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What are Education Savings Accounts?


The EdFly Blog

  • School Choice

    School Choice

    Families need the financial freedom to attend schools that meet their needs. The Foundation supports policies that empower families to choose a public, charter, private, virtual or home school.

During National School Choice Week, ExcelinEd’s Adam Peshek is highlighting unique aspects of educational choice policyToday, Adam explores Education Savings Account programs: what they look like, where they’re advancing and what the 2017 legislative forecast looks like for these programs.

Check out related posts on charter schoolstax-credit scholarshipsways the federal government can support school choice and opportunities for states to advance school choice through ESSA.

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Education Savings Accounts (ESAs), also known as Education Scholarship Accounts or Individualized Education Accounts, are an innovative way to bring customization to K-12 education. Through ESAs, parents are able to direct their child’s funding to the schools, courses, programs and services of their choice. Parents are also able to save unused funds for future K-12 and higher education expenses—creating an incentive for parents to judge all K-12 service expenses not only on quality but also on cost. By allowing parents to plan for their child’s unique needs, ESAs create a personal approach to education, where the ultimate goal is maximizing each child’s natural learning abilities.

ESA image

The key is customization. Parents are no longer relegated to School A or School B. A child can attend a private school and receive speech therapy on the side. Or she could learn math and science online, study English and history at home, receive tutoring twice a week and have leftover money deposited into a college savings account. Through an ESA, education is no longer “use it or lose it.” Parents decide where the best values are and have the ability to direct their child’s funds in the most efficient way.

Since Arizona first enacted its ESA program in 2011, ESAs have garnered considerable interest across the country. Today, there are five enacted ESA programs across the country: Arizona (2011), Florida (2014) and Mississippi, Tennessee and Nevada (2015).

Nevada: The Battle for ESAs

Nevada lawmakers took a bold approach in 2015 when they passed the nation’s first near-universal ESA program. Once fully implemented, at least 93 percent of students in the state would be eligible for an ESA worth between $5,100 and $5,700 to spend on the schools, courses and services of their choice.

Unsurprisingly, opponents of choice sued the program in Nevada court. In September 2016, the Nevada Supreme Court ruled that while ESAs are constitutional, the funding mechanism used in the program’s authorizing legislation is not. At that time, approximately 8,000 applications had been received for the program, which remains dormant until state lawmakers create an alternative funding mechanism.

Luckily, two promising developments have happened in 2017:

  • Governor Brian Sandoval committed to including $60 million for ESAs in his recent State of the State address.
  • Attorney General Adam Laxalt asked for clarification from the courts on whether or not the program truly still stands, given the Supreme Court ruled the program constitutional but required a new form of funding. This month, it was determined that the State Treasurer’s Office may continue to implement the program while the legislature identifies a new funding stream. That means the State Treasurer’s Office may continue their excellent work in creating the structure of the program, collecting applications and educating citizens on how ESAs will work.

2017 Legislative Forecast: High Chance of ESAs

This year, ExcelinEd staff forecasts that nearly 20 additional state will file legislation to create ESA programs—and possibly more.

ESA 2017 legislative forecast

 

One of those states is Missouri, where the recently-elected Governor Eric Greitens said he would work with Missouri legislators to create an ESA program for students with special needs:

We also need to make sure that every child in Missouri, especially those kids with special needs, get a fair shot at the American Dream. I will work with you to implement Education Savings Accounts for children with special needs.

Education Savings Accounts are simple. Kids with special needs have IEPs, individualized education plans. With education savings accounts, parents are able to use their fair share of state education money in a way that fits with what their kids need.

Arizona was the first state in the country to try these accounts, and the program has been a success. Parents are much happier with their children’s educations, and children are able to get the kind of education that meets their needs.

As ESAs spread across the country, here are some resources that you can use to develop your understanding of the policy:

  • In April, ExcelinEd and the American Enterprise Institute (AEI) will publish the first volume on ESAs, Education Savings Accounts: The New Frontier in School Choice. The publication includes chapters from nine different choice experts, covering the politics, policy, administration and legality of ESAs. The volume will also share profiles of parents and providers in the current states with ESA programs. AEI and ExcelinEd hosted a conference on the book in May. (View draft papers and video of the live event.)
    • In particular, this chapter by Allysia Finley of the Wall Street Journal details how different parents of students with special needs are utilizing ESAs in Arizona, Florida and Mississippi.
  • In 2016 and 2015, ExcelinEd hosted panels on ESAs at our annual National Summit on Education Reform.

About the author


Adam Peshek @AdamPeshek

Adam@excelined.org

Adam Peshek is the Director of Education Choice for the Foundation for Excellence in Education. Previously, Adam was legislative director for the Foundation for Florida’s Future and a research associate at the Reason Foundation. He received his undergraduate degree from Florida State University and is currently a graduate student at Johns Hopkins.



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