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Research & Commentary: Universal ESA Bill Would Be Giant Boon to Iowa Students, Families

January 10, 2017

Legislators Should Focus On Passing Universal ESA Bill

There has been talk there will be a big push to introduce education choice options in Iowa during the 2017 legislative session. Now that this session has commenced, Iowa legislators should concentrate their focus on passing a universal education savings account (ESA) bill.

Under an ESA model, state education funds are placed into parent-controlled savings accounts. Parents then use a state-provided debit card to access these funds to pay for different education-related expenses, such as tuition at a private or parochial school, tutoring, online classes, transportation, specialized therapies, and textbooks. Parents may even use the funds to pay for their high school students to attend some college courses. Under the best ESA models, unused funds are rolled over from year to year and can be used to pay for future college expenses. ESA programs are essentially voucher programs with vastly increased flexibility and freedom for parents.

“ESAs are about empowering parents and improving the range of educational options for children,” Renee Porter, executive director of Choice Matterstold The Heartland Institute’s School Reform News. “All children are different and learn differently. Some children have disabilities that require special attention. Other children are so advanced that their time in the classroom isn’t really benefitting them. It’s unrealistic, and quite frankly unfair, to expect every public school to provide for the exact needs of every student. That’s why it’s important to give parents options like charter schools, private schools, and virtual schools.”

Only 44 percent of Iowa 4th graders and 37 percent of 8th graders tested “proficient” in math on the 2015 National Association of Education Progress (NAEP) test, also known as the Nation’s Report Card. Only 38 percent of 4th graders and 36 percent of 8th graders tested proficient in reading. These results show Iowa’s public school system is failing to educate roughly six out of ten 4th grade and 8th grade students to a proficient level in reading and mathematics.

Iowa’s sub-standard performance on NAEP underscores the desperate need for the state to expand school choice opportunities far beyond what is currently available. Too many public schools in Iowa are failing to adequately prepare students for productive lives. Parents should be allowed to choose the schools their children attend and should not be penalized financially if that choice is a private religious or secular school.

In May 2016, EdChoice released a report examining 100 empirical studies on school choice programs. Eighteen of these studies used random assignment to measure outcomes, referred to in academia as the “gold standard.” According to the report, “Students who apply for a voucher enter randomized lotteries to determine who will receive the voucher and who will remain in a public school; this allows researchers to track very similar ‘treatment’ and ‘control’ groups, just like in medical trials.” The overwhelming majority of the available empirical evidence makes it clear educational choice offers families equal access to high-quality schools that meet their widely diverse needs and desires – and does so at a lower cost – while simultaneously benefitting public school students. 

Outside of the School Tuition Organization Tax Credit, private education choice in the Hawkeye State is literally nonexistent. The creation of a universal ESA bill similar to the one passed in Nevada in 2015 would go a long way toward remedying Iowa’s lackluster record of failing to educate its children. Educational choice programs can give all families a greater opportunity to meet each child’s unique education needs. The goal should be to allow every parent to choose, require every school to compete, and give every child an opportunity to attend a quality school.

The following documents provide more information about education savings accounts.

A Win-Win Solution: The Empirical Evidence on School Choice (Fourth Edition)
https://www.heartland.org/publications-resources/publications/a-win-win-solution-the-empirical-evidence-on-school-choice-fourth-edition?source=policybot
This paper by the Friedman Foundation for Educational Choice 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.

2016/17 School Choice Report Card
https://www.heartland.org/publications-resources/publications/201617-school-choice-report-card
This report card published by the American Federation for Children scores 27 active non-special-needs voucher, scholarship tax-credit, and education savings account programs against ideal standards for program quality. The report is an excellent tool policymakers and researchers can use to help improve education programs and maximize student participation. 

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.

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 Tax-Credit Scholarship Audit: Do Publicly Funded Private School Choice Programs Save Money?
https://www.heartland.org/publications-resources/publications/the-tax-credit-scholarship-audit-do-publicly-funded-private-school-choice-programs-save-money
In this study, EdChoice Director of Fiscal Policy and Analysis Martin Lueken updates previous work examining the fiscal effects of private school choice programs on state governments, state and local taxpayers, and school districts. This report analyzes savings from tax-credit scholarship programs, which allow individuals and businesses to reduce their state tax liability by making a private donation to a nonprofit organization that provides scholarships for children to attend private schools of their choice. This audit examines 10 tax-credit scholarship programs operating in seven states between 1997 and 2014, which serve 93 percent of all students participating in tax-credit scholarship programs nationwide.

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.

How School Choice Programs Can Save Money
http://www.heritage.org/Research/Education/wm727.cfm 
This Heritage Foundation study of the fiscal impact of voucher programs notes Washington, DC vouchers cost only 60 percent of what the city spends per pupil in government schools. The study estimates if the states with the top eight education expenditures per pupil adopted voucher programs similar to the Washington, DC program, they could save a combined $2.6 billion per year.

How School Choice Can Create Jobs
https://www.heartland.org/publications-resources/publications/how-school-choice-can-create-jobs?source=policybot
Examining five South Carolina counties, Sven R. Larson found school choice programs were associated with gains of up to 25 percent in youth self-employment. Larson writes, “School Choice raises academic achievement and reduces the problems and costs associated with high school dropouts. But it also has a decisively positive impact on youth entrepreneurship and could provide a critical boost for the economies of poor, rural counties.”

Research & Commentary: Indiana School Choice Parental Satisfaction Should Lead to More School Choice
https://www.heartland.org/publications-resources/publications/research--commentary-indiana-school-choice-parental-satisfaction-should-lead-to-more-school-choice?source=policybot
In this Research & Commentary, Heartland Policy Analyst Tim Benson examines an expanded, follow-up study to a 2014 report by EdChoice that examines why Indiana parents choose to take advantage of the state’s Choice Scholarship Program voucher and use it to send their children to private 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 at https://www.heartland.org/publications-resources/newsletters/school-reform-news, The Heartland Institute’s website at http://heartland.org, and PolicyBot, Heartland’s free online research database, at https://www.heartland.org/policybot/index.html.

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