What are Educational Savings Accounts (ESA) and Does Hawaii Need Them?

Parents, imagine that your government gave you tax dollars to custom fit and finance your child’s K-12 education.  Sounds good, doesn’t it?  Arizona did just that in 2011 and Florida followed suit in 2014.   The way it works is this:  The government gives you 90 percent of what it would have spent and you design your child’s education around it.  Whatever you don’t spend you can save for future educational use.  The plan can be as flexible as your State Legislature designs.  For instance, in Arizona, items such as therapeutic horseback lessons may be eligible.

Conservatives and Libertarians are wild about Educational Savings Accounts (ESA) and, apparently, so too are cash-strapped States.  At least a half-dozen states from Virginia to Oklahoma will bring a bill to the floor soon; Georgia’s vote is imminent.

On its face, it’s a great idea: a real win-win.  

To hear Kathy Visser tell it to The Federalist, it’s a benefit for all.  Instead of spending the money on legal expenses challenging the State of Arizona over her son’s special education needs, she’s able to spend it on him directly. The government and her child are both made better off under an ESA.

Underlying states’ incentive to convert students to ESA is the cost of Special Education (SPED).  The Federal Government mandates inclusion of all students regardless of ability but only partially funds the excess needed to educate SPED students.  As an example, Hawaii’s Department of Education spends $325.5 million, 23.2 percent of its budget, on special education while as a percentage of enrollment, SPED students comprise less than 10 percent of the total.

Indeed, proponents of ESAs make valid point after valid point.  Perhaps one of the more intriguing arguments for ESAs is that it eliminates the need for mandated standardized testing.  Write Jason Bedrick and Lindsey M. Burke:

 

In a generally well-meaning effort to impose “accountability,” some policymakers have attempted to regulate school choice programs as they regulate district schools, including by mandating state tests. However, rules designed to regulate a monopoly like a public-school system are not appropriate for a market. Beyond basic health and safety regulations, top-down accountability measures are generally unnecessary at best and harmful at worst. Centralized standards, especially in the form of state testing mandates, induce conformity that can undermine the innovation and diversity that give educational choice its value.

 

Simply put, ESAs leave all of the quality issues and decisions to parents.  Depending on how you feel about this issue, it could be either good or bad.  On one hand, it lessens the impact the government has on your household, giving you more freedom to decide what is important and relevant.  On the other hand, it also gives your neighbor the ability to decide for his household what is important, perhaps leaving him to eliminate science and teach faith-based learning only.  While such an approach seems innocuous on its surface, it would leave also us without a national narrative or a common lesson in civics and tolerance of other viewpoints.  

Returning back to ESA’s relevance to Hawaii however, we need to ask ourselves if this is the wave of the future.  That is, have we already gone that route by creating charter schools?  Wouldn’t we all be better off if we could control the cost of education while also creating a market-based incentive to excel?  

An important distinction to note here, is that ESAs were designed by legislatures specifically to address special education needs.  While Arizona’s ESA statute is not as restrictive as Florida’s, admission to the program was denied to nearly half of its applicants for the 2014-15 school year.  Florida’s statute specifically limits the program to those “who have an Individualized Education Plan or have been diagnosed with one of the following: autism, Down syndrome, Intellectual disability, Prader-Willi syndrome, Spina-bifida, Williams syndrome, and kindergartners who are considered high-risk.“  Clearly, it was a financial matter that brought about the creation of ESAs.

Seguing into financial matters introduces the question of whether ESA legislation is viable over the long term.  Wouldn’t the current legislation lead to more special education requests?  That is, for a child marginally in need of SPED, there’s now an incentive to be fully diagnosed in order to be placed in an ESA.  There’s also an incentive for people who are now homeschooling their child to qualify for an ESA.  Such cases already exist in Florida, where there is no requirement that a child have been previously enrolled in a public school before requesting enrollment in an ESA.  In this case, the State of Florida’s cost has risen rather than been reduced.  Then again, there’s the cost of administration as well as the potential for fraud.  Take for instance, the Florida family that requested a European boondoggle as part of the learning plan. (It was denied, but the cost of evaluation still exists.)

There are many unanswered questions regarding Educational Savings Accounts (ESA) that can only be answered by the passage of time.  It will be interesting to see how this new legislation works out over the next few years.  While the State of Hawaii could use some changes to the cost and quality of SPED education, it remains to be seen if ESA is the answer.  

Hawaii Kai Auntie

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Hawaii Kai Auntie

News from Hawaii Kai and East Oahu. My ❤ passions include kids, education, #rstats, technology and our environment. Casual strategy game player and DIY er.