Education savings accounts are supposed to help families cover a range of expenses linked to teaching their kids. That’s exactly what parents in North Carolina with ESAs tend to do.
It’s a key finding from new research on the topic. The finding could have positive implications for ESAs’ long-term viability.
“More parents customized — that means used their account for more than one educational option or service — in North Carolina than in the first two years of any education savings account program to date,” said Jonathan Butcher, education fellow at the conservative Heritage Foundation. “Arizona, Florida, Tennessee, and Mississippi all have programs that are older than North Carolina’s. But North Carolina families — a larger share of them — customized with their accounts more than any other states that have had ESAs.”
“The state deposits a portion of the child’s funds from the state finance formula into a private account that parents use to buy education products and services for their children,” said Butcher, describing the ESA’s basic structure. “This is different from a school voucher. With a school voucher, the state will send a check either straight to a school or to a family, who will then use it to pay private school tuition.”
The ESA is unique. “To date, there is no other private learning option that allows parents to use traditional state education spending — or even a separate appropriation — that allows families to buy more than one educational product,” Butcher said.
That means ESAs can cover more than just tuition. Textbooks, online classes, and educational therapies are all eligible for ESA funding, Butcher said. He didn’t mention tutoring. But my John Locke Foundation colleague Bob Luebke has touted the important role ESAs can play in funding individualized tutoring, especially for students dealing with learning loss from the COVID-19 pandemic.
Butcher did focus on one education innovation tied to the pandemic. “Learning pods have been in the headlines because families have been taking their child out of a public school, educating them at home with friends or with other students in a small learning setting,” he said.
Distinct from single-family homeschooling and the typical private school, learning pods have helped 3 million families over the past year, Butcher said, citing data from Education Next. “It’s a nontrivial number of families that have been dissatisfied with the persistent school closures.”
Those learning pods are “just one step away” from ESAs, Butcher said. ESA programs in Arizona and New Hampshire allow families to use the accounts to pay for services in a learning pod. North Carolina created a new grant program for families creating learning pods.
“We have vouchers and pods and ESAs. All of these things are now starting to overlap and merge together into a landscape that is becoming much more personalized based on the needs of a child,” Butcher said.
About 64% of North Carolina’s ESA families took advantage of the account’s flexibility to pay for more than one service. “Generally speaking, this was private school tuition and something else,” Butcher said.
“This is distinct from the first years of the program in Arizona,” the birthplace of ESAs. Just 34.5% of the earliest families in that Western state used the new account to pay for more than one education option. The percentage actually dropped from the first to the second year. In Florida, the comparable number was 42% of families who customized ESA spending.
Now is a great time to assess education savings accounts, Butcher explained. “This is a significant point in the lifeline of school choice around the U.S.”
ESAs were “limited to about 75 students in Arizona in 2011,” he said. Now five states have operating ESA programs, with new laws expanding the education funding option to West Virginia, New Hampshire, Missouri, and Kentucky. “We are sort of living right now the change in the landscape of learning options for parents around the country.”
It’s important to highlight parents’ use of ESAs for more than just private school tuition. “ESAs are distinct from school vouchers,” Butcher said. “They’re distinct from tax credit scholarships and certainly from charter schools.”
“That matters because school choice programs are the target of groups such as teachers unions that try to shut them down,” he added. “When these programs arrive in court, it is important to be able to demonstrate the distinct features of these accounts.”
The distinct features of North Carolina’s program should protect it from legal attacks, in Butcher’s estimation. That would mean good news for students, families, and taxpayers.
Mitch Kokai is senior political analyst for the John Locke Foundation.