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOM!!!


Petrilli’s Regulatory Porridge

January 28, 2016

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(Guest Post by Jason Bedrick)

Fordham’s Michael Petrilli offers new taxonomy for school choice tribes dividing the school choice world in three: Purists, Nannies, and Realists.

First, as Matt noted, this is not Mike’s first foray into Hemisphere Fallacy territory. (Or the second. Or even the third.) Like the guy who thinks anyone who is more religious is crazy and anyone who is less religious is a heretic, Mike thinks he has found the Perfect Goldilocksian Mean and everyone else is wrong. In Mike’s view, those who support more regulation than he does are paternalist Nannies, and those who support less regulation are utopian Purists, but the temperature of his regulatory porridge is just right.

Second, as I noted on Twitter, it’s adorable that Mike thinks he’s not a Nanny. He decries their “micromanagement” but he supports forcing private schools to administer the state test (de facto determining what is taught when and even how), as well as price controls that economists will tell you leads to shortages and obliterates the essential price signal (without which we may have competition, but we most certainly do not have a functioning market). He may fancy himself a “Realist” but, if these categories really mean anything, he just has minor disagreements with his fellow Nannies.

Third, Mike is engaging, once again, in the Means and Ends Fallacy. It goes something like this:

I think X is a problem. I believe Solution Y solves X. Group A opposes Solution Y, therefore Group A must not think X is really a problem.

Of course, this is a fallacy because it is entirely possible (as is the case here) that Group A agrees that X is a problem but doesn’t think Solution Y actually solves it. Mike thinks his preferred regulations solve the problem of bad schools, but we think those regulations are more likely to have adverse effects. More on that in a moment.

Mike accuses the “Purists” (those who, like Milton Friedman, conclude based on the evidence from nearly every other industry that markets spur innovation and lead to greater quality and efficiency) of being utopian. He writes:

Start with the Purists. I’m skeptical of all utopian visions, including theirs—one imagining that a full-fledged system of choice (perhaps through universal Education Savings Accounts) will yield greater innovation, productivity, and customer satisfaction—and produce better-educated young people to boot.

But there’s nothing utopian about that. We see that ESAs have already begun to produce greater innovation, productivity, and customer satisfaction. We don’t yet have any data on test scores or graduation rates, but we have no reason to believe that ESAs will underperform the many voucher programs that have produced positive results. No one in the free-market crowd is expecting miracles. We’re expecting the sort of incremental improvement that the market regularly brings about through the process of experimentation, evaluation, and evolution.

(For that matter, the most utopian schemes in education come from the Nannies. Can you imagine a more fantastically utopian scheme than “No Child Left Behind”? Is there a more utopian slogan than that anywhere in education policy? And did anyone in the administration really believe we’d ever achieve 100% proficiency in any state, let alone every state? Either they set up the nation to fail or they were delusional. Or perhaps they just set up the DOE for a naked power grab. But I digress.)

Mike’s central challenge to the Friedmanite crowd is the Payday Lender Problem. What do we do about bad private schools?

First of all, Mike doesn’t have a whole lot of evidence that the government does a better job ensuring quality than the market. Indeed, the Louisiana debacle should give him great pause about that article of faith.

Second, eliminating the least-bad option doesn’t guarantee a better option. Payday lending serves an important function in the market (in the Third World, we call it “microlending,” a concept for which Muhammad Yunus won a Nobel Peace Prize). Poor people who need funds to cover rent or buy food while waiting for payday often turn to payday lenders. If they repay the loan on time, the fees are generally marginal. If they repay late, the interest rates can be exorbitant, especially if (misleadingly) expressed in annual terms. (The interest is so high both because the loans are so small and because the rate of default is so high, which is why banks generally just refuse to lend to the poor.) But eliminating the payday lenders can have serious unintended consequences that make the poor even worse off. The payday lender may charge a steep fee for late payment, but at least Rocky Balboa doesn’t come break your legs.

Kicking a school with poor test scores out of a voucher program doesn’t guarantee those poor kids a seat at a better school. Rather, the state just eliminates that kid’s least-bad alternative. Even in Louisiana, where the voucher schools appear to be doing much worse on the state test than the district school alternatives, the families who chose those schools may well have had good reasons for doing so. Perhaps they were safer. Perhaps they had higher graduation rates. We don’t know. But those families chose them for a reason and they may well be worse off overall if deprived of that choice.

Third, as Michael McShane explained previously, the market process has proven time and again to significantly improve absolute quality (and efficiency) over time:

Cars today are uniformly better than cars in 1950. They are safer. They are faster. They are more comfortable. They are more fuel efficient.  But it wasn’t a clear upward-sloping line to get here. People bought Edsel’s in the 50’s, Corvairs in the 60’s, Chevettes in the 70’s, Yugo’s in the 80’s, Suzuki Sidekicks in the 90’s, and Pontiac Aztecs in the 00’s. These were bad cars.

But “bad” has two meanings in this case, an objective one and a relative one. There are relatively bad cars out there today. That is, my hail-damaged ’05 Kia Spectra with no cruise control and a blown-out right front speaker is worse than Jay-Z’s Maybach on almost every calculable measure, relatively speaking. But my Spectra, which is still purring like a kitten after over 100,000 miles with darn near nothing more than oil changes, tires, and brake pads is a helluva lot better than the burn-out-after-five-years cars that automakers made for decades.  That’s absolute quality.

Markets work when the spectrum of relative quality drives improvements in absolute quality.  Someone sees my little tin can driving down the road and says “I want to buy a car that doesn’t look like it’s going to blow away in a stiff breeze” and cars get less tin-canny.  Someone buys a Ford Excursion and then gas prices go up and says, “I’m never doing that again” and cars get more fuel efficient. It’s a slow winnowing process, but over time it is superior to centralized systems, that, for example, made the Trabant in an essentially unchanged manner for over three decades.

Rather than thinking we can regulate bad schools out of existence, a better goal is to develop a system that continuously improves what we think a “bad” school is.

Mike Petrilli is right to be worried about kids who are in bad schools today, but the regulations he proposes to ensure that those students are attending relatively good schools interfere with the market process that could otherwise be driving up absolute quality for everyone (and, as Louisiana has shown, those kids may end up in low-performing schools anyway).

Imagine if government officials, following Mike’s logic, had decided decades ago that every low-income family should have access to a phone. Now, these Realist officials aren’t Nannies — they’re not going to have the government make the phones or micromanage the specs. They’re just going to ensure that everyone has access to a good phone, so they create a phone voucher but prohibit companies selling phones from charging more than the value of the voucher. What would have happened?

Well, there’s the seen and the unseen. We would have seen, perhaps, that everyone would have had access to a phone and many would have applauded that (although given the price controls, it’s likely that supply would not have met demand). But what we wouldn’t have seen was that the iPhone had not been invented. With no way to charge more than the meager voucher, there’d be no market for expensive smartphones. And that wouldn’t just have harmed the wealthy, it would also have harmed the poor. After all, Walmart now sells a $10 smartphone that has better specs that the original iPhone. Innovations that at first benefit the wealthier early adopters tend to benefit even the poor after a while.

In short, Mike’s admirable passion to help the poor immediately through state action may well harm them in the medium-to-long run without any guarantee of actually helping them in the short run. That doesn’t sound very Realist to me.

 

 

 


The Three Bees release New Study on Tax Credit Funded ESAs

January 21, 2016

(Guest Post by Matthew Ladner)

Jason may have not yet developed the shameless self-promotion bug that afflict the rest of us here at JGPB, so I’ll mention for him that he has a new study out along with Jonathan Butcher and Justice Bolick (ah….I just love the sound of that…) on tax-credit ESAs.

The Three Bs make a strong case on the desirability of converting existing tax credit programs over to multiple uses, and also correctly note possible constitutional advantages under some state constitutions for a tax credit approach. The technology for allowing multiple uses for funds looks to be better and cheaper than one might expect (account management/oversight technology is fairly advanced) which may allow for oversight within the admin fees typically allowed by scholarship tax credit programs.

The Three Bs did not directly address the topic of scale. The mighty Florida tax credit program currently looks likely to reach the practical limits of its ability to scholarship children somewhere below 100,000 out of Florida’s 2,500,000 students. This might change if new taxes can be added to credit, but the mechanics of creating a credit against some taxes seems somewhere on the speculative to work-in-progress spectrum at present.

Thus I enthusiastically support conversion of existing tax credit programs to multiple uses, and under some state constitutions, it might be a very good idea to choose this option over a state funded model. Outside of those circumstances, I’d recommend taking your chances with a state funded model if aiming for more than a pilot project.


Florida Renames ESA to Honor Senator Gardiner

January 14, 2016

(Guest Post by Matthew Ladner)

The Florida legislature strikes first in 2016- expanding their special needs ESA program and renamed them the Gardiner Scholarship program after the Florida legislature’s tireless champion for special needs children. RedefinED reported on the floor debate in the Florida Senate:

“This is a bill that people come up to us with tears in their eyes and talk about how it’s changed their life,” Gardiner said, calling attention to a girl with special needs who was seated in the back of the chamber.

“She said, ‘I just want to go to college,’” Gardiner said. “Your bill will provide that path, from cradle to career.”

Senate President Gardiner, the original sponsor of the Florida ESA law, follows in the footsteps of former of another special needs father and former Senate President John McKay in crafting an innovative program to serve the needs of Florida’s special needs students. Senator Gardiner is deeply deserving of the honor that the Florida legislature has bestowed upon him, just as Senator McKay was before him.

Greg btw is one signature away from 1 down, 6 to go in piling up yet another victory over Jay Mathews.

 


Coons and Sugarman called for ESAs-in 1978!!

September 9, 2015

(Guest Post by Matthew Ladner)

Okay so yes it took us 33 years to figure out how to create ESAs after someone first proposed them, and yes we had to stumble into it. Don’t blame me- I was battling my Luke Skywalker action figure against my Stretch Armstrong, and well, er, better late than never! Ron Matus with a great post on Berkeley law professors Jack Coons and Stephen Sugarman’s call for what we now call ESAs- in 1978. Here is a taste:

John E. “Jack” Coons and Stephen Sugarman didn’t use the term “education savings accounts” in their book, “Education by Choice.” But they described a sweeping plan for publicly funded scholarships in terms familiar to those keeping tabs on ESAs. They envisioned parents, including low-income parents, having the power to create “personally tailored education” for their children, using “divisible educational experiences.”

To us, a more attractive idea is matching up a child and a series of individual instructors who operate independently from one another. Studying reading in the morning at Ms. Kay’s house, spending two afternoons a week learning a foreign language in Mr. Buxbaum’s electronic laboratory, and going on nature walks and playing tennis the other afternoons under the direction of Mr. Phillips could be a rich package for a ten-year-old. Aside from the educational broker or clearing house which, for a small fee (payable out of the grant to the family), would link these teachers and children, Kay, Buxbaum, and Phillips need have no organizational ties with one another. Nor would all children studying with Kay need to spend time with Buxbaum and Phillips; instead some would do math with Mr. Feller or animal care with Mr. Vetter.

Coons and Sugarman were talking about education, not just schools, in a way that makes more sense every day. They wanted parents in the driver’s seat. They expected a less restricted market to spawn new models. In “Education by Choice,” they suggest “living-room schools,” “minischools” and “schools without buildings at all.” They describe “educational parks” where small providers could congregate and “have the advantage of some economies of scale without the disadvantages of organizational hierarchy.” They even float the idea of a “mobile school.” Their prescience is remarkable, given that these are among the models ESA supporters envision today.

Sounds very, very familiar eh?