Research & Commentary: Education Savings Accounts in Pennsylvania

Published October 19, 2017

A bill recently introduced in the Pennsylvania Senate would establish an education savings account (ESA) program for students attending the lowest-performing 15 percent of public schools in the Keystone State.

Under the program, ESAs could be used to pay for tuition and fees at private and parochial schools, as well as textbooks, tutoring services, and educational therapies. The ESAs could also be used to cover the fees required to take national standardized achievement tests, such as the SAT and ACT.

The maximum scholarship amount for an eligible student would be $5,700, which is the average per-pupil funding provided by the commonwealth. All leftover funds could be rolled over for use in the following school year and used to pay tuition costs for higher education. For special needs students, the ESA amount will be based “on the category of disability by which the resident school district is required to categorize the student.”

“Too many Pennsylvania children are relegated to persistently underperforming schools based on nothing more than a home address,” wrote three of the bill’s sponsors in a memorandum. “Pennsylvania’s existing school choice programs—charter schools and scholarship tax credits—are vital lifelines for many of these children. But demand for these options greatly outpaces supply, as evidenced by heartbreaking stories of charter lotteries and scholarship organizations forced to turn away thousands of deserving applicants every year. Chronic low performance and abysmal graduation rates fail to prepare our students for college or careers. Clearly, there is an urgency to serve families who do not have the means or the good fortune to enroll in a high-quality school.”

Only 45 percent of Pennsylvania 4th graders and 36 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 41 percent of 4th graders and 39 percent of 8th graders tested proficient in reading. These results show Pennsylvania’s public school system is failing to educate roughly 6 out of 10 of their 4th grade and 8th grade students to a proficient level in reading and mathematics.

Pennsylvania’s troubling performance on NAEP underscores the desperate need for the state to expand school choice opportunities beyond what is currently available. Too many public schools in Pennsylvania 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 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. 

“The results are not difficult to explain,” the authors of the study stated. “School choice improves academic outcomes for participants and public schools by allowing students to find the schools that best match their needs and by introducing healthy competition that keeps schools mission-focused. It saves money by eliminating administrative bloat and rewarding good stewardship of resources [and it] breaks down the barriers of residential segregation, drawing students together from diverse communities.”

Pennsylvania already has two tax-credit scholarship programs, the Educational Improvement Tax Credit Program and the smaller Opportunity Scholarship Tax Credit Program, so establishing this limited ESA program would not be out of step for the Keystone State and would give more Pennsylvania 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 on education savings accounts.

Policy Tip Sheet: Education Savings Accounts in Pennsylvania
In this new Heartland Policy Tip Sheet, Policy Analyst Tim Benson analyzes a recent proposal in Pennsylvania establishing a new education savings account program which could allow for greater education choice options in the Keystone State. Benson argues that “empirical evidence shows education choice offers families equal access to high-quality schools and does so at a lower cost.”

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 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.

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.


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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