Funding All Students Through Education Savings Accounts: A Vision for the Future

After an Arizona citizens’ referendum failed to block the state’s massive expansion of Empowerment Scholarship Accounts last month, the Grand Canyon State now leads the nation in education customization. 

Arizona’s education savings account (ESA) expansion was a critical school-choice success, but the story should not stop here. Policymakers can do two things that go beyond Arizona’s reforms to truly revolutionize a state’s education system: make ESAs the default option for all students and eliminate residential assignment in public schools.

Make Education Savings Accounts the Default for Students

First, policymakers should not limit ESAs to those opting out of public schools but rather make these accounts the default funding system for all students. Instead of funding school districts based on factors such as property wealth, local tax effort, and complex formulas, state and local education funds would be streamlined and deposited into each student’s account. 

Under this system, these accounts would not just be used for private school tuition payments. Parents who enroll their children in public schools would pay these schools directly and could also use education savings accounts to pay for tutoring, courses at a community college, classes at a nearby public school, transportation, and more.

An ESA-based system would let parents customize their children’s education options inside and outside the public school system. This means that students would no longer be locked into the courses offered at a single school. Instead, families could unbundle their children’s coursework and enroll in learning options wherever they see fit.

For example, students could take history and language arts classes at their local public school but also take their advanced math and science classes at a school in a nearby school district. The student’s ESA would pay for the classes in each school as well as any associated transportation costs. Ultimately, students could take classes online, at home, in a brick-and-mortar school, or any combination of available options.

Making education savings accounts the default funding mechanism to distribute state and local dollars would truly make a state’s entire education system student-centered. The versatility that ESAs provide means that public school students would no longer be locked into a particular school where one size fits all. Both public and private school students could customize their educations.

School districts would need to be nimble in this new education marketplace since dissatisfied families could leave and take their education dollars elsewhere. However, Education Next research on Florida’s school choice system and evaluations of California’s District of Choice program by the California Legislative Analyst’s Office shows that competition can spur innovation in public schools, making them responsive to market forces.

Interestingly, most parents gave high marks to their local public schools in a 2022 Education Next survey, with nearly 60% giving them an “A” or “B” grade. Most families would be likely to stay in their neighborhood public school, yet ESAs could give them options to customize on the margins. Furthermore, default ESAs would give dissatisfied families key decision-making power, no longer forcing them to support public schools that aren’t a good fit.

Eliminating Residential Assignment

Policymakers could also eliminate residential assignment in public schools so that students can enroll in any public school with open seats, regardless of where they live. 

Residential assignment sorts students into schools based on where their families can afford to buy or rent a home. This method of public school assignment, however, inextricably links property wealth and schooling because high-quality schools are often located in more expensive neighborhoods.

To make matters worse, district and attendance-zone boundaries often divide communities by race and socioeconomic divisions because the boundaries can reflect discriminatory and now-illegal housing redlining.

Several states, including Arizona, Florida, and Kansas, have weakened residential assignment through K-12 open enrollment. This policy allows students to transfer to public schools outside their geographically assigned school district or attendance-zone boundaries.

While open enrollment lets students access different schooling options, a system of school assignment based on a student’s geographic residence remains in place. Open enrollment is good policy, but it could be vastly improved by eliminating residential assignment altogether so that no students are favored based on where they live.

In a system without residential assignment, parents and students could use various factors to select their school, such as academics, parents’ work commute, safety, transportation options, or specialized programming.

Residential school assignment is an archaic and often discriminatory policy. Eliminating these government-imposed boundaries would unfetter schooling from housing and make public schools responsive to market forces since they would no longer hold an artificial geographic monopoly.

In sum, school-choice proponents should celebrate Arizona’s groundbreaking victory, but they should not rest on their laurels. Making education savings accounts the default funding mechanism for K-12 education and eliminating residential assignment would establish a robust education marketplace that is parent-driven and student-centered.