Research & Commentary: Universal ESA Program Could Produce More Than $4 Billion in Social Benefits for Tennessee

Published January 10, 2019

A new report from the Beacon Center details how a statewide, universal education savings account (ESA) program could provide the Volunteer State $4.26 billion in economic benefits through 2038 due to increasing high school graduation rates and a decrease in criminal activity.

Counting Dollars and Cents: The Economic Impact of a Statewide Education Savings Account Program for Tennessee, authored by the Cato Institute’s Corey DeAngelis and the Wisconsin Institute for Law & Liberty’s Will Flanders, conservatively projects adoption of a universal ESA would increase the number of high school graduates by 13,480 through 2038 and add $2.9 billion in economic benefits for these students, including a $683 million increase in personal income, over the course of their lifetimes due to the higher earning potential that comes with having a high school diploma. Furthermore, the report estimates the ESA program will help reduce the number of felons in Tennessee by more than 15,000 and the number of misdemeanants by more than 21,000 through 2038, which would produce a $685 million reduction in social costs.

“These numbers represent expected additional dollars in the pockets of Tennesseans as well as additional taxpayer revenue for the state itself that could be used for other meaningful reforms,” the authors wrote. “But even more importantly, the numbers serve as stand-ins for the meaningful improvements to quality of life brought about by a better education.”

With an ESA, state education funds allocated for a child are placed in a parent-controlled savings account. Parents are then able to use a state-provided, restricted-use debit card to access the funds to pay for the resources chosen for their child’s unique educational program. Normally, these ESA funds can be used to pay for tuition and fees at private and parochial schools, textbooks and curriculum, online learning programs, tutoring services, and educational therapies. 

Tennessee currently has the Individualized Education Account Program, an ESA for special-needs students. But eligibility for that program is limited to just two percent of Tennessee students. For the 2018–19 school year, only 137 children at 14 different schools participated in the program.

Copious empirical research on ESAs, their sister voucher programs, and tax-credit scholarships finds these programs offer families improved access to high-quality schools that meet their children’s unique needs and circumstances. Moreover, these programs improve access to schools that deliver quality education inexpensively. Additionally, these programs benefit public school students and taxpayers by increasing competition, decreasing segregation, and improving civic values and practices. Students at private schools are also less likely than their public school peers to experience problems such as alcohol abuse, bullying, drug use, fighting, gang activity, racial tension, theft, vandalism, and weapon-based threats. 

“For policymakers,” the authors conclude, “this study suggests that the implementation of a universal or statewide ESA is not only the right one when one considers the tangible academic benefits that accrue to choice participants, but also from the perspective of continuing to expand Tennessee’s position as an economic engine of the southeast and the nation as a whole.”

The school a child attends should not be determined solely by his or her ZIP code. However, this is currently the case for most Tennessee children. The goal of public education in the Volunteer State should be to enable all parents, no matter their income level, to choose which schools their children attend. Public schools should not hold a monopoly on education. By implementing a universal ESA program, we can make sure every child has the opportunity to attend a quality school.

Counting Dollars and Cents: The Economic Impact of a Statewide Education Savings Account Program in Tennessee
This report from the Beacon Center argues that giving families at all income levels true education choice leads to better education outcomes, as well as higher financial, economic and societal benefits. For Tennessee, a universal ESA program could lead to $.26 billion in economic benefits through 2038.

2018 Schooling in America Survey: Public Opinion on K–12 Education, Parent and Teacher Experiences, Accountability, and School Choice
This annual survey from EdChoice, conducted in partnership with Braun Research, Inc., measures public opinion and awareness on a range of K–12 education topics, including parents’ schooling preferences, educational choice policies, and the federal government’s role in education. The survey also records response levels, differences, and intensities for citizens located across the country and in a variety of demographic groups.

Education Savings Accounts: The Future of School Choice Has Arrived
In this 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.

Protecting Students with Child Safety Accounts
In this Heartland Policy Brief, Vicki Alger, senior fellow at the Independent Women’s Forum and research fellow at the Independent Institute, and Heartland Policy Analyst Tim Benson detail the prevalence of bullying, harassment, and assault taking place in America’s public schools and the difficulties for parents in having their child moved from a school that is unsafe for them. Alger and Benson propose a Child Safety Account program, which would allow parents to immediately have their child moved to a safe school – private, parochial, or pub­lic – as soon as parents feel the public school their child is currently attending is too dangerous to their child’s physical or emotion­al health.

The Effects of School Choice on Mental Health
This study from Corey DeAngelis at the Cato Institute and Angela K. Dills of Western Carolina University empirically examines the relationship between school choice and mental health. It finds that states adopting broad-based voucher programs and charter schools witness declines in adolescent suicides and suggests that private schooling reduces the number of times individuals are seen for mental health issues.

Ten State Solutions to Emerging Issues
This Heartland Institute booklet explores solutions to the top public policy issues facing the states in 2018 and beyond in the areas of budget and taxes, education, energy and environment, health care, and constitutional reform. The solutions identified are proven reform ideas that have garnered significant support among the states and with legislators.

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.

The Public Benefit of Private Schooling: Test Scores Rise When There Is More of It
This Policy Analysis from the Cato Institute examines the effect increased access to private schooling has had on international student test scores in 52 countries. The Cato researchers found that a 1 percentage point increase in the share of private school enrollment would lead to moderate increases in students’ math, reading, and science achievement.

Fiscal Effects of School Vouchers: Examining the Savings and Costs of America’s Private School Voucher Programs
In this EdChoice study, Director of Fiscal Policy and Analysis Martin F. Lueken examined the fiscal impact of voucher programs across America—from their inception through fiscal year 2015—to determine whether they generated costs or savings for state and local taxpayers. Lueken found these programs generated cumulative net savings to state and local budgets of $3.2 billion. This represents a $3,400 savings per voucher recipient.


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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