Q&A: Education Savings Accounts

Could Education Savings Accounts change public education in Pennsylvania?

We asked Jonathan Butcher, education director for the Goldwater Institute in Arizona and nationally-known expert on ESAs, for his expertise on this cutting edge school choice policy.

[Note: This interview has been edited for length and clarity.]

CF: What are Education Savings Accounts (ESAs), and from where did the idea originate?

Jonathan Butcher: Well, most families—and those in state legislature—are familiar with the idea of a scholarship. You provide public funds to a family in the form of a voucher scholarship to send a child to a new school. And that’s the extent of that choice, which is a great one. For thousands of children across the U.S., these scholarships have provided tremendous opportunity to fund a quality education.

But we took the idea one step further. We said, “what if families had a flexible use account?” With an ESA, the state deposits a portion of a child’s part of the funding formula in a private account that families use to buy educational products and services for their children. In the state of Arizona, it comes in the form of a flexible-use debit card. In other states, like Nevada and Florida, as it’s currently underway, it’s actually a reimbursable set of educational purchases. It’s a flexible way to customize a child’s education.

CF: Which states have ESAs in place already?

JB: There are five states. Arizona was the first; Florida followed in 2014, and then three states in 2015: Mississippi, Tennessee, and Nevada.

CF: When public funds become part of an ESA, do they remain public funds or do they become the property of the parent?

JB: That’s a terrific question and a great distinction. These funds become private funds. Parents are effectively contractors for their child’s education. It’s something that a recent court ruling in Nevada made quite clear that the court recognized these funds do become private funds for families.

CF: Critics might ask: Will ESAs undermine the traditional school system model?

JB: Every child deserves a chance of quality education, without a doubt. The fact is that there are public schools / traditional district schools serving families well across the country—and that’s great. So no one is going to stop them or take that away from them. But there’s also the truth that every child is different. They have unique needs; maybe there’s a child that has special needs or maybe is bullied in school. It may just be a child that wants to do advanced Russian and it’s not offered at the public school.

What we need to provide for them is a way to go and find those educational services. That’s what the accounts do. They allow families to go and seek out opportunities for their children to meet their needs, or help them get ahead, or to help them catch up.

CF: Who are the opponents of ESAs?

JB:  They’re pretty familiar: the same groups that have sued to stop private school choice, and even charter schools around the country: teachers’ unions, the school board association in Arizona, superintendents’ associations, and other education associations. Groups that are lobbying against families—that’s really what they do. They want to require that children attend their assigned school and we direct as much taxpayer money to that school as possible irrespective of the achievement and whether those children are being served.

That’s what we want to change—what we need to change. Every parent should have access to something that gives their child a chance at the American Dream. 

CF: What's happening in Nevada and what does it mean for the future of ESAs in that state—and beyond?

JB: The significance for the entire country with what’s going on in Nevada is that the lawmakers made every public school child in the state of Nevada eligible for an education savings account. That’s never been done before, both for ESAs as well as for nearly every private school choice opportunity.

There are 450,000 children assigned to public schools in the state of Nevada, and this law that they passed last year made every one of them eligible to apply. It didn’t compel them to leave or force them to do anything. But for those families that are looking for other solutions, this law gave every child the same opportunity.

CF: Was this a big change from other states that focused ESAs on children with special needs?

JB: That’s right. In Florida, Tennessee, and Mississippi, which have excellent, very strong laws—their laws are directed to help children with special needs specifically, like children on the autism spectrum, or children with hearing or vision impairments. But Nevada said, “You know what? We’re going to give every child the same chance to succeed.”

CF: And what did the courts say of this?

JB: The ACLU in Nevada sued shortly after the law was signed in 2015, and the state Supreme Court ruled in 2016 that ESAs do not violate provisions in the Nevada state constitution against providing money to religious or private purposes. They’re otherwise known as Blaine amendments; thirty-eight states have these.

What the court said was that ESAs do not violate these provisions—they are in fact constitutional. And that’s significant, because now there are two states, Arizona and Nevada, where the highest court in those states have said that ESAs are in fact constitutional under these otherwise discriminatory provisions.

CF: What are some ways states can fund ESAs?

JB: With ESAs, the money flows from the general fund to the family who can then spend it on a variety of products and services. But as people in Pennsylvania well know, and many other states that have tax credit scholarships, donors can contribute funds to organizations that will then award scholarships to families to use for their child’s education.

The same idea can be applied to ESAs. There are states like Missouri, Virginia, perhaps even Pennsylvania, where the constitutional provisions might be such that funding it using general fund dollars may not fit with the way the constitution or state laws are already arranged. And so you could take a tax credit funded model and give families instead of one choice, for say, a scholarship, you could give them multiple choices with a restricted-use account.

The critical thing to remember with these accounts is that families can make multiple purchases simultaneously. So if a family finds a tutor, for example, that they think is excellent for their child, they can look at both what that tutor will provide for that child, and at what else they may want to spend on the child’s education. Whether they save some of the money for the future for college, or spend the money, say, on an online class that the child does at home. Parents can be cost-conscious about those services.

What we want to do is we don’t want there to be any barriers between children, families, income, race, whatever. We don’t want there to be something else to divide families and students. We want them to all have great opportunities. Let’s start there and say, “look, we want every child to have a quality option.” So let’s push to get every child an option. And if there is opposition and compromises that must follow, then inevitably, that’s what happens. But I still think that is where our goal needs to be. It needs to be that every child, no matter where they live, what their zip code is, around the country—eventually, we want the day to come where they can choose how and where and when they learn.

CF: What makes you so confident that choice will lead to improvement in education outcomes?

JB: We find in the research that in most of the random assignment studies, the highest quality studies we have, it’s true that when parents do have options, there are positive outcomes both in terms of achievement as well as persistence in school and in college. The more choices we can give families, the better outcomes will be on the horizon for students.

CF: How optimistic are you about school choice reforms being enacted in the near future?

JB: I think we have school choice successes all around us. Whether it’s a new charter school law in Washington state to the states that are just starting off with ESAs like Tennessee and Nevada. There is a lot to be excited about. Lawmakers around the country are considering education savings accounts. There’s at least two dozen states that have been working hard over the past two years alone to bring these accounts to families within their borders. So we are very excited about what lies in the future.

Visit goldwaterinstitute.org for more of Jonathan Butcher’s work and follow him on Twitter @JM_Butcher.