Education savings accounts: The future of school choice in Ohio

Greg R. Lawson

NOTE: The Thomas B. Fordham Institute occasionally publishes guest commentaries on its blogs. The views expressed by guest authors do not necessarily reflect those of Fordham.

The Buckeye Institute in Ohio recently released Education Savings Accounts: Expanding Education Options for Ohio, a report co-authored with the Heritage Foundation’s school choice expert Lindsey Burke, which explains how Education Savings Accounts (ESA) will build upon Ohio’s already successful voucher and scholarship programs. Adopting a robust ESA program would propel Ohio’s outdated public education system into the 21st century, and make it nimble enough to navigate the needs of today’s students.

ESAs take the next step toward putting parents in charge of their child’s education. In envisioning education in the 21st century, parents—not bureaucrats—are primarily responsible for meeting the educational needs of students. And ESAs will help Ohio realize that vision.

For more than a century, an “Industrial Age” model of mass learning and limited flexibility has dominated the public education paradigm. This model too often ignores the individual needs, differences, skills, and interests of the children it purports to instruct. By embracing a more flexible and personalized approach to learning, ESAs will help Ohio transition into the new “Information Age”—empowering consumers, parents, children, and taxpayers to customize education to better meet student and community needs.

Ohio has helped lead the nation’s school choice movement, and already boasts strong charter schools and five different voucher programs that allow parents to seek education options to best meet their students’ individual needs. Adding a healthy ESA program simply builds on this success by giving families more purchasing power to customize their child’s education. Even beyond the flexibility of Ohio’s voucher programs, ESAs would present parents with an à la carte menu of education products and services, including textbooks, tutors, online classes, private school tuition, and saving for college. 

An Ohio ESA program could function in a variety of ways, but the keys to its success will always be flexibility for students and families, and minimizing bureaucratic intervention.

In broad strokes, an ESA program deposits an established base dollar amount into a participating family’s account, and would allow for more funds to be added according to a formula that factors relevant demographic criteria and other student needs. Like Ohio’s vouchers, the base amount should hew closely to the state’s guaranteed per-student funding. ESA funds would be dispersed on a periodic basis after parents submit receipts for eligible education expenses. ESA funds from the state would not be taxable income, and parents should be permitted to supplement their ESA funds with personal revenue and to rollover ESA funds from year-to-year in order to enhance market power and increase the supply and demand for new educational products.

Ohio, of course, uses a complex school funding formula and an elaborate mechanism of local and state taxes that would make Rube Goldberg proud. Thus, any ESA funding formula will need to account for those complexities to ensure that the state allocates adequate resources.

Like any state considering ESAs, Ohio should also look to the five successful ESA programs already up and running in Arizona, Florida, Mississippi, Nevada, and Tennessee. The programs in Florida, Mississippi, and Tennessee are currently only available to certain special needs students, but Arizona and Nevada have created effectively universal ESAs for their students.

In 2011, Arizona created the first ESA program with its Empowerment Scholarship Accounts for children with special needs. The program has been a resounding success, with 70 percent of survey respondents indicating that they were very satisfied with their child’s educational experience and Arizona Governor Doug Ducey signing legislation this year to expand the ESAs into a near universal program.

Nevada was first to adopt universal ESAs in 2015, but litigation over the state’s chosen funding stream has delayed its implementation.

Already, Ohio policymakers appear keen to join this revolutionary school choice trend. Two companion bills, Senate Bill 85 (sponsored by Senator Matt Huffman) and House Bill 200 (sponsored by Representative Kyle Koehler), would modify Ohio’s existing non-special needs vouchers by creating a single Opportunity Scholarship. These would closely mirror ESAs and would be available to eligible students based upon a sliding income scale, and they offer Ohio a good place to start.

Nothing succeeds like success. As policymakers and the public learn of ESA successes around the country, demand will continue to grow for more school choice, more parent empowerment, and more innovative and effective ways to educate our students. School choice has always recognized that a traditional one-size-fits-all public education does not meet the individualized and nuanced needs of students and their families. ESAs take the next logical step away from a bureaucratic education system that proves increasingly outmoded and unable to satisfy the demands of the new century.

Greg R. Lawson is a research fellow at The Buckeye Institute in Ohio and an expert in school choice.