Tens of thousands of American families have some decisions to make as a new school year begins. They hold state-funded education savings accounts, which give them wide latitude to choose how to educate their children.
Such accounts have been around for years, mostly as a way to help students with disabilities get the specialized services they need. But a growing number of states have made them available to all families. Federal tax credits kicking in this year will also allow families to write off up to $1,700 to scholarship-granting organizations for similar education services and expenses.
What all this will mean for students, their academic achievement, and the future of public schools is still far from clear.
Susha Roy has been looking for answers in one of the states that pioneered education savings accounts, Arizona. She’s a policy researcher at RAND and a specialist in school choice policies. Her findings could help other states ensure their programs are helping the students they want to help, without leaving some behind.
Let’s start with the basics. What are education savings accounts, and how do they work?
They essentially take the money that would have been allocated for a student in public school and make it available directly to the family. The family can then use it on any sort of educational expense. That could be private school tuition, tutoring services, homeschooling expenses, textbooks—you name it.
Your research has shown that these accounts can be game changers for some students. Who benefits from them?
There are two main categories of students who have typically benefited from these. The first is students in underperforming neighborhood schools. These accounts give them the flexibility to pursue something outside of their local public school, and that can be really important for them.
The other category is students with disabilities. There are all kinds of special needs that public schools are very well equipped to support. But there are also disabilities that require very individualized and specialized support. Our research in Arizona found that a large number of students with autism use these accounts, for example. The support they need can be so varied that public schools might not be able to meet their needs. These accounts may be really helpful for them.
There have also been concerns about “cream skimming” as states make these accounts available to everyone. What is that, and how might these accounts encourage it?
Cream skimming is when private schools and other schools of choice enroll students who are higher achieving or more affluent or just easier to educate than the general student population. We found a pretty clear pattern of this in Arizona: Students using these accounts tended to live in wealthier neighborhoods and came from higher-achieving public school districts. They weren’t necessarily reflective of the population of students who you might think could benefit the most from these education savings accounts.
Now, early adopters of any education program are often different from the general population. But what this does suggest to me is that policy design is really important here. We shouldn’t expect that all kids and families will know how to take advantage of these new accounts. If states want to expand access to educational opportunities for all students, they could consider prioritizing outreach to families who could benefit the most.
If states want to expand access to educational opportunities for all students, they could consider prioritizing outreach to families who could benefit the most.
How do these accounts affect funding for public schools and the broader education system?
Most states tie state funding for public schools to student enrollment. So if students opt out of going to their public school, that is going to decrease the state funds the school will receive. Maybe the school can save money by not hiring as many teachers, since it won’t have as many students. But it still has fixed costs, like building maintenance, and that can become a real challenge.
What we saw in Arizona, though, was that a lot of the students who received these accounts were already in private school. And we found evidence that private school tuition went up when these accounts became available. We need more research here, but it could be that schools raised their tuition to try to capture the additional state funding that families had coming in.
It goes back to how you design these programs. If there are no accountability mechanisms, you might just inflate the cost of private school and subsidize families whose kids were already going to private school anyway without making sure the quality of those schools also improves.
If you were advising state leaders who were considering accounts like these, what would you tell them?
Collect data on how students with these accounts perform in their receiving schools. Without that, we just won’t know for sure whether the money states spend on education savings accounts benefits children.
I’ve had some encouraging conversations with some states that are trying to be really thoughtful about this. A few have talked about having a student ID that stays with students as they move between sectors. That would allow you to track student outcomes in a way that we really can’t right now.
It’s critically important that states’ highly consequential policy decisions are informed by good evidence. That’s why we do this work at RAND. There’s such a huge opportunity to help states shape these important policy decisions so they benefit their constituents.
