Research & Commentary: California Should Empower Parents with ESAs

Published November 27, 2017

A new report by Vicki Alger of the Independent Institute, titled Customized Learning in California, lays out how the Golden State can help to improve outcomes for its K–12 students by implementing an education savings account (ESA) program.

With an ESA, state education funds allocated for a child are placed in a parent-controlled savings account. Parents then use a state-provided debit card to access the funds to pay for the resources chosen for their child’s unique educational program, such as tuition at a private or parochial school, tutoring, online classes, transportation, specialized therapies, textbooks, and even college courses while still in high school. Unused ESA funds may be rolled over from year to year and can be saved to pay for future college expenses.

Alger notes California already has experience with similar programs. The Alum Rock School District in San Jose participated in an experimental school voucher program in 1972–77. The program was highly popular with parents and teachers, but it was ultimately undone by sustained opposition campaigns from national teachers unions, as well as bureaucratic resistance to full implementation.

As Alger points out, funding for California’s $66 billion K–12 public education system takes up almost 43 percent of the state budget, costing roughly $12,000 per pupil. Yet, despite all these resources and the amount of money required to educate each child, only 29 percent of California 4th graders and 27 percent of 8th graders tested “proficient” in math on the 2015 National Association of Education Progress (NAEP) test, also known as the “Nation’s Report Card.” Only 28 percent of 4th graders and 8th graders tested proficient in reading. These results show California’s public school system is failing to educate 7 out of 10 4th grade and 8th grade students to a proficient level in reading and mathematics.

California’s troubling performance on NAEP underscores the desperate need for the state to expand school choice opportunities far beyond what is currently available. Too many public schools in California are failing to adequately prepare students for productive lives. Parents should be allowed to choose the schools their children attend and should not be penalized financially if that choice is a private religious or secular school.

Parents in California have been indicating they are ready for school choice programs, including those that implement ESAs. A Berkeley IGS/EdSource poll conducted in August and September 2017 finds 55 percent of Californians support the idea of tax-credit scholarships or voucher programs for low-income families. Among Latino parents, support for these programs rises to 72 percent. Forty-six percent responded they favor offering these programs to all families, regardless of income, including 66 percent of Latino parents and 53 percent of parents in Los Angeles County. These results are backed up by a Public Policy Institute of California poll from earlier in 2017 that showed 60 percent of adults and 66 percent of public school parents are in favor of voucher programs.

Not only are school choice programs popular, they are also effective. In May 2016, EdChoice released a report in which it examines 100 empirical studies of school choice programs. Eighteen of these studies used random assignment to measure outcomes, referred to in academia as the “gold standard.” The overwhelming majority of the available empirical evidence shows education choice offers families equal access to high-quality schools that meet their widely diverse needs and desires, and, according to the research, it does so at a lower cost. In addition, EdChoice found education choice also benefits public school students. 

Alger concludes, “ESAs are popular, easy to use, fiscally responsible, and constitutional. Best of all, they empower parents to choose how, not just where, their children are educated, which customizes learning to degrees no one-size-fits-all system could ever match—no matter how lavishly funded.”

California is currently a school choice desert, but providing a universal ESA program would instantly bring the Golden State to the forefront of the education choice movement, and would give all California families a greater opportunity to meet each child’s unique education needs. When parents are given the opportunity to choose, every school must compete and improve, which gives more children the opportunity to attend a quality school.

The following documents provide more information about education savings accounts.

Customized Learning for California: Helping K–12 Students Thrive with Education Savings Accounts
In this report, Independent Institute Research Fellow Vicki Alger explains how ESAs can help education outcomes for students in the Golden State. The report discusses K–12 education options in California, describes the basic mechanics of ESAs, corrects misconceptions about ESAs, and outlines the features of a California ESA program that would be privately funded through tax-credit contributions.

Education Savings Accounts: The Future of School Choice Has Arrived
In this new Heartland Policy Brief, Policy Analyst Tim Benson discusses how universal ESA programs offer the most comprehensive range of educational choices to parents; describes the six ESA programs currently in operation; and reviews possible state-level constitutional challenges to ESA programs.

A Win-Win Solution: The Empirical Evidence on School Choice (Fourth Edition)
This paper by EdChoice details how a vast body of research shows educational choice programs improve academic outcomes for students and schools, saves taxpayers money, reduces segregation in schools, and improves students’ civic values. This edition brings together a total of 100 empirical studies examining these essential questions in one comprehensive report.

Competition: For the Children
This study from the Texas Public Policy Foundation claims universal school choice results in higher test scores for students remaining in traditional public schools and improved high school graduation rates.

Recalibrating Accountability: Education Savings Accounts as Vehicles of Choice and Innovation
This Special Report from The Heritage Foundation and the Texas Public Policy Foundation explores how education savings accounts expand educational opportunities and hold education providers directly accountable to parents. The report also identifies several common types of regulations that can undermine the effectiveness of the program and how they can be avoided.

Taking Credit for Education: How to Fund Education Savings Accounts through Tax Credits
This Cato Institute paper shows how legislators can design an education savings account (ESA) that is privately funded through tax-credit-eligible contributions from taxpayers, similar to tax-credit scholarship programs that already exist in states across the country. Tax-credit-funded ESAs would empower families with more educational options while enhancing accountability and refraining from coercing anyone to financially support ideas they oppose. Because they are funded through voluntary contributions, rather than public funds, tax-credit scholarships have been found by the U.S. Supreme Court and by every state supreme court that has considered the issue to be within the bounds of the U.S. Constitution and most state constitutions. In states that have Blaine amendments, which greatly restrict the ability of lawmakers to create some school choice programs, tax-credit ESAs could be a lifeline to families in need.

The Effects of Statewide Private School Choice on College Enrollment and Graduation: Evidence from the Florida Tax Credit Scholarship Program
This study from Urban Institute scholars Matthew Chingos and Daniel Kuehn shows Florida’s Tax Credit Scholarship Program boosted college enrollment for participating students by 15 percent, with students enrolled in the program for four or more years seeing a 46 percent hike.

The Fiscal Effects of School Choice Programs on Public School Districts
In the first-ever study of public school districts’ fixed costs in every state and Washington, DC, Benjamin Scafidi concludes approximately 36 percent of school district spending cannot be quickly reduced when students leave. The remaining 64 percent, or approximately $8,000 per student on average, are variable costs, changing directly with student enrollment. This means a school choice program attaching less than $8,000 to each child who leaves a public school for a private school actually leaves the district with more money to spend on each remaining child. In the long run, Scafidi notes, all local district spending is variable, meaning all funds could be attached to individual children over time without creating fiscal problems for government schools.


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit School Reform News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

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