by (in alphabetical order) John Garrett Clawson, Reynaldo de la Garza, Victoria Keller, Sarah Pollock, Laurie Roberts,
Started: September 6, 2016. Last updated: September 20, 2016
Definition
Education Savings Accounts (ESAs) are a /wiki/spaces/edpolicy/pages/27033626 mechanism that puts state funding for educational expenses in the hands of parents. Funds are calculated based on the amount the state would have spent on a given student in their public school. That money is placed in a debit account, from which parents can access and use the funds for a variety of public and private education services.
In Texas, SB 1178 outlined a proposed ESA program that may be modeled in subsequent proposals, although it ultimately failed to pass in the Committee on Public Education in the Texas House of Representatives in 2015. In 2016, the 85th Texas Senate was tasked with investigating the academic success and fiscal impact of similar programs in other states, including Arizona, Mississippi, Nevada, Florida and Tennessee (Patrick, 2016). While these programs have different names from state to state, the fundamental features are essentially the same.
Because ESAs seek to accomplish goals similar to school voucher programs, political sentiment on both sides of the aisle are quite similar in nature. For more information about ideology and school choice, see the school choice page.
How it Works
Parents who elect to enroll in the proposed program would receive a debit card with funds that may be applied to educational expenses. Unused funds roll over and may be applied to higher education expenses.
Arizona, Mississippi, Florida, Oklahoma and Tennessee limit eligibility to students with special needs, students from low income families, and/or students in low performing school districts, but the program outlined in Texas' SB 1178 would be open to all students meeting the following conditions (SB 1178, 2015):
- Students over the age of five AND
- Students who are already enrolled in public school OR
- Students who are entering the public school system for the first time, in first grade
Amount Per Student
States (with the exception of Mississippi) determine the amount for each student based upon the average amount the government spends on each student attending public school. This amount varies by special need and poverty level.
- Arizona – 90% of the amount that would have gone to a public school for a given student (FN SB 1363, 2013)
- Mississippi - $6,500
- To be adjusted annually in proportion with public student spending (SB 2695, 2015)
- Nevada – up to 90% (SB 302, 2015)
- Tennessee – 100% (SB 431, 2015)
- Florida – $9,000 (SB 850, 2014)
SB 1178 suggests that Texas students would receive 80% of the amount that would have been spent on that student in the school district they would otherwise have attended, with students with disabilities receiving the full 100%.
Eligible Expenses
Parents may spend ESA funds on a variety of educational costs including private or charter school tuition, textbooks, curricula, and tutoring. Parents can also use funds to pay for private tuition or specialized therapy for children with disabilities. Consumables (like pens and paper), transportation, and technological equipment are not eligible expenses under SB 1178.
ESAs vs. Vouchers
ESAs are often confused with vouchers. The primary distinction is that vouchers can only be used for tuition, while ESAs can be used for a variety of educational expenses. Another distinction is that vouchers transfer tuition from the government to the student's chosen school, while ESA funds are controlled by parents through a government-funded debit card.
Legal issues
States that have passed legislation adopting ESAs include Arizona, Florida, Mississippi, Nevada and Tennessee (EdChoice, 2016). Legislation is typically challenged on a constitutional basis; 40 states have made amendments to or included provisions in their constitutions that prohibit public funding of "religious worship, exercise or instruction" (DeForrest, 2003). Referred to collectively as "Blaine Amendments," in reference to the original failed amendment to the United States Constitution, they are part of the legal landscape in all states that currently have ESAs, with the exception of Tennessee. Plaintiffs argue that because money diverted from public schools to fund ESAs can be spent on tuition at religious private schools, such laws are unconstitutional in states that have such a stipulation in their constitution. Similar forms of school choice, such as vouchers, have also been challenged on such basis in a larger number of states (Burke & Butcher, 2016).
The Heritage Foundation, a conservative think-tank, has been a proponent of ESAs with the specific understanding that they provide a work-around to a given state's "Blaine Amendment." They noted in a recent report titled "Education Savings Accounts: Advancing Choice in States with Blaine Amendments" that:
"The defining feature of ESAs—that parents can make multiple choices for their children’s education—helped them survive a Blaine-based legal challenge in Arizona where the state supreme court had deemed a voucher program unconstitutional. In the 2013 Arizona Court of Appeals’ unanimous opinion, Judge Jon Thompson wrote that '[t]he ESA does not result in an appropriation of public money to encourage the preference of one religion over another, or religion per se over no religion. Any aid to religious schools would be a result of the genuine and independent private choices of the parents.'" (Burke & Butcher, 2016)
At the present time, legislation passed in Arizona, Florida, Mississippi, and Tennessee has been been upheld by each of those states' supreme courts. However, in September 2016, The Nevada Supreme Court struck down the state’s education savings account law, ruling that, while the premise of using taxpayer money for private education was constitutional, the method used to fund the ESA program was not. The court held that the Legislature’s discretion to encourage other methods of education is not limited by the state Constitution. Moreover, the Court indicated that funds placed in education savings accounts belong to parents and are not “public funds,” and that ESAs are thus not in violation of the Constitution’s prohibition against using public money for sectarian purposes; this has been hailed as a victory by proponents of the legislation. However, justices said that the Legislature cannot divert money specifically authorized for public schools to private educational programs (like tuition at parochial schools). Thus, the Court held that the use of the Distributive School Account funding for ESAs undermines the Nevada Constitution’s mandate to fund public education. Proponents believe that this constitutional issue can be resolved through legislation revising the flow of money into ESAs. The state’s Republican governor has indicated that he will prioritize the issue of ESA funding in the 2017 Legislature when it convenes in February.
Evidence
ESAs are a new reform, and little direct evaluation of their effects currently exists. Indirect evidence, however, can be gleaned from evaluations of voucher programs. While ESAs often have fewer restrictions on eligible expenditures than do voucher programs (which are typically limited exclusively to tuition), early evidence from Arizona's Empowerment Scholarship Program has found that two-thirds of ESA disbursements are being spent on tuition. In a universal ESA program like the one proposed in Texas, it seems likely that an even larger share would be spent on tuition, so that the effects of ESAs would be similar to those of tuition-only vouchers.
A summary of the evidence on vouchers is given on a separate page.
References
“School Choice in America,” EdChoice, last modified Oct. 28, 2016, http://www.edchoice.org/school-choice/school-choice-in-america.
S.B. 1178, Texas 84th Cong. (2015).
S.B. 2695, Mississippi 114th Cong. (2015).
S.B. 302, Nevada 302nd Cong. (2015).
S.B. 431, Tennessee 431st Cong. (2015).
Arizona original bill – http://www.azleg.gov/legtext/50leg/1r/bills/sb1553h.pdf
Heritage Foundation – http://www.heritage.org/research/reports/2016/10/education-savings-accounts-advancing-choice-in-states-with-blaine-amendments#_ftn5
Tennessee – https://www.edchoice.org/blog/florida-governor-signs-nations-second-esas-expands-tax-credit-scholarships/
Florida – https://www.tn.gov/assets/entities/education/attachments/IEA_Parent_Handbook_PublicReviewDraft.pdf
Arizona – https://www.alec.org/article/education-savings-accounts-upheld/
Oklahoma – http://www.oscn.net/applications/oscn/DeliverDocument.asp?CiteID=477431
Mississippi – http://www.mde.k12.ms.us/ose/esa
DeForrest, Mark Edward. "An Overview and Evaluation of State Blaine Amendments: Origins, Scope, and First Amendment Concerns." Harvard Journal of Law & Public Policy 26.2 (2003): 551-626.