Students, Taxpayers—and Even Public Schools—Gain from Arizona’s ESA Program

August 13, 2019
By Matt Beienburg

Is there an education program that can save money, increase student funding, and change lives for the better? Yes, it’s called the Arizona Empowerment Scholarship Account (ESA) program.

Out today, a new Goldwater Institute report, The Public School Benefits of Education Savings Accounts: The Impact of ESAs in Arizona, illustrates the ways that ESAs are good news for students and their families, taxpayers—and yes, even public schools:

• ESAs provide a customized education to high-need students, giving them more opportunity to succeed.
• ESAs save taxpayers thousands of dollars per enrolled child.
• ESAs financially benefit K-12 public schools.

Known more informally as education savings accounts, Arizona’s ESAs take part of what the state would have spent covering the cost of a student’s education in a K-12 public school and instead deposit that money into a personalized account that allows the child’s family to use the funds for tutoring, educational therapies, private school tuition, curriculum materials, and other teaching tools.

Today, the program enrolls more than 800 children in Arizona whose parents serve on active duty in the military or have fallen in the line of service, making them the single largest group of ESA beneficiaries outside of special needs students. And adding up the 3,700 special needs children and hundreds more from the foster care system, Native American reservations, and failing schools—all of whom also qualify for the program—ESAs served more than 6,400 students this past year alone.

As explored in the report, ESAs give these families an average of roughly $6,100 per child each year (for non-special needs, non-kindergarten students) to help meet their educational needs. In comparison, taxpayers spend more than $10,100 per public school pupil in Arizona, meaning that on average, ESAs are generating thousands of dollars of taxpayer savings for every child enrolled.

But it’s not just Arizona families and taxpayers who benefit from ESAs. In a major twist, it turns out that Arizona’s public schools also reap financial benefits from the program. How is that possible? As the report explains, ESAs increase per pupil public school spending by redistributing state and federal dollars back to remaining public school students each time a child opts out of public school and into an ESA. From state sources alone, ESAs redirect over $600 per participant back to remaining public school students for teacher pay and other operational uses.

Despite the fact Arizona has increased total K-12 spending by over $5 billion over the past two decades, many education advocates have long complained that Arizona has failed its students because the state’s per pupil funding hasn’t gone up (since there are also so many more students to educate). And per pupil funding, they say, is the metric that truly matters. Fortunately, it turns out that ESAs help remedy precisely this issue, increasing the amount of funding available to public schools per student served.

Furthermore, in FY 2020, $3 million of ESA savings are being used to rebuild the Arizona Department of Education’s IT system, which calculates the payments to every single public school in the state, benefitting over 1.1 million public school students.

Moreover, while school districts have argued that special needs students with severe disabilities have strained their budgets and forced them to redirect funding from other students to meet federal regulations, ESAs give more than 2,200 of these families each over $25,000 a year to better meet their children’s unique needs without putting pressure on district budgets to comply with federal rules. (And this amount is still less than what taxpayers would spend sending the students to a public school.)

And contrary to claims that Arizona’s ESA program has led to widespread fraud and misuse, it turns out that the colorful anecdotes of program misspending account for a miniscule fraction of ESA transactions: As described in the report, roughly 99 percent of ESA funds have been used appropriately.  (In comparison, other government initiatives like the National School Lunch program have been found to have improper payment rates that are ten times higher than the ESA program’s.)

While teachers unions and political activists have painted ESAs as an apocalyptic threat to K-12 education, the evidence now suggests that their objections are rooted in political ideology, rather than research. Indeed, the true contrast now falls between 1) an ESA program that benefits students, taxpayers, and the education system at large, and 2) union-backed political movements whose organizers recently explicitly rejected student learning as their priority in favor of aggressive political platforms.

For Arizona families who are truly concerned about the quality of educational opportunity in Arizona, the choice between those two is clear. And as I write in the report, states looking to establish or improve their ESA programs should look to Arizona for key lessons in how such a program ought to work in order to benefit not just students, families, and taxpayers—but also public schools, too.

Read more about the positive differences ESAs are making in a new Goldwater Institute fact sheet.

Matt Beienburg is the Director of Education Policy at the Goldwater Institute. He is the author of the new Goldwater Institute report The Public School Benefits of Education Savings Accounts: The Impact of ESAs in Arizona.