Six Questions To Evaluate Your State’s Education Savings Account Voucher Program

Over the past year, several states have proposed, instituted or expanded their version of school vouchers. The popular format these days is the Education Savings Account, a form of voucher that funds a scholarship administration company which in turn provides a stack of money (perhaps loaded on a debit card) to parents to spend on educational expenses. Betsy DeVos and Ted Cruz attempted to create this type of voucher on the national level, and while they failed, ESAs have been around states for a while, allowing families to leave the public system and shop for educational programs and materials on their own.

If your state has, or is considering, ESAs, how do you evaluate the program? Here are six critical questions to ask.

What is the funding source?

The “scholarship” money in an ESA usually comes from one of two sources. Some states offer Tax Credit Scholarship programs, in which donor contributions to the ESA count as a tax credit. In essence, donors pay for the scholarship program instead of paying taxes. In some states, donors may be individuals, but some states (e.g. Pennsylvania) are set up for corporate donors. These systems typically have a cap limiting how much money the state will have to give up in tax credits; a $50 million tax credit scholarship program leaves a $50 hole in state revenues.

The other funding source may be the state itself, which may choose to fund the program with taxpayer money originally intended to pay the state’s share of funding for public education.

Who runs the actual program?

The funding will go to an organization responsible for awarding it to families. There are several companies that have gotten into this business (e.g. Florida-based Class Wallet). Typically, they make their money by taking a percentage of the money that they handle.

In some states (e.g. Georgia), a small number of students scholarship organizations (SSO) broker the ESAs. In Pennsylvania, which has TCSs but not ESAs there are multiple SSOs, each serving its own particular school.

The scholarship organization is usually responsible for maintaining the list of participating vendors. It’s important to know who will actually be handling the money, their qualifications, and their experience.

How can the money be spent?

Traditional vouchers were set up to pay student tuition (or at least part of it) at a particular school. But ESAs more commonly allow families to spend the money on a wide range of educational expenses, from textbooks and tutoring to therapy services and computer equipment. Dollars could be spent on micro-schooling or other online education products. Therefore, ESAs can be used by homeschooling families as well as those who want to move their child to a private school.

What oversight is there for spending?

Usually, not much. In Georgia, an audit discovered that parents had spent $700,000 on items like cosmetics and clothing. Some proposals include no oversight except a means of reporting parents after the fact. If you want to know how your taxpayer dollars were spent in the program, you may be out of luck. See what the state proposes to do to track spending of the tax dollars that go into the program.

What quality control is involved?

Do vendors who enter the program have to meet any sort of standards to be on the receiving end of ESA spending? In some states (e.g. New Hampshire), vendors simply have to ask to be on the approved list. In some cases, they may be removed if they fail to deliver the promised services. Many ESA laws include a clause explicitly forbidding the state from making any rules about how the vendor conducts their business. For any ESA program, it’s fair to ask who decides that a vendor should be eligible to get taxpayer money via ESAs.

What protections are in place for families?

What happens if a family is scammed by one of those unvetted education product providers? What happens if they simply run out of ESA money before they have finished getting their child an education that year? What about families that simply lack the expertise to navigate the marketplace of education vendors and make some honest mistakes? Must they simply re-enroll their child in the public system, or do they have some recourse if their ESA money proves inadequate for providing a full education for the child?

The answers to these six questions will tell you a great deal about the transparency and accountability of your state’s existing or proposed ESA program. Such voucher programs are a step toward defunding and dismantling the public education system; it’s reasonable for taxpayers to ask about what they will get in its place.