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December 2012 Policy Study, Number 12-13


Education Savings Account:

A Path to Give All Children an Effective Education and Prepare Them for Life


Who Benefits?



When Nathan turned six, he was still unable to speak. A few years earlier, Nathan, a dark-haired boy with brown eyes and an infectious smile, had been diagnosed with autism. While his time at a developmental preschool had been a positive experience, said Amanda, Nathan’s mom, “There wasn’t really anything being learned, it was just fun for him.”


Nathan’s frustration with background noise, which made it hard for him to concentrate, was compounded by his inability to speak. He wasn’t able to tell his mom or teachers what was frustrating him. As a result, he struggled when he entered kindergarten and sat in a class of 30 other children.


Nathan’s mom applied for an education savings account for her son in the fall of 2011 and watched as Nathan blossomed in a new school.


Just weeks after using the account to change schools and to pay for a tutoring service, Nathan did something amazing: Amanda was reading to him, and he pointed to a picture on the page and asked, “What’s that?” Now it was Amanda’s turn to be speechless.


“He’s starting to ask questions,” Amanda said two months into the new school year, “something he’s never done in his life.”



Education savings accounts benefit children, parents, and taxpayers alike.


Students. Because the accounts allow families to choose from many different education services, a child’s education can be precisely fit to his or her needs. For students with special needs, such as children with autism, cerebral palsy, or hearing or vision impairments, parents can use the funds to send their children to a school that specializes in addressing those challenges. In Arizona, schools such as the Hi-Star Center for Children and Lauren’s Institute for Education are two institutions whose primary focus is to serve students who need accommodations. Goldwater Institute research, along with studies from the Manhattan Institute, provide evidence that children with special needs show improved performance when their public school is exposed to competition because of a school-choice program.[6]


Evidence strongly indicates that all types of children perform better academically when they exercise their option to attend a school of choice. Nine studies using the “gold standard” of empirical research — that is, random assignment — where students are chosen by lottery to participate in a school-choice program have found that children using opportunity scholarships experience improved academic outcomes.[7] New research finds that the benefits can even extend beyond high school. In the first longitudinal, randomized study of students in a voucher program and college enrollment rates, researchers at Harvard University and the Brookings Institution found that African American students that used an opportunity scholarship to attend private school had college enrollment rates that were 24 percent higher than their peers in traditional schools.[8]


Children in failing schools are now eligible under Arizona’s law. These students should realize benefits similar to students using opportunity scholarships because children using education savings accounts have the same choices and more than students using scholarships.


Parents. With their newfound ability to search and pay for learning experiences, parents have more flexibility to meet their children’s needs. And parents have never had more schools and services to choose from. As Quinn Cummings, author of The Year of Learning Dangerously: Adventures in Homeschooling, says,


Imagine that your high school junior spends half of every day at the brick-and-mortar school up the street. Two afternoons a week, he logs into an art history seminar being taught by a grad student in Paris. He takes computer animation classes at the local college, sings in the church choir, and dives at the community pool. He studies Web design on YouTube. He and three classmates see a tutor at the public library who preps them for AP Chemistry. He practices Spanish on Skype and takes cooking lessons at a nearby restaurant every Saturday morning.[9]


Education savings accounts make potential experiences like these a reality. Today, education is not simply defined by where it is delivered, but by how many different ways it is delivered. From online resources such as the Khan Academy videos on YouTube, which cover thousands of subjects, to full-time virtual schools such as Connections Academy and Primavera Online High School, those sources make it easier for students to access education anywhere through the Internet.[10] Parents can become more engaged than ever in their children’s education either through the choice of a school (critical for families of children who have special needs, as indicated previously) or, as Cummings explains, through a set of alternatives.


Taxpayers. Education savings accounts offer accountability in education spending and can be a cost savings for taxpayers. With the accounts, the state provides funds directly to families and audits every purchase, instead of funding schools, where revenues and expenses are difficult to track. Savings account families then report expenses to the state (Arizona’s audit procedures are described on page 9). Every penny is accounted for. With savings accounts, the state and taxpayers know exactly where and how money is spent.


How do taxpayers save on costs? In Arizona, the state deposits 90 percent of student funds from the funding formula into an account that is available for individual students. The state’s department of education reserves some of the remaining 10 percent of student funds to administer the program and saves the rest. Thus, each student using a savings account actually saves money for the state.


Education savings accounts will have drastic results for states with complicated funding formulas. In Arizona, taxpayers spend some $125 million on empty seats in traditional schools because of outdated student information software that is designed to fund the system, not students.[11] The money spent on empty seats unfairly pays the wrong institution for a child’s education. Savings accounts eliminate inefficient practices like these.




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