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Giving Parents Choices: How Education Savings Accounts Can Give Every Child a Better Education

by Jonathan Butcher
July 26, 2013

Imagine your child’s teacher calls you in the middle of a workday to say that your son is hiding under a desk and shaking uncontrollably. He needs to be picked up from school right away. Then imagine that episode happens not once, but several times every week.

Holland Hines lived through that experience—and more—with her son, Elias. When he was almost 1 year old, Elias was diagnosed with Autism, Asperger’s Syndrome, and hyperlexia (precocious reading ability), resulting in a unique combination of special needs. He required one-on-one therapy and regular work with a speech specialist and a physical therapist.

“At first he attended a regular public school,” Hines says, “but by the beginning of second grade, it was obvious that they weren’t equipped to help him.” Hines moved with Elias and her four other children from Michigan to Arizona to be closer to her extended family and find help to meet Elias’s needs.

Shortly after moving, Hines learned about Arizona’s education savings accounts. “I couldn’t believe it at first. This was exactly what we needed!”

Education savings accounts give parents choices. For children who are eligible for the program, the Arizona Department of Education deposits 90 percent of a child’s share of the school funding formula into a private bank account that parents maintain. Eligible families use a check card or online payment services such as PayPal to buy textbooks, hire a tutor, enroll their child in online classes, or pay for private school tuition. Parents can save money from year to year and even put the remaining funds in a college savings plan.

The accounts’ flexibility has allowed parents to help their children in ways public schools cannot. Holland Hines, for example, has used her account to pay for tuition to a private school that provides Elias a schedule adapted to his needs. His teachers give him instruction in the morning, and then he attends therapy sessions in the afternoon.

“Elias is now excited for school and comes home happy about what he is learning,” Hines says. “His academics have improved tremendously, his anxiety at home and school is almost gone, and his ability to remain at school for his scheduled school day has greatly improved.”

The Goldwater Institute, a free market policy organization based in Phoenix, designed the accounts in 2005. In 2011, the Arizona legislature and Gov. Jan Brewer (R) made that idea into law. In the 2012–2013 school year, 302 children used the accounts, which is more than double the number of accounts awarded in 2011. More than 1,000 parents applied for education savings accounts this spring.

Currently, children with special needs, children attending failing schools, children from active duty military families, and children adopted from the state foster care system are eligible. More than 200,000 Arizona children (one in five) can apply for an account.

The Arizona teachers’ union and the Arizona School Boards Association sued to take the accounts away from children just weeks after the governor signed the accounts into law. Opponents cited a section of Arizona’s constitution that prohibits public money from being used for private or religious purposes. At least 38 states have “Blaine Amendments” such as this, and unions have used these provisions to attack school choice around the country. The teachers union used this provision to challenge Arizona’s school vouchers, and the Arizona Supreme Court struck down the vouchers in 2009.

The Goldwater Institute is defending education savings accounts alongside state superintendent John Huppenthal and the Institute for Justice. In January 2012, Maricopa County Superior Court Judge Maria Del Mar Verdin ruled the accounts constitutional, citing the very provision that makes education savings accounts so unique: Parents’ flexibility to use the funds for different purposes.

“The exercise of parental choice among education options makes the program constitutional,” ruled Judge Verdin. The judge said that because money does not flow directly from the state to a private or religious school, but instead goes directly to a parent who decides how the money is spent, the accounts do not violate the state constitution.

The union appealed the decision and requested an injunction to block the program. The Arizona Court of Appeals has denied the injunction and will rule on the appeal later this year. Regardless of the outcome at appeals court, the battle is almost surely bound for the state supreme court. The ruling could have broad implications for states with constitutional provisions similar to the Blaine Amendment at issue in this case.

To help families share best practices and navigate the application process, Hines started a message board for savings-account families on Yahoo.com. The message board started as a small chat room to share ideas but has become a virtual buyer’s guide for parents using education savings accounts. Today, 183 families—more than half of all account holders—are members of the chat room, and they have posted nearly 4,000 messages on tutoring programs, online classes, and extracurricular activities such as music lessons, as well as a host of other topics.

Parents and children have been the first to benefit from the accounts, but taxpayers have seen a benefit through the cost savings the accounts provide. As more children take advantage of the accounts, the savings will add up quickly. For every 1,000 Arizona children using education savings accounts, taxpayers save $5.7 million every year. These savings mean that parents can meet their children’s needs at a lower cost than what taxpayers would otherwise spend on them in the public school system.

To meet the growing demand, the Arizona Department of Education has adopted new strategies to prevent fraud and abuse. No public program is immune to fraud, even one that means more educational opportunity for well-meaning parents and their children. The department audits the accounts every fiscal quarter, and the department will withhold the next deposit if a parent has bought an item that is not eligible for purchase.

For example, parents can buy educational apps for an iPad, but they cannot buy hardware like a computer or tablet device. If they buy a device and the department uncovers the purchase during an audit, parents will have to repay the funds or an amount equal to the purchase will be withheld from their next disbursement.

The Goldwater Institute helped design other methods of preventing fraud like an online fraud reporting form and a surety bond system. In the bond system, parents buy an inexpensive insurance contract (costing about $25), and the department uses these fees to recoup the cost of investigating misuse of funds for fraudulent purchases.

Protecting children from fraud will help preserve the program’s integrity and make sure education savings accounts will be around for years to come. The accounts are an education solution that gives parents the freedom to make choices for each of their children’s educations. The idea is a drastic contrast to other education reform ideas—like district consolidation and school turnaround plans—that riddle schools with bureaucracy and take years to show results.

Every child is different and has different needs. Some, like Elias, need specialists to help him with both physical and cognitive development. Other students may be ahead of their peers and could use an education savings account for one-on-one tutoring to move at their own pace. Thousands of students across the country are now attending full-time virtual schools, completing their coursework via computer and interacting with their teachers using phone calls and online chat programs. With so many different choices, a parent has more ways than ever to find a class, school, or any number of other education solutions to help his or her child.

Lawmakers in Florida, Montana, Iowa, and Utah have introduced legislation in the past two years to create education savings accounts in their states, but the bills have not advanced.

All children need access to education savings accounts so we will have more success stories like that of Holland and Elias Hines.

“Nothing about having a special-needs child has been easy,” Hines says. “But this savings account has been one of the most exciting and rewarding experiences of our family’s journey.”

Mr. Butcher is Education Director at the Goldwater Institute, an Arizona-based free market think tank.


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