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Research & Commentary: New Report Shows the Positive Fiscal Effects of an Education Savings Account Program in Connecticut

December 14, 2017

ESA Program Could Save Connecticut $25 to $127 Million, Depending On How Many Students Enroll

A report issued by the Yankee Institute and Nonpartisan Action for Better Redding, titled Education Savings Accounts: Empowering Kids and Saving Money in Connecticut, details how education savings accounts (ESAs) can change the Nutmeg State’s “deficient” K–12 funding mechanism, while also helping to improve the state’s finances and increase local control of education.

With an ESA, state education funds allocated for a child are placed in a parent-controlled savings account. Parents then use a state-provided debit card to access the funds to pay for the resources chosen for their child’s unique educational program, such as tuition at a private or parochial school, tutoring, online classes, transportation, specialized therapies, textbooks, and even college courses while still in high school. Unused ESA funds may also be rolled over from year to year and can be saved to pay for future college expenses.

In September 2016, a Superior Court judge ruled in Connecticut Coalition for Justice in Education Funding v. Rell that Connecticut officials must submit a plan to remedy deficiencies in the state’s K–12 funding mechanism within 180 days. The judge ruled Connecticut fell short in “intervening in struggling school districts when local government falters,” “distributing education aid,” and “funding special education, identifying eligible students, and delivering services,” among others.

While an appeal was granted by the Connecticut Supreme Court, the authors believe the General Assembly may have to radically restructure the state’s public education system to meet the court’s demands.

The study authors believe ESAs can help Connecticut address these issues, because ESAs give parents alternative choices to their local public schools, “[offering] a quick and efficient method for intervening when a district is unable to meet a student’s needs.” Further, ESAs could provide “a sustained and equitable funding stream to underserved students and students with special needs” because a program could be set up that provides higher-value ESAs for special-needs and economically disadvantaged students.

“ESAs represent a fundamental structural improvement to public education by giving the people who know students best – their parents – the control to shape their children’s education to meet each child’s unique needs,” the authors wrote. “They can provide parents with an ongoing opportunity to individualize and fine-tune the education their children receive to ensure that their needs are met.”

Noting the poor fiscal health of the state, including a teacher pension system that is $10.8 billion in debt and only 59 percent funded, the authors estimate a $10,000 per-student ESA could have save between $25 million and $127 million, depending on the number of students (2 percent on the low end, 10 percent on the high end) who sign up for the program. This amounts to a savings of $2,500 per pupil. This number would be in line with the findings of other researchers examining the fiscal effects of the country’s 10 largest school voucher programs, which were determined to produce an annual savings of $3,400 per pupil.

Connecticut is currently a school choice desert, but providing an ESA program would instantly give Nutmeg State families a greater opportunity to meet each child’s unique education needs. When parents are given the opportunity to choose, every school must compete and improve, which gives more children the opportunity to attend a quality school.

The following documents provide more information about ESAs and school choice.

Education Savings Accounts: Empowering Kids and Saving Money in Connecticut
http://www.yankeeinstitute.org/wp-content/uploads/2017/10/Yankee-Study-ESA-Study-2017-no-marks.pdf
This report from the Yankee Institute and Nonpartisan Action for Better Redding notes how an ESA program could help save Connecticut millions of dollars annually while simultaneously providing equity and improving outcomes for Connecticut students. 

Education Savings Accounts: The Future of School Choice Has Arrived
https://www.heartland.org/publications-resources/publications/education-savings-accounts-the-future-of-school-choice-has-arrived
In this new Heartland Policy Brief, Policy Analyst Tim Benson discusses how universal ESA programs offer the most comprehensive range of educational choices to parents; describes the six ESA programs currently in operation; and reviews possible state-level constitutional challenges to ESA programs.

A Win-Win Solution: The Empirical Evidence on School Choice (Fourth Edition)
http://www.edchoice.org/wp-content/uploads/2016/05/A-Win-Win-Solution-The-Empirical-Evidence-on-School-Choice.pdf
This paper by EdChoice details how a vast body of research shows educational choice programs improve academic outcomes for students and schools, saves taxpayers money, reduces segregation in schools, and improves students’ civic values. This edition brings together a total of 100 empirical studies examining these essential questions in one comprehensive report.

2017 Schooling in America: Public Opinion on K–12 Education, Parent Experiences, School Choice, and the Role of the Federal Government
https://www.edchoice.org/wp-content/uploads/2017/11/2017-Schooling-In-America-by-Paul-DiPerna-Michael-Shaw-and-Andrew-D-Catt.pdf
This annual EdChoice survey, conducted in partnership with Braun Research, Inc., measures public opinion and awareness on a range of K–12 education topics, including parents’ schooling preferences, educational choice policies, and the federal government’s role in education. The survey also records response levels, differences, and intensities for citizens located across the country and in a variety of demographic groups.

Competition: For the Children
https://www.heartland.org/publications-resources/publications/competition-for-the-children
This study from the Texas Public Policy Foundation claims universal school choice results in higher test scores for students remaining in traditional public schools and improved high school graduation rates.

The School Voucher Audit: Do Publicly Funded Private School Choice Programs Save Money?
http://www.edchoice.org/wp-content/uploads/2015/07/The-School-Voucher-Audit-Do-Publicly-Funded-Private-School-Choice-Programs-Save-Money.pdf
This report by Jeff Spalding of EdChoice provides a program-for-program breakdown of school voucher costs and savings. On the whole, Spalding says these programs have provided a cumulative savings of $1.3 billion since 2007, or roughly $3,400 per pupil.

The Education Debit Card II: What Arizona Parents Purchase with Education Savings Accounts
http://www.edchoice.org/wp-content/uploads/2016/02/2016-2-The-Education-Debit-Card-II-WEB-1.pdf
This follow-up EdChoice report by Jonathan Butcher and Lindsey Burke examines additional data from Arizona’s Empowerment Scholarship Account program. Butcher and Burke reveal what ESA families’ expenditures are now and how spending trends have changed since their previous report.

Recalibrating Accountability: Education Savings Accounts as Vehicles of Choice and Innovation
https://www.heartland.org/publications-resources/publications/recalibrating-accountability-education-savings-accounts-as-vehicles-of-choice-and-innovation?source=policybot
This Special Report from The Heritage Foundation and the Texas Public Policy Foundation explores how education savings accounts expand educational opportunities and hold education providers directly accountable to parents. The report also identifies several common types of regulations that can undermine the effectiveness of the program and how they can be avoided.

The Fiscal Effects of School Choice Programs on Public School Districts
https://www.heartland.org/publications-resources/publications/the-fiscal-effects-of-school-choice-programs-on-public-school-districts?source=policybot
In the first-ever study of public school districts’ fixed costs in every state and Washington, DC, Benjamin Scafidi concludes approximately 36 percent of school district spending cannot be quickly reduced when students leave. The remaining 64 percent, or approximately $8,000 per student on average, are variable costs, changing directly with student enrollment. This means a school choice program attaching less than $8,000 to each child who leaves a public school for a private school actually leaves the district with more money to spend on each remaining child. In the long run, Scafidi notes, all local district spending is variable, meaning all funds could be attached to individual children over time without creating fiscal problems for government schools.

 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit School Reform News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

The Heartland Institute can send an expert to your state to testify or brief your caucus; host an event in your state; or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact John Nothdurft, Heartland’s director of government relations, at john@heartland.org or 312/377-4000.

Author
Tim Benson joined The Heartland Institute in September 2015 as a policy analyst in the Government Relations Department.
TBenson@heartland.org @BenceAthwart