Four Families, One Education Savings Account, and the Math of Choice

Ask ten politicians what an education savings account is and you will get eleven speeches. One will say it is a lifeline. Another will say it is a scheme to loot the schoolhouse. Both will use the word "freedom" or the word "privatization" at least six times, and neither will show you a single receipt.

So let's skip the speeches and open the checkbook. Receipts are where the truth lives. I am going to follow the money for four different households, all of them invented, all of them in a made-up state with made-up rules, and by the end you will understand more about education savings accounts than most people who vote on them.

One warning before the arithmetic. Every family, every price and every account balance below is a hypothetical, chosen to make the math clear. Real programs differ by state, sometimes sharply, in who qualifies, how big the account is, what it can buy and what happens to money left over. Treat this as a map of the mechanism, not a quote from any state's handbook. Check your own state's statute and program office before you plan anything.

The short version of how an ESA works

A state decides that a child who leaves the district school will have a portion of the state's education money placed in an account the parents control. Parents spend that money on approved education expenses: private school tuition, tutoring, online courses, curriculum, testing fees, therapies for students with special needs, and so on, depending on the list. A state agency, or a vendor the state hires, checks the purchases. Money left over typically stays in the account for later years, up to limits the law sets, or returns to the state, depending on the program.

That is the entire idea. The family gets the dollars rather than the school getting them by default, and the family has to account for how it spends them. The difference from a traditional voucher is that a voucher is usually a payment to a school, while an ESA is an account that can pay for a menu of things. If you want the broader sorting of vouchers, ESAs, tax credits and charters, Vouchers, ESAs, Tax Credits and Charters Sorted Out in One Table puts them in one table, and How a School Voucher Works, From the State Check to the Classroom Door follows the check.

Where the idea came from

Arizona created the first education savings account program in the country in 2011. It was originally open only to a narrow group of students, beginning with children with disabilities, and the legislature widened eligibility in steps over the following years. In 2022 Arizona opened its program to every school-age child in the state. Other states have since built programs of their own, with their own names, rules and eligibility lines.

The legal path was cleared by the Supreme Court. In Zelman v. Simmons-Harris (2002), the Court held that Ohio's Cleveland voucher program did not violate the Establishment Clause when aid reached religious schools through the independent choices of parents. Later cases, including Carson v. Makin (2022), held that a state that offers tuition aid cannot exclude schools merely because they are religious. The story of those cases is in From Everson to Carson, the Court Cases That Opened the Door to Choice. Some state constitutions still contain old provisions that complicate the picture, which is the subject of The Blaine Amendments and the Old Bigotry Still Sitting in State Constitutions.

The ground rules of our made-up state

To keep the arithmetic honest, let me fix the rules of the hypothetical state, which I will call Stateland.

• The state sends each district $8,000 per pupil in state aid. (That excludes local property taxes, which are a separate stream.)
• A child who leaves for the ESA program gets an account equal to 90 percent of that figure: 0.90 times 8,000 is $7,200. (Real states set their percentage by statute. Some are higher, some lower.)
• A student with an identified disability gets a larger account, weighted for the cost of services. In Stateland, our special-needs family has an account of $18,000.
• Accounts can pay for tuition, tutoring, curriculum, online courses, approved therapies, assistive technology and standardised-test fees. They cannot pay for transportation, uniforms, registration fees or household items.
• Unspent money rolls over from year to year, up to a limit.
• The state audits purchases, and every expense needs a receipt.

Notice the first piece of arithmetic, because opponents will raise it and you should be ready. The state sends the district $8,000 for a child and the account takes $7,200. The difference, $800 per child, stays with the state or the district (that depends on the design). The district keeps the local property taxes either way. We'll come back to this.

Four families

Family one: the special-needs student

Meet the first household, the Okafors, entirely invented. Their son is eleven and has needs that a neighbourhood school with a large class has struggled to meet. They leave the district school, and Stateland places $18,000 in his account.

Here is what they buy over the year:

Check: 36 times 110 is 3,960. 36 times 120 is 4,320. Add those: 8,280. Add 1,500 for 9,780. Add 6,000 for 15,780.

Left in the account: 18,000 minus 15,780 is $2,220, which rolls over.

What this family illustrates: services for a child with serious needs can cost a lot, and an account that follows the child lets the parents assemble a mix of services from different providers that no single school offers. The strongest argument for ESAs usually comes from families like this one.

Family two: the rural household with no nearby alternative

The second household, the Lindgrens, live on a ranch an hour from the nearest town. The nearest private school is 45 miles away, which is no school at all for a daily commute. They would never use a voucher, because there's no school to give it to. An account is different, because it can buy things that arrive by internet or by appointment.

Their daughter is in ninth grade. Her account is $7,200.

Check: 4 times 600 is 2,400. 25 times 40 is 1,000. Then 2,400 plus 900 is 3,300; plus 1,000 is 4,300; plus 200 is 4,500; plus 1,200 is 5,700.

Left in the account: 7,200 minus 5,700 is $1,500.

What this family illustrates: the honest weakness of "choice" in a rural county is that there is little to choose from. A critic is right to say a voucher worth $7,200 means nothing where no school exists. But an account that pays for courses, tutors and college credits can still open doors. It is not the same as having a Catholic school down the road, and nobody should pretend otherwise. It's more than the family had.

Family three: the family choosing a private school

The third household, the Moraleses, live in a mid-sized town with several private schools. Their daughter is in fifth grade. Her account is $7,200. The private school she wants charges $9,500 in tuition, plus $450 in registration and uniform costs.

• Tuition: $9,500.
• The account pays: $7,200.
• Gap on tuition: 9,500 minus 7,200 is $2,300.
• Registration and uniforms, not allowed under the list: $450.
• The family pays out of pocket: 2,300 plus 450 is $2,750.

The account is empty at the end of the year.

What this family illustrates: the account lowers the price. It does not erase it. A family still has to find $2,750, probably through savings, a scholarship the school offers, or a second job. That's why the program often attracts families who were already stretched to pay full tuition and now find it a little more possible.

There is also a worry hiding in this family's numbers, and the critics are right to raise it. If every private school in town knows that every family arrives with $7,200 in hand, what stops the schools from raising tuition by $7,200? That is the argument economists call the Bennett hypothesis when applied to college aid. The conservative response is competition: if tuition rises faster than quality, parents can move, and new schools can open. The record on this is not settled for K-12, and Does Federal Aid Raise Tuition? The Bennett Hypothesis Tested weighs the evidence for college aid, where it is better known.

Family four: the mixer

The fourth household, the Nguyens, wants something in between. They homeschool their son, but they don't want to teach everything themselves. His account is $7,200.

Check: 30 times 55 is 1,650. Then 1,650 plus 800 is 2,450; plus 1,100 is 3,550; plus 1,200 is 4,750; plus 120 is 4,870.

Left in the account: 7,200 minus 4,870 is $2,330.

What this family illustrates: the ESA is not only a ticket to a private school. It's a way to pay for a custom education, which is why the legal status of homeschooling in your state matters. See Homeschooling and the Law, Eleven Questions Parents Actually Ask for the rules.

Side by side

Four households, four different answers, one program. That's the point of the model.

Why the allowed-expenses list is the whole fight

Look again at the tables. Every single dollar above passed through a gate: the list of allowed expenses. That list is the most important part of the law, and it is where the real arguments happen.

A long list gives families flexibility. Our rural family could not use the account at all if online courses were excluded. A short list keeps the money close to the classroom and makes the program easier to audit, and it is harder to abuse. A middle path is an approved-vendor system, in which the state pre-approves providers and parents choose among them.

There's a debate inside the conservative movement about this, and it is a healthy one. Some argue that every restriction is a step toward regulating private schools and homeschools as heavily as district schools, and that the strings that come with public money will eventually be pulled. Others argue that public money requires public accountability, and that a program that can't show where the dollars went will lose the voters' trust. Both are right. The design question is how to get enough accountability to protect taxpayers without turning every receipt into a permission slip.

What the account does not do

Before the objections, a few things the accounts do not do, because the sales pitch and the attack ad both get these wrong.

• It does not guarantee a seat. A private school can still say no. Admissions, waiting lists and capacity are the school's decisions, which is why new schools opening is part of the story.
• It does not guarantee results. The money buys access, and quality still has to be judged by the family, the school and, where a state requires it, a test. A program that never looks at outcomes is asking taxpayers for trust.
• It does not replace special education law. A family that takes an account may give up some of the rights a child has in the district school, depending on the state. Federal special education law has its own rules about students in private settings, and a family weighing the choice should read the waiver or the participation agreement carefully before signing. That is a good reason to ask for the document in advance, in writing.
• It does not make the tax bill disappear. The Morales family still pays the district's property tax. They chose to leave a service they were already paying for, which is a point conservatives make about fairness and which opponents answer by saying that schools are a common good.

The strongest objection, stated fairly

The best case against ESAs goes like this: "The district's costs don't fall when a child leaves. The building, the buses and the teachers are still there. If twenty students leave from a school of five hundred, the district loses their state aid, but it can't shrink a classroom by twenty children. The remaining students are worse off, and taxpayers are now paying twice."

Take the strongest part of that seriously. Fixed costs are real. But look back at our Stateland numbers. The account is 90 percent of state aid, not 100, so the state keeps $800 per departing child, and the district keeps all of its local property tax revenue. In a district that gets, say, $5,000 per pupil locally and $8,000 from the state, a departing child takes $7,200 of the $13,000 and leaves $5,800 behind: the $800 the state holds back plus the whole $5,000 local share. (That's a hypothetical design; some states handle the local share differently.) The district then has less to teach fewer children, but not by the full amount.

I'd argue the better answer is a deeper one. Schools exist for children, not children for schools. If a child is better served elsewhere, the public money for that child's education should follow the child's education. The longer, fuller version of the arithmetic is in Vouchers Drain the Public Schools, and the Answer Is in the Arithmetic, and the broader myths are tested in Seven School Choice Myths Your Neighbor Believes and What the Record Shows.

The bottom line

• An ESA is an account, not a check to a school. Parents get a pot of public money for approved education expenses and have to document how they spent it.
• The same account does different things for different families. For the special-needs household it buys services. For the rural household it buys courses and tutors. For the town family it cuts the price of a private school. For the homeschool family it pays for the parts they can't teach.
• Read the allowed-expenses list before you read anything else in a bill. It decides who the program really helps.
• Demand accountability that protects taxpayers without choking families. Receipts, audits and approved vendors are reasonable. A permission slip for every pencil is not.
• Ask your own state for its numbers. The account size, the percentage of state aid, the rollover rule and the audit rules are all in the statute. Everything in this post is made up. Yours is real.