Research & Commentary: Education Savings Accounts in Oklahoma

Published January 27, 2017

A slew of education savings account (ESA) bills have been introduced in the Oklahoma Senate. Three of the bills would establish the Oklahoma Parental Empowerment Account Program, although the bills contain differences in eligibility. One would make the program eligible for any students from pre-K through 12th grade who attended public school for the first 100 days of the previous school year. The second version requires that an applicant family’s income be less than $250,000 a year and that he or she live in a county with a population of at least 50,000. The third would block eligibility to students in school districts that have adopted four-day weeks.

Funds provided in this ESA program could be used to pay for tuition and fees at private or parochial schools, “educational services” at a public or charter school outside the student’s school district, online curriculum, textbooks, tutoring services, extracurricular activities, and fees for college entrance exams. Leftover funds would carry over each year of the child’s eligibility and would even be available to help pay for tuition at postsecondary schools. Funding would equal 90 percent of state aid totals, and all three bills would cap enrollment at 1 percent of all public school students each year. Participants would be chosen on a first-come, first-serve basis.

Another bill would set up the Parent Empowerment, Revenue Enhancement and Classroom Size Reduction Program, which would also cap participants at 1 percent of all public school students. While similar to the other three bills, it would only go into effect when the Oklahoma Legislature passes pay raise legislation for teachers, and it would change the student funding formula based on income level. Students whose family’s total household income is less than the amount required to qualify for the federal free or reduced-price lunch program would receive 90 percent of state aid funding. Families with total household income above this threshold but below twice this amount would receive 60 percent of funding. Any family with a household income greater than that would receive 30 percent of funding.

Oklahoma’s traditional public schools are failing. Only 37 percent of Arkansas 4th graders and 23 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 33 percent of 4th and 29 percent of 8th graders tested proficient in reading. These results show Oklahoma’s public school system is failing to educate roughly seven out of 10 4th grade and 8th grade students to a proficient level in reading and mathematics.

Oklahoma’s sub-standard 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 the Sooner State 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.

In May 2016, EdChoice released a report examining 100 empirical studies on 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 makes it clear educational choice offers families equal access to high-quality schools that meet their widely diverse needs and desires – and does so at a lower cost – while simultaneously benefitting public school students. 

Currently, private school choice in the Sooner State is available only in a voucher program to children with special needs and in a tax-credit scholarship program with very limited funding. Providing a universal ESA program would instantly bring Oklahoma to the forefront of the education choice movement, and would give all Oklahoma families a greater opportunity to meet each child’s unique education needs. Allowing all students in Oklahoma to receive ESAs would be a giant step toward remedying Oklahoma’s lackluster record of failing to educate its children. 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 on education savings accounts and school choice.

A Win-Win Solution: The Empirical Evidence on School Choice (Fourth Edition)
This paper by the Friedman Foundation for Educational Choice 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.

A Truly Universal Education Savings Account Proposal, Including Fiscal Implications
Under this proposal from the 1889 Institute, the State of Oklahoma would offer every school-age child an education savings account (ESA). Funds could be used for educational purposes, including private school tuition, tutoring, books, and online materials. Leftover ESA funds could be spent on college and career education. The amount of the proposed ESA is $4,500 per child per year, which parents are free to supplement. The program would save districts about $7,500 in variable costs for every child who leaves a public school to take advantage of the ESA program. At maturity, an ESA program of the proposed design would likely save the state over $500 million per year.

Education Savings Accounts and Improving Oklahoma Student Achievement
This report for the 1889 Institute, the Goldwater Institute’s Jonathan Butcher gives an overview of Arizona’s pioneering efforts with education savings accounts and the benefits to Oklahoma of creating its own ESA program. 

2016/17 School Choice Report Card
This report card published by the American Federation for Children scores 27 active non-special-needs voucher, scholarship tax-credit, and education savings account programs against ideal standards for program quality. The report is an excellent tool policymakers and researchers can use to help improve education programs and maximize student participation. 

Research & Commentary: Indiana School Choice Parental Satisfaction Should Lead to More School Choice–commentary-indiana-school-choice-parental-satisfaction-should-lead-to-more-school-choice?source=policybot
In this Research & Commentary, Heartland Policy Analyst Tim Benson examines an expanded, follow-up study to a 2014 report by EdChoice that examines why Indiana parents choose to take advantage of the state’s Choice Scholarship Program voucher and use it to send their children to private schools.

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.

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.

How School Choice Programs Can Save Money 
This Heritage Foundation study of the fiscal impact of voucher programs notes Washington, DC vouchers cost only 60 percent of what the city spends per pupil in government schools. The study estimates if the states with the top eight education expenditures per pupil adopted voucher programs similar to the Washington, DC program, they could save a combined $2.6 billion per year.

How School Choice Can Create Jobs
Examining five South Carolina counties, Sven R. Larson found school choice programs were associated with gains of up to 25 percent in youth self-employment. Larson writes, “School Choice raises academic achievement and reduces the problems and costs associated with high school dropouts. But it also has a decisively positive impact on youth entrepreneurship and could provide a critical boost for the economies of poor, rural counties.”


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.

The Heartland Institute can send an expert to your state to testify or brief your caucus; host an event in your state; or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact Nathan Makla, Heartland’s state government relations manager, at [email protected] or 312/377-4000.