Tag: education savings accounts

2015: The Year of Educational Choice

The Wall Street Journal declared 2011 “The Year of School Choice” after 13 states enacted new school choice laws or expanded existing ones. By that measure, 2015 could be “The Year of Educational Choice” as at least 10 state legislatures consider new or expanded education savings accounts (ESAs) in addition to at least 11 states considering new or expanded scholarship tax credits.

ESAs represent a move from school choice to educational choice because families can use ESA funds to pay for a lot more than just private school tuition. Parents can use the ESA funds for tutors, textbooks, homeschool curricula, online classes, educational therapy, and more. They can also save unused funds for future educational expenses, including college.

Currently, two states have ESA laws: Arizona and Florida. Both states redirect 90% of the funds that they would have spent on a student at her assigned district school into her education savings account. The major difference between the two laws is that Arizona’s ESA is managed by the Arizona Department of Education while Florida’s is privately managed by Step Up For Students and AAA Scholarships, the nonprofit scholarship organizations that also issue scholarships through the Sunshine State’s tax credit law. As the Heritage Foundation’s Lindsey Burke and I explained in the most recent edition of National Affairs, there are several reasons to believe that Florida’s model holds advantages over Arizona’s:

First, the non-profit scholarship organizations are less likely to be captured by opponents than is a government agency. The non-profits are dedicated to the scholarships, and the idea of school choice is built into their mission. Second, awarding scholarships is the primary mission of a scholarship organization but only an ancillary function of a state education agency — which means that not only will they be more dedicated to the concept but they can generate and retain best practices more easily. Third, scholarship organizations have the ability and incentives to be more flexible in their operation than government agencies, and therefore more responsive to the needs of families. The Arizona education department did not offer workshops for parents outside of regular business hours because employees were not paid for those hours. Non-profits can more easily implement policies like flextime.

While both Arizona and Florida redirect public funds into the ESAs, a state could create an ESA that is funded through tax credits, which would minimize the threat of overregulation and avoid coercing people into supporting the teaching of ideas that they dislike. New Hampshire’s scholarship tax credit law already has an ESA-style provision that allows homeschoolers to use scholarship funds for a wide variety of educational expenses. 

Several state legislatures are moving fast to enact ESA laws this year. Both the Mississippi Senate and Virginia Assembly passed ESA bills last week. This week, the Virginia Senate’s Education Committee and Oklahoma Senate education subcommittee both approved ESA bills and a Florida Senate panel approved an expansion of their state’s ESA law. Arizona is also considering expanding eligibility for its ESA law.

Other states considering a new ESA law include Colorado, Delaware, Georgia, Montana, and Oregon. Additionally, Politico reported that Iowa, Nebraska, Nevada, Rhode Island, Tennessee, and Texas are likely to take up ESA bills as well. States considering new or expanded scholarship tax credit laws include Georgia, Indiana, Maryland, Missouri, Montana, Nebraska, Nevada, New Mexico, New York, South Carolina, and Texas. In addition, two state senate committees in Colorado have approved a personal-use education tax credit.

There’s no guarantee that any of these bills will become law, but the number of state legislatures exploring educational choice is encouraging.

[Updated to include Oregon’s ESA bill.]

How to Design an Education Savings Account

State legislatures across the nation are considering an innovative new education reform: education savings accounts. Hailed as “School Choice 2.0,” ESAs empower parents to customize their child’s education beyond the school walls—a development that could substantially alter the way students are educated. There is “no reason to expect that the future market will have the shape or form that our present market has,” observed Nobel laureate economist Milton Friedman in a 2003 interview, “How do we know how education will develop? Why is it sensible for a child to get all his or her schooling in one brick building?”

Two states have already enacted ESA laws. In Arizona, parents of eligible students that opt out of their assigned district school can access 90% of what the state of Arizona would have spent on those students. The Arizona Department of Education deposits the funds directly into a privately managed bank account that parents can access through a restricted-use debit card. The parents can then spend the ESA funds on any qualifying education-related service or provider they choose. In the first year, eligibility was restricted to students with special needs. Since then, Arizona has expanded eligibility to include children in foster care, children of military personnel, and children assigned to low-performing district schools. Last year, Florida adopted a special-needs ESA law similar to Arizona’s except that it is privately managed.

Today, National Affairs published an essay I coauthored with Lindsey Burke of the Heritage Foundation. Our essay explores the administrative, regulatory, and constitutional issues that policymakers will have to address when designing an ESA law. Policymakers should consider crafting a privately managed and privately funded ESA law that offers tax credits in return for donations to scholarship organizations that manage the ESAs. Florida’s privately managed model is already proving to be more operationally efficient and effective than Arizona’s government-run model. A privately managed ESA would be less susceptible to capture by hostile parties than a government agency, more likely to generate and retain best practices, and more likely to have the ability and incentives to be responsive to the needs of families. Privately funded ESAs also have several advantages over government-funded ESA laws. In particular, they are more likely to pass constitutional muster in states with restrictive “Blaine amendments” and less likely to include burdensome regulations that undermine the effectiveness of the program.

We conclude:

Most school choice programs offer significant but not revolutionary changes to the traditional educational model. But true educational choice, and the educational market it could help foster, promise to radically improve education for many children. As Milton Friedman observed, “not all ‘schooling’ is ‘education’ and not all ‘education’ is ‘schooling.’” Charter schools and voucher programs still conflate the two, but education savings accounts embody a more expansive understanding of education.

ESAs offer several key advantages over traditional school choice programs. Because families can spend ESA funds at multiple providers and can save unspent funds for later, ESAs incentivize families to economize and maximize the value of each dollar spent in a manner similar to spending their own money. ESAs also create incentives for education providers to unbundle services and products to better meet students’ individual learning needs. […] These laws hold great potential to expand educational opportunity and remake the entire education system in ways that better and more efficiently meet the needs of children.

Return of the Vampire Lawsuit Against School Choice

Just in time for Halloween, a vampire lawsuit against school choice has risen from the dead.

Nearly a month ago, a Florida judge dismissed the Florida Education Association’s (FEA) lawsuit against a bill amending the state’s school choice laws, ruling that the plaintiffs lacked the standing to sue because they were not harmed. The union wanted to block the creation of the Personalized Learning Scholarship Accounts program for students with special needs, and “in particular” the so-called “expansion” of the Florida Tax Credit Scholarship (FTCS) law, which provides tax credits to corporations in return for donations to nonprofit scholarship organizations that help low-income children attend the schools of their choice. There are two additional lawsuits against school choice in Florida, including another involving the FEA.

This year, nearly 70,000 low-income students received FTCS scholarships. One former scholarship recipient, Denisha Merriweather, recently wrote an op-ed for the Wall Street Journal explaining how the FTCS allowed her to switch from her assigned district school, which failed to meet her needs, to a private school where she thrived.

Last week, the FEA filed an amended complaint with additional plaintiffs. The union argues that the new plaintiffs have standing as district school teachers and parents of district school students because they “are threatened by the implementation of […] the expansion of the Florida Tax Credit Scholarship Program,” which they claim would cause the district schools to “[lose] considerable funding” since the scholarship funds “that otherwise would go to support the public schools are instead redirected through an intermediary to provide vouchers [sic] for Florida children to attend private schools.” (The FEA’s complaint did not discuss the impact of the Personalized Learning Scholarship Accounts.)

The union’s argument suffers from at least two fatal flaws.

First, the FTCS does not “redirect” any state funds. The state of Florida allocates funds to school, in part, on a per-pupil basis, but the fiscal impact of a student leaving her assigned district school to accept a tax-credit scholarship is no different than the fiscal impact of a student moving out of the district, attending private school without a scholarship, or homeschooling. Moreover, if the funds were actually “redirected” then the state would not realize any savings. In fact, the state’s own Office of Program Policy Analysis and Government Accountability found that the FTCS generates significant savings ($36.2 million in 2008-09) because the forgone revenue is less than the reduction in state expenditures.

Second, the union is factually incorrect in asserting that the challenged legislation, SB 850, “expanded” the FTCS. The bill loosened eligibility requirements by eliminating the requirement that recipients spend the prior academic year in a district school; allowing foster students to continue receiving scholarships if adopted; and raising the income thresholds for eligibility for full and partial scholarships. However, the bill did not expand the amount of tax credits available nor did it add any new credits against other taxes. In other words, while the bill increased the number of students who can apply for scholarships, it did not increase the actual amount of available tax credits or scholarship funds.

The FEA’s vampire lawsuit misunderstands how the FTCS law works and misstates the facts about what the legislation does. The judge should drive a stake through its heart.

School Choice Safe in Florida…for Now

Earlier this year, Florida’s largest teachers union filed a legal challenge to prevent the expansion of school choice. As I explained then:

The Florida Education Association is suing the state of Florida to eliminate the new Personal Learning Scholarship Account (PLSA) program, among other recent education reforms, including an expansion of the state’s scholarship tax credit law. Modeled after Arizona’s popular education savings account (ESA), the PLSA would provide ESAs to families of students with special needs, which they could use to pay for a wide variety of educational expenses, such as tuition, tutoring, textbooks, online learning, and educational therapy. Six families with special-needs children who would have qualified for the program are seeking to intervene as defendants in the lawsuit, represented by the Goldwater Institute’s Clint Bolick.

The union’s lawsuit argues that the legislation creating the PLSA, Florida’s Senate Bill 850, violated the state constitution’s “one subject rule” because it contained a variety of education reforms.

Today a circuit court judge dismissed the lawsuit, ruling that the plaintiffs lacked standing to sue because they could not show how they were harmed by the law. Last month, the New Hampshire Supreme Court unanimously ruled that plaintiffs lacked standing to challenge the Granite State’s scholarship tax credit law because they also could not demonstrate that they suffered any harm.

Florida Parents Fight for Educational Choice

On what would have been the 102nd birthday of Milton Friedman—the godfather of educational choice—six families with children that have special needs are fighting back against Florida’s largest teachers union, which is seeking to kill the Sunshine State’s newest educational choice program.

Milton Friedman on educational choice.

The Florida Education Association is suing the state of Florida to eliminate the new Personal Learning Scholarship Account (PLSA) program, among other recent education reforms, including an expansion of the state’s scholarship tax credit law. Modeled after Arizona’s popular education savings account (ESA), the PLSA would provide ESAs to families of students with special needs, which they could use to pay for a wide variety of educational expenses, such as tuition, tutoring, textbooks, online learning, and educational therapy. Six families with special-needs children who would have qualified for the program are seeking to intervene as defendants in the lawsuit, represented by the Goldwater Institute’s Clint Bolick.

The union’s lawsuit argues that the legislation creating the PLSA, Florida’s Senate Bill 850, violated the state constitution’s “one subject rule” because it contained a variety of education reforms.

The Coming School Choice Tidal Wave

Last week I reviewed the latest survey on education policy from the Friedman Foundation but I missed something that should warm the cockles of the hearts of everyone who supports greater choice in education: each generation is progressively more favorable and less opposed to educational choice. 

Scholarship tax credits (STCs) remain the most popular form of educational choice. Even among the 55+ cohort, there is a 20 point spread in favor of choice, 53 percent to 33 percent. Support increases in each cohort by 8 to 13 points. Meanwhile, opposition falls precipitously from 33 percent to only 14 percent. The 35-54 cohort has a 39 point spread in favor of educational choice and the 18-34 cohort has a whopping 60 point spread, 74 percent to 14 percent.

Friedman Foundation survey: popularity of scholarship tax credits

Vouchers are the second most popular of the three reforms. While the oldest cohort is slightly more pro-voucher than pro-STC, opposition is 7 points higher at 33 percent, for a spread of 16 points. The margin widens considerably to 32 points for the middle cohort (65 percent support to 33 percent opposition) and 44 points for the youngest cohort (69 percent support to 25 percent opposition), which is 16 points narrower than the spread for STCs.

School Choice Lawsuit Roundup

School choice advocates have been winning in the halls of state legislatures and in the court of public opinion, so opponents have taken to the courts of law. Since the U.S. Supreme Court ruled in Zelman v. Simmons-Harris (2002) that school vouchers are consistent with the First Amendment’s Establishment Clause, opponents of choice have been scrambling to find novel reasons to challenge school choice programs. Here’s a brief summary of school choice lawsuits around the nation:

1) In Louisiana, the U.S. Department of Justice has sued to halt the state’s school voucher program, arguing that it hurts the desegregation effort. The DOJ’s already weak case was further undermined by a new study released today showing that school choice actually improves integration. Since 90 percent of the voucher recipients are black, the DOJ’s lawsuit would have the effect of keeping low-income blacks from attending the schools of their choice.

Earlier this year, Louisiana’s state supreme court ruled that the voucher program was unconstitutionally funded, but otherwise left the program intact. The governor and state legislators adjusted the funding mechanism in response.

2) Two days ago, a group of activists in Oklahoma sued the state over its special needs voucher program, arguing that it violates the state constitution’s ban on using public funds at religious schools. Last year, the state supreme court tossed out a challenge to the program by public school districts, ruling that they did not have standing since they are not taxpayers.

3) On the same day, the Arizona Court of Appeals ruled unanimously that the state’s education savings account program, the first in the nation, is constitutional. Anti-school choice activists had argued that it violates the state constitution’s ban on publicly funding religious schools. The court held that students are the primary beneficiaries and that any “aid to religious schools would be a result of the genuine and independent private choices of the parents.” The decision will likely be appealed to the state supreme court.