Education savings accounts (ESA’s) are an idea whose time has come for Kentucky. Dr. Vicki Alger of the Independent Institute recently gave a presentation on ESA’s to the Interim Joint Education Committee of the state legislature. Her report, commissioned by the Bluegrass Institute and detailing the impact education savings accounts would have for Kentucky families and school districts, makes a convincing case for expanding school choice in the Commonwealth.
Why school choice?
School choice is based on the idea that education is a public good. We all benefit economically and culturally from a well-educated populace, and so we should make a public investment in that desired outcome. But there is no reason to assume a well-educated community can only be achieved via government-run schools.
A healthy community that values education should have a wide array of schooling options available to all families. A vibrant education marketplace encourages competition and innovation and increases the likelihood that every family can find a school that meets their individual child’s needs. Therefore, most education tax dollars should follow the child to the school of his or her family’s choice.
This is not an unusual idea. As Dr. Alger’s report points out, the popular federal Pell Grant program provides $32 billion for low- and middle-income American students to attend the college or university of their choice.
In fact, more than 131,000 Kentucky undergraduate students are using nearly $468 million in Federal Pell Grants to attend postsecondary institutions, including more than 42,000 students who are using $150 million in public funds to attend private and proprietary postsecondary institutions.
Most Kentuckians view the Pell Grant program as a good public investment in the state’s economic and cultural future, regardless of where these students attend university. Likewise, education savings accounts would be an excellent investment and offer Kentucky families new options for K12 schools.
ESA’s and how they would work in Kentucky
Education savings accounts are already helping thousands of families access non-public schools in five other states. Dr. Alger defines education savings accounts like this:
The concept behind ESAs is simple. Parents who do not prefer a public school for their child simply withdraw him or her, and the state deposits most or all of what it would have spent into that child’s ESA instead. Parents receive a type of dedicated-use debit card to pay for authorized expenses, including private school tuition, online courses, testing fees, tutoring, and special education therapies. Any leftover funds remain in the child’s ESA for future education expenses, including college.
If Kentucky modeled an ESA policy on Arizona’s, 90% of the student’s SEEK funds (the adjusted per-pupil state education allotment) would go to the family’s debit card, while the remaining 10% of SEEK, plus all of the student’s additional allotment from local, state, and federal funds, would stay with the district, a provision that makes an ESA policy very lucrative for the traditional public schools. The appendix of Dr. Alger’s report details exactly what this would mean in dollar amounts for every single district in Kentucky.
A personal example
Let me offer a personal example based on Alger’s data if Kentucky had an education savings account plan like Arizona’s. My family resides in the Bowling Green Independent School district. Total per pupil revenue for BGISD, including local, state, and federal sources, is $10,700 per pupil. My daughter attends a non-public school, and our annual ESA amount would be $5,711.
The annual tuition at my daughter’s school is $4,530, so the ESA would leave us an extra $1,181 per year which would could save for her future college expenses, and/or for supplemental educational materials to help with her special reading and mathematics needs.
Meanwhile, the Bowling Green city schools would keep $4,990 of my daughter’s per pupil allotment and would not have to spend a penny to educate her. Given this windfall, you’d think officials from the BGISD would be eager to support ESA’s!
You can check the appendix of Dr. Alger’s report to see similar numbers of every other district in Kentucky. The median ESA across the state would be $5,690 per student, while the median kickback to the local district would be $4,569.
Education savings accounts would be a win-win for everyone. My daughter would get the best education option for her. The money I am currently spending on her tuition would likely be spent in other ways in the local economy, further supporting jobs and the community tax base. The local public school district would have additional resources to spend on its other students. The entire community would benefit.
That’s how ESA’s benefit a relatively affluent family like mine. Now imagine the doors of opportunity it opens for families of more modest means who could never exercise a school choice otherwise, with an even greater social benefit in the long run.
Education savings accounts are but one mechanism to enhance school choice options for Kentucky families. Charter schools, scholarship tax credits, and other proposals should also be on the table and could work together to create a rich local education market and strengthen student learning outcomes. Polling data suggest Kentuckians are eager for all of these choices, and it’s time parents start pressing political leaders for change.