To say school choice has been on the march in recent years would be a major understatement. State after state has implemented school vouchers, tax-credit scholarships, and, in especially innovative places like Louisiana and Arizona, course choice and education savings accounts (ESAs), respectively. More students than ever before have access to private school choice options.
As the Goldwater Institute’s Jonathan Butcher and I suggest, states now have the opportunity to make their existing school choice programs even stronger by converting them to innovative Arizona-style ESAs, which are like school choice 2.0. Specifically, states with voucher and tax-credit scholarship programs have two options for infusing a new level of customization into their programs.
Two Ways to Convert Voucher and Tax-Credit Scholarship Programs to ESAs
1. Allow parents to deposit those funds into an education savings account to infuse more flexibility into the scholarships. The education savings account option would be distinct from a state’s existing voucher program or tax-credit scholarships, but the accounts would provide an additional vehicle for parents to customize how they use their voucher funds.
This would enable parents to direct every dollar they’re allocated to multiple education services and providers, as Arizona’s education savings accounts allow. Although vouchers and tax–credit scholarships are excellent school choice options for states, structuring those programs similarly to Arizona’s ESA program would allow parents to finance private school tuition as well as textbooks, curricula, private tutoring, online learning, educational therapies, and a host of other education-related services and products. Moreover, parents could be empowered to roll over unused funds from year to year (putting downward pressure on private education prices) and save unused funds for future college expenses.
Because such a transition would be legislatively approved but administratively driven, state leaders interested in this change should consider contacting Arizona’s Department of Education and Department of Revenue to obtain best practices on how ESA funding can work.
By transitioning existing programs to ESAs or creating new ESA programs, policymakers have the power to bring a vision of customized learning for every child to fruition.
2. A second option for states with existing voucher or tax-credit scholarship programs would be to expand the approved expenses covered by a voucher or scholarship. That would slowly expand the allowable uses of the voucher/scholarship, transitioning the program into an ESA. Perhaps a state first considers expanding their existing voucher program to allow parents to roll over funds. A second expansion might include textbooks and curricula as allowable expenses. Additional allowances for the use of a voucher or scholarship program could be phased in over time, but each successful expansion would be a new use for a family’s voucher.
This path likely would require policymakers to revisit funding models for existing voucher and tax-credit scholarship programs—as such plans typically are funded at the “lesser of” a program’s per-student funding or private school tuition. If parents were able to receive the maximum voucher/scholarship funding for their child(ren), any funds left over after paying for private school tuition could go toward other educational expenses. Again, should policymakers make such a move, the way parents would access the funding likely would be determined by a state agency.
How to Create a Public School Education Savings Account Program
For states that don’t have a private school choice program in place yet, or those that have restrictions such as Blaine amendments and compelled support clauses, creating a public school education savings account is an option. This would take the same financing structure as Arizona’s education savings account (with state funds being deposited into a parent-controlled account), but parents would be empowered to use funds at any public education option of choice.
As Butcher and I explain, the state legislature would provide an appropriation for a per-student allocation, weighted by specific student characteristics, such as poverty and disability. Funds would be deposited in an ESA and could be used to pay course fees at public schools and public charter schools, in a state online learning program, and at a community college or state university. Utah Rep. John Dougall (R-Highland) introduced a similarly structured proposal for his state during the 2012 general legislative session.
Education savings accounts are the way of the future, not only in school choice but in education financing overall. By transitioning existing programs to ESAs or creating new ESA programs, policymakers have the power to bring a vision of customized learning for every child to fruition.