Oregon Considers Universal ESA Bill

Published March 27, 2017

ESAs grant parents access to all or a portion of the money allocated to their child’s public school education for use on education alternatives such as homeschooling textbooks, educational therapies, and private school tuition.

Senate Bill 437 would establish the Education Savings Program Fund, an ESA program in which parents of low-income or disabled children would have access to 100 percent of their child’s public school money. Parents who do not fall into either category would have access to 90 percent of those funds.

SB 437 was introduced in January and remains in committee.

ESA Benefits

Jason Bedrick, director of policy at EdChoice, says ESAs incentivize education providers to improve.

“Education savings accounts empower families to tailor their child’s education to his or her learning needs,” Bedrick said. “ESAs have the potential to foster innovation. There is no one best way to provide an education. With greater flexibility in funding, education providers will have the freedom to try new ways of educating children beyond the traditional school model, and as parents select providers that are effective, those providers have an incentive to grow and others have an incentive to imitate them. Over time, successful innovations will spread and the entire system will evolve.”

Budget Impact Concerns

Steve Buckstein, a senior policy analyst and founder of the Oregon-based Cascade Policy Institute, which provided model language that legislative attorneys used to craft SB 437, says the bill needs some adjusting if it is to have any chance of being passed by the legislature.

“Politically, the bill is a nonstarter this year because it will have a $200 million fiscal impact on the state,” Buckstein said. “So, we are adjusting by filing an amendment that would dictate that special-needs and low-income students are to receive $6,000 instead of $8,781, and if all of the other kids were to receive $4,500 instead of 90 percent of the full amount, that would virtually break even for the state. In other words, there would be roughly no fiscal impact with this amendment.

“Higher ESA dollar amounts can result in a fiscal impact because the bill allows all students to access ESA accounts, including those currently outside the public education system,” Buckstein said. “We estimate that some 90 percent of current private school and homeschool students will apply for ESAs, while less than 10 percent of current public school students will apply for ESAs. Since the state currently only funds public school students, the impact on state funding can be large if the dollar amounts of ESA accounts are too high. We ran models at different dollar amounts and estimated the ‘break-even’ for the state and local districts combined occurs about the $6,000 level for disabled and low-income students and $4,500 for other students.”

Michael McGrady ([email protected]) writes from Colorado Springs, Colorado.