Vouchers, ESAs, Tax Credits and Charters Sorted Out in One Table

When a politician says "school choice," listen carefully, because he may be talking about any of six different things and hoping you will not ask which. It is the policy equivalent of saying "I'm going to fix transportation" and leaving everyone to wonder whether we are talking about buses, bridges or a tunnel under the Hudson. A voucher is not a charter school. A charter school is not an education savings account. An education savings account is not a tax credit. And the differences are not trivia. They decide who holds the money, what it can buy, who answers to whom, and whether the thing is even available in your county.

So here is the sorting hat. One table, six tools, then a short tour through each one, and then a plain verdict on who benefits from which.

The table

If you stop reading here you already know more than the average candidate at a candidate forum. If you keep going, I will tell you why each row looks the way it does.

Row one: the voucher

A voucher is a payment from the state to a private school on behalf of a particular child. The family picks the school, the state sends the money, and the sum is usually capped at the school's tuition. The money is tied to the school, not to a menu of other goods. If the family wants to spend a portion on a speech therapist, a voucher cannot usually do that.

The design is the simplest of the six, which is both its strength and its limitation. It is easy to explain and easy to audit. It is also narrow. It buys one thing, a seat in a private school, and if there is no private school within driving distance, it buys nothing at all. The step-by-step mechanics are in How a School Voucher Works, From the State Check to the Classroom Door.

Row two: the education savings account

The ESA is the newest and the most flexible. Instead of paying a school, the state deposits money into an account that belongs to the family, in practice an account the state administers, and the family spends it on approved education expenses. That might be private school tuition. It might be tutoring, a curriculum, online courses, testing fees, therapies for a child with special needs, or saving up for college. The statute lists what counts.

Arizona is the origin story. In 2011 the legislature created what it called the Empowerment Scholarship Account, and it began with a narrow group, children with disabilities. Over the following years the state widened eligibility in stages, and in 2022 it opened the accounts to every school-age child in the state. Other states have followed the account model, each with its own list of eligible families and approved expenses.

Why does the account model appeal to people who are tired of the voucher? Because a voucher still asks a family to fit the child into somebody's existing building. An account lets a family build a plan around the child. Picture a household with a son who is gifted in mathematics and struggles in reading (a hypothetical, to be clear). A voucher puts him in one school, which has to be good at both. An account might pay for a small school for part of the week, a reading tutor and an online advanced math course. That is not the right answer for every family, and some families do not want to be their child's general contractor. But for those who do, the account is the tool.

The account also comes with the most risk of the six if the law is sloppy. A flexible account needs real accounting: a list of allowable expenses, receipts, audits and consequences for misuse. Critics are right to ask for that. So should the supporters.

Row three: the tax-credit scholarship

The tax-credit scholarship is the one most people have never heard of, which is a shame because it is the one that has gone through the courts with the fewest scars. The mechanism: a state allows an individual or a business to donate to a private organization that gives scholarships to students, and the donor gets a credit against his state tax bill for some portion of the donation. The scholarship organization, not the state, awards the money.

Notice what is different. The state never writes a check to a school or a family. The money was never in the treasury in the first place, because it went from the taxpayer to a charity and the state simply reduced the tax bill. That distinction matters in two ways. Legally, it has proved helpful: Arizona had an early version of a tax-credit scholarship law, passed in 1997, and the Supreme Court in Arizona Christian School Tuition Organization v. Winn in 2011 held that taxpayers who objected lacked standing to challenge it, which left the program standing. Politically, it is easier to pass, because it is described as a tax cut and a charitable gift rather than as spending.

The limits are plain too. The size of the program is capped by the amount of credits the legislature offers, and the scholarships go only to families the organizations choose to serve under the law's rules. It is a donor-driven model. Families depend on the generosity and the priorities of the people who give.

Row four: the charter school

Charters differ from the first three rows because they are public schools. They charge no tuition. They are funded with public money, they are open to any child on the same terms as a district school (with a lottery when seats run short), and they are held to the state's testing and civil-rights rules. What makes them different is that they are run under a contract, called a charter, granted by an authorizer such as a state board or a university or a local district. The contract spells out what the school will achieve, and if it falls short, it can be closed.

Where do charters come from? Minnesota passed the first charter school law in 1991, and I tell that story in full in The 1991 Minnesota Law That Gave America the Charter School. The point for the table is that a charter does not involve a voucher or an account. The family does not hold any money at all. The state pays the charter school a per-pupil amount, and the family gets a seat in a different kind of public school.

That also explains a common confusion. When a speaker says "we should end school choice," he usually means vouchers or accounts. When he says "charters take from public schools," he is describing a fight over formulas inside the public system. The two arguments have different answers.

Row five: open enrollment

Open enrollment lets a child attend a public school outside his home attendance zone or district, with the state or the district funding following him. Some states run the program inside a district ("intradistrict"), others across district lines ("interdistrict"). The rules vary a great deal. Some states require districts to accept transfers if there is space. Others let a district opt out. There may be a transportation provision or there may not be.

It is the least dramatic of the six, which is why it is the least talked about and perhaps the most widely used. It requires no new school and no new building. It asks only that the district lines be less like a fence and more like a suggestion.

Row six: the magnet school

A magnet school is a public school with a special theme or program, such as the performing arts, a technical specialty, or an advanced academic curriculum, designed to attract students from across a district. The magnet idea grew up largely as a tool of school desegregation in the 1970s, a way to draw families to a school by quality rather than by force. Today it is a district-run choice. Admission may be by lottery, by application, or by testing or audition.

For the family, a magnet is a seat. For the district, it is a way to offer variety without giving up control. Magnets are often the choice that school boards are most comfortable with, since they stay entirely inside the district structure.

The three questions that sort every policy

You can use a short list to classify any school choice proposal that lands on your desk.

1. Who holds the money? The state, the school, a private scholarship group or the family?
2. What can it buy? A seat, a tuition payment or a basket of services?
3. Who regulates the school? An authorizer, a district, or no one beyond the state's basic private school rules?

Answer those three and you can place any proposal in the table. If a candidate cannot answer them, you have learned something about the candidate.

Who each tool suits: four hypothetical households

Let me pull the table into real life with four invented families. These are illustrations, not case studies.

• A single mother in a city with a strong charter network. She wants a school with a longer day and no tuition. A charter is the obvious fit, and the charter application is a lottery form, not a financial aid worksheet.
• A rural family forty miles from the nearest private school. A voucher is worth little to them, because there is nothing to spend it on. An open-enrollment seat in a neighboring district or an education savings account that funds online courses and a tutor is a better tool.
• A family with a daughter who has a learning disability. An ESA is designed for exactly this kind of problem, since it can pay for therapies and specialized instruction, not just a seat. This is why Arizona started its account model with children with disabilities.
• A suburban household with two kids at a good district school. None of the tools may matter to them today, and that is fine. The best reform is the one that works for the family that needs it, not the one that forces a change on the family that does not.

The conclusion is not that one tool is best. It is that a state serious about choice builds more than one door.

What to ask your own legislator

State law controls all of this. If you want to know which of the six your state offers, go to your legislature's website and search the education title, or call your state education agency and ask for the list of choice programs. Then ask three things: how is the program funded, how many families are on the waiting list, and what happens when a school fails? For more on how these tools stack up for lawmakers, there is a companion comparison in Vouchers, Tax Credits, ESAs and Charters Compared for State Lawmakers, and for a reality check on the loudest claims, try Seven School Choice Myths Your Neighbor Believes and What the Record Shows.

The bottom line

• "School choice" is a family of tools, not a single policy. Before you cheer or boo, ask which tool, who holds the money and who regulates the school.
• Vouchers and ESAs put the decision in the family's hands, with the ESA being the more flexible and the more demanding of careful accounting. Tax-credit scholarships work through donors. Charters, open enrollment and magnets give families choices inside the public system.
• A good state offers several doors, because a rural family, an urban family and a family with a child with special needs need different ones.
• Check your own state legislature's website for the programs on the books, and ask your representative to explain the rules in plain words. If the answer is a slogan, keep asking.
• The strongest case for choice is not against any school. It is for the parent who knows the child better than any assignment formula ever will.