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ESAs + Tax Credits = Grand Plan for Brighter School Choice Future

I spent the last couple days of 2014 looking back. With 2015 underway, it’s now time to peer directly into the future of possibilities.

Fortunately, I have really smart people like the Heritage Foundation’s Lindsey Burke and the Cato Institute’s Jason Bedrick to do all the heavy lifting for me. (Besides, it’s especially interesting to see these two D.C. think tanks team up together.) Their piece for National Affairs, titled “The Next Step in School Choice,” has me smiling optimistically at the possibilities.

Building off the late, great Milton Friedman’s vision of “partial vouchers,” the authors remind us of the inefficiencies of the current system and efforts to overcome them:

In their classic work, Free to Choose, Milton and Rose Friedman described four basic ways of spending money. People can either spend their own money or someone else’s money, and they can either spend it on themselves or on someone else.

The status quo is education bureaucrats spending other people’s money on other people’s children — notoriously, the least efficient approach. What Bedrick and Burke prescribe is a refinement on an emerging school choice policy that would lead us much closer to the opposite.

It’s not the first time I’ve brought your attention to the concept of Education Savings Accounts (ESAs), described as the “unbundling of education.” Such programs are now maturing in Arizona, beginning to take root in Florida, and on the legislative horizon in a number of other states.

This article makes a strong case for combining the consumer-friendly, cost-saving incentives of ESAs with the less regulatorily restricted and more litigation-resistant scholarship tax credits. Burke and Bedrick explain how the Arizona Department of Education’s experience overseeing ESAs has revealed some significant administrative challenges. Many of those challenges have been overcome, and documented, but I was surprised to learn about another issue:

Enrollment in Arizona’s ESA program nearly doubled from 692 students last year to about 1,300 this year, but nearly half of the 2,300 applicants were rejected, indicating either that the state needs to re-evaluate its eligibility criteria or that the department was inappropriately rejecting qualified applicants. The department blamed uninformed families, but a prominent non-profit that helped families apply says that’s “insulting” and “misleading.” The Hispanic Council for Reform and Educational Options (HCREO) claimed that, even after they had screened applicants to ensure eligibility, the department rejected three-quarters of their roughly 600 applicants. HCREO also faulted the department for lacking Spanish-language translators, failing to return phone calls to parents, and scheduling ESA workshops during business hours when most low-income parents had to be at work.

Getting improved customer service is one of the reasons the authors wisely recommend running an ESA program through tax credits, as Florida has decided to do with its new Personal Learning Scholarship Accounts. That’s overseen by the state’s large non-profit scholarship organization. As research has shown, the approach of funding ESAs through tax credits rather than through direct government appropriation also promises less bureaucratic regulatory creep and a stronger constitutional bulwark.

I’ve only scratched the surface in this little blog post. So go back and read the piece in National Affairs. And hope along with me that Colorado and many other states soon might follow such a path to a brighter educational future.