Education Savings Accounts for Dummies

Education Savings Accounts are beginning to crop up all across the country as a new policy tool for education (recently news came that Iowa's GOP was pushing them). If they are turning up in a legislature near you, what do you need to know about them? If you are late to this particular party, here's the "for dummies" version of an ESA explainer:

The Basics

ESAs are vouchers on steroids.

In a voucher system, you might register your child Pat at Flat Earth Academy, after which you or FEA notifies the state that Pat is a student there, and the state shoots your voucher allowance to the school.

But with an ESA, the state gives you an stack of money, perhaps in an actual bank account or maybe on a special debit card, and you go spend that on whatever education thing you like. You could spend it like a voucher to help offset the cost of private school tuition (as with vouchers, nobody is proposing ESAs in amounts that would give poor families a free ride to Snooty Upscale Academy). But you could also spend your ESA money on unbundled education-- a math class from an online vendor, a software based reading program, etc. Maybe you'll spend your ESA on books and a computer for homeschooling.

The specifics vary by implementation and proposal. ESAs are being floated in various legislatures with a variety of different features attached. Think of ESAs as a vehicle that can come with lots of options-- and you want to be paying attention to which options your local version includes. The questions to ask.

Who can contribute?

In some versions, the ESA is "funded" by some version of the per pupil cost in the student's district, and it is just the state that does the funding. But in other versions of ESA, private individuals and even corporations can contribute to the ESA kitty. In the most aggressive versions, this is treated as a tax deduction-- folks can fund an ESA instead of paying their taxes to the state-- this version of the ESA is not only a sneaky way to fund vouchers, but it's also a sneaky way to defund public schools.

Who is really helped?

ESAs are often sold like vouchers-- as a means to give poor students the same choices that wealthy students have. And the problem is the same-- giving students a $3000 ESA will not help them get into a private school with $20,000 annual tuition. It will not help them get into a private school that can reject them for any reason from wrong skin color to wrong academic background to wrong religion.

Is it grandfathered in?

This feature can also be devastating to public schools and local taxpayers. In this version of ESAs, everyone gets an ESA even if they were never enrolled in public schools in the first place.

In other words, if ESA became the law on Monday, on Tuesday hundreds of thousands of taxpayer dollars would immediately leave the public system and move to private and parochial schools. Public school systems could lose millions of dollars in revenue without actually losing a single student. Even for some ESA fans that's a bridge too far, and some ESA proposals include rules that say the student must have been enrolled in public school at some point. But even then, you can end up with silly rules that basically require students to check in with a public school for six months before cashing out with their ESA.

Is there any oversight at all?

ESAs come with some of the same problems as vouchers-- are tax dollars being used to support a school that teaches that the earth is flat, that the Holocaust never happened, and that slavery was good for black people because they're genetically inferior?

But ESAs up the ante. Can I spend my ESA on single courses? Can I hire a tutor with no actual qualifications? How about a youtube subscription so I can watch Kahn Academy videos more easily? Can I take an "educational" trip to Europe? What if I buy an Xbox so I can play "educational" games? How about buying a car so that I can drive myself to the library? A cruise? Nice clothes so I feel smarter? Are there any limits to how I can spend my ESA? Is there any oversight at all?

This, incidentally, should bother conservatives. ESAs generally come with zero-to-no accountability, meaning that taxpayer dollars are simply collected and handed over to families to do nobody-knows-what with. I don't believe that taxation without accountability is a conservative value.

Does the state shed all educational responsibility?

This is not discussed nearly enough. Pat's family takes the ESA and enrolls Pat in some classes at a charter school, sets up some online studies, and hires a tutor. The charter school goes out of business, the online courses turn out to be frauds, and the tutor skips out after being paid. At this point, does the state just shrug and say, "Look, we gave you your ESA. If you blew it and didn't caveat emptor hard enough, then it sucks to be you. When we gave you the ESA, we had done our part. You're on your own now."

ESAs imply a policy shift-- that the state is no longer responsible for making sure that very child gets a decent education. That's a problem.

Trying to stay caught up

In March of 2015, I wrote a piece suggesting that if we were going to take "the money follows the child" we'd have to accept that the money could be spent on trips or play stations or parties or clothes and food. I was making my point with hilarious hyperbole, but now reality is catching up with me. So I'll quote my own conclusion. Maybe we can just let students have to use or waste on whatever, I said.

Unless of course you'd like to suggest that the taxpayers who handed over that money and the community that collected it have an interest in making sure that it's spent well and responsibly in a way that serves the community's greater good. In which case we can go back to discussing how those needs of the stakeholders--ALL the stakeholders-- are best served by an all-inclusive community-based taxpayer-controlled educational system, and stop saying silly things like, "The money belongs to the student."

ESAs are a terrible idea unless your goal is to further cripple public education, to subsidize the wealthy (with tax dollars collected from everyone else), or to dump the taxpayer's dollars into a deep, dark hole. But they are one of the current ed reform legislative policy darlings, so keep your eyes peeled, ask the right questions, and oppose them when they roll into your state capital.