by (in alphabetical order) John Garrett Clawson, Cassie Davis, Reynaldo De La Garza, Katie Floyd, Sarah Pollock
Supervisor: Paul von Hippel
Started: September 6, 2016. Last updated: November 8, 2016
Definition
Education Savings Accounts (ESAs) are a school choice mechanism that puts state funding for education 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 the 2015 Texas legislative session, SB 1178 outlined a proposed ESA program that failed to pass in the House Committee on Public Education. 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.
ESAs share several programmatic characteristics with school voucher program. 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. Consequently, many of those that support the school voucher concept support ESA initiatives as well. Those that oppose such voucher proposals are also likely to reject ESA programs.
How ESAs Work
While no ESA program currently exists in Texas, in 2015 the Texas Senate considered an ESA bill (SB 1178). The bill did not pass, but it may have features in common with ESA proposals that are considered in 2017.
According to the 2015 ESA bill, parents who participated in the ESA program would receive a debit card with funds that may be applied to educational expenses. The office of the Texas Commissioner would be in charge of establishing and managing funds to be distributed for approved educational-related expenses for eligible students. The debit card would be funded with 80% of the amount that would have been allocated to the student in their home school district. Students with disabilities and students living in poverty (“educationally disadvantaged” students) would receive the full amount (100%) that would have been allocated to their home school district. A third party would assess applications to determine the level of funding for which each student was eligible.
In the 2015 Texas bill, the amount allocated per student would have been similar to the amount allocated by ESA programs in other states. For example, Arizona allocates 90% of the amount that would have gone to a public school for a given student (FN SB 1363, 2013), Nevada allocates up to 90% (SB 302, 2015), Tennessee allocates 100% (SB 431, 2015), and Florida and Mississippi allocate fixed amounts ($9,000 and $6,500) that are comparable to those states' per student public education spending (Florida SB 850, 2014; Mississippi SB 2695, 2015; the Mississippi amount is legislated to increase with per pupil public school spending).
To sign up for the program proposed by the 2015 Texas bill, parents would agree (SB 1178, 2015):
- to participate in a curriculum that covers reading, grammar, health, social studies, and science;
- to spend funds on qualified education expenses;
- to participate in annually administered assessment instruments (i.e. state testing, AP exams, etc.);
- to notify TEA if their child enrolls in public school district or an open enrollment charter school;
- and to inform TEA once their child has graduated
Any unused funds would roll over and could be applied to higher education expenses the child may incur after completing a K-12 curriculum.
Currently, 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 Nevada program is universal, and the Texas program outlined in SB 1178 would allow all students to participate provided they are between ages 5 and 21 and are either entering first grade or were enrolled in a public school the previous year (SB 1178, 2015).
Once a student is eligible, it is at the discretion of the parent/guardian to decide how the funds will be applied in order to meet the agreed requirements of the program. Eligible expenses include
- Private or charter school tuition
- Textbooks
- Curricula
- Tutoring
- Private tuition or specialized therapy for children with disabilities
However, consumables (e.g., pens and paper), transportation, and technological equipment would NOT be eligible expenses under SB 1178.
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 constitutional amendments or provisions 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, these state laws 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 with a Blaine Amendment. Similar forms of school choice, such as vouchers, have also been challenged on this basis in a larger number of states (Burke & Butcher, 2016; Healy & Rich, 2015).
The Heritage Foundation, a conservative think-tank, has been a proponent of ESAs with the specific understanding that they provide a way to work around state Blaine Amendments. As noted in a recent Heritage report (Burke & Butcher, 2016),
"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.'"
At the present time, legislation passed in Arizona, Florida, Mississippi, and Tennessee has been been upheld by each of those states' supreme courts (EdChoice, 2016). 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 is constitutional, the method used to fund the ESA program is not. The court held that the legislature’s discretion to encourage other methods of education is not limited by the state constitution (Rindels 2016; Chereb 2016). Moreover, the Court indicated that funds placed in education savings accounts belong to parents and are not “public funds”; therefore, ESAs are not in violation of the Constitution’s prohibition against using public money for sectarian purposes (ibid). This has been hailed as a victory by proponents of the legislation. However, the Nevada decision also stated 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 (ibid). Proponents believe that this constitutional issue can be resolved through legislation revising the flow of money into ESAs. In light of this, 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 (Chereb 2016).
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 expenditures than do voucher programs (which are typically limited to tuition), early evidence from Arizona's ESA program has found that two-thirds of the state's ESA disbursements are spent on tuition, even though Arizona's ESA program is limited to special-needs and disadvantaged children who have a variety of other expenses (Burke, 2013). In a universal ESA program like the one proposed in Texas, it seems likely that an even larger share of ESA funds would be spent on tuition, so that the effects of ESAs would be similar to those of tuition-only vouchers.
The evidence on vouchers' achievement effects is summarized on another page .
References
Burke, Lindsay. "The Education Debit Card: What Arizona Parents Purchase With Education Savings Accounts." EdChoice. August, 2013. Accessed November 11, 2016. https://www.edchoice.org/research/the-education-debit-card/
Burke, Lindsay, and Jonathan Butcher. "Education Savings Accounts: Advancing Choice in States with Blaine Amendments." The Heritage Foundation. October 3, 2016. Accessed November 8, 2016. http://www.heritage.org/research/reports/2016/10/education-savings-accounts-advancing-choice-in-states-with-blaine-amendments.
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.
“Fast Facts on School Choice,” EdChoice, last modified Oct. 27, 2016, http://www.edchoice.org/our-resources/fast-facts.
Healy, Jack and Motoko Rich. 2015. "Colorado Court Rules Use Of Public Funds For Private Schools Unconstitutional". The New York Times. http://www.nytimes.com/2015/06/30/us/colorado-court-rules-use-of-public-funds-for-private-schools-is-unconstitutional.html.
Lutz, Lauren. "Arizona Court Unanimously Upholds Education Savings Accounts as Constitutional." American Legislative Exchange Council. October 17, 2013. Accessed November 08, 2016. https://www.alec.org/article/education-savings-accounts-upheld/.
Nevada. Senate. 2015 reg. sess. SB 302 Fiscal Note. Carson City. 2015.
O'Dell, Rob, and Yvonne W. Sanchez. "State Money Helping Wealthier Arizona Kids Go to Private Schools." The Arizona Republic. Last modified July 7, 2016. http://www.azcentral.com/story/news/arizona/politics/education/2016/02/23/state-money-helping-wealthier-arizona-kids-go-private-schools/80303730/.
Michelle Rindels. “Nevada High Court Blocks Funding for School Choice Program.” The Las Vegas Sun. September 29, 2016.
Sandra Chereb. “Nevada Supreme Court Strikes Down School Choice Funding Method.” Las Vegas Review-Journal. September 29, 2016.
S.B. 1178, Texas 84th Cong. (2015).
S.B. 1363 Fiscal Note, Arizona 51st Cong. Schimpp, Steve. (2013).
S.B. 2695, Mississippi 114th Cong. (2015).
S.B. 302, Nevada 302nd Cong. (2015).
S.B. 431, Tennessee 431st Cong. (2015).
S.N. 850, Florida 116th Cong. (2014).
Villanueva, Chandra. "It's Time to Renovate our School Finance System." Center for Public Policy Priorities. 18 October 2016, University of Texas-Austin, TX.
McDonald, Christian. "Private School Data Suggest Vouchers Could Have Big Effect In..." Statesman.com. The Austin Stateman, 30 May 2015. Web. 21 Nov. 2016.
