Friedman Foundation Touts How AZ Parents Spend School Choice Funds

When given an opportunity to spend their education funds outside of the public school system, parents embrace the option to choose enthusiastically, according to a new study from The Friedman Foundation for Educational Choice. The study looks at the spending patterns of families enrolled in Arizona’s unique Empowerment Scholarship Account programs, which has enrolled more than 150 families in its first year and has now grown to over 300 families in the two years since.

On the whole, families had access to nearly $3 million in education funds, and while more than 65% put it towards private school tuition for their children, the remainder took advantage of a broad range of alternative educational options. However, nearly a third of the total funding – close to $1 million – remained unspent. Families can deposit their end-of-the-year ESA balances in college savings plans.

Parents receive ESA funds via restricted-use debit cards loaded with approximately 90 percent of what the state reserved for their children in the public school system. ESA parents must submit to the Arizona Department of Revenue receipts for their preceding quarter expenditures to obtain funds for the coming quarter. Burke found that outside of private school tuition, families used ESA funds for online learning courses, curricula, private tutoring, and education therapies, all approved by the Arizona Department of Education.

“Children’s learning opportunities shouldn’t be restricted to just a traditional classroom, particularly if students’ needs could be served better outside those walls,” Robert Enlow, president and CEO of the Friedman Foundation, said. “And when parents are empowered to meet their children’s needs, they do so in a more financially meticulous way than well-intentioned bureaucrats.”

The Arizona program is likely to experience an influx of new participants this year as the eligibility pool has been expanded to all low-income students who are enrolled in schools graded F and D on the state report card as well as children of active duty military members and children in the foster care system.

Just this year, lawmakers expanded the eligibility yet again to include incoming kindergarten students. In total, more than 220,000 students now qualify to take part in the ESA program. And if they’re anything like the current participants, they will derive substantial benefits from the available school choice options.

Data in “The Education Debit Card: What Arizona Parents Purchase with Education Savings Accounts” also reveal to what extent parents took advantage of the ESA program’s unique roll-over option. In the 2011-12 school year, 43 percent of distributed ESA funds were saved by families; in the first quarter of the 2012-13 school year, that number was around 26 percent. Burke said that shows education savings accounts encourage parents and schools to be cost-conscious.

“Once parents have the freedom to shop around based on their own cost-benefit analysis, they make decisions that take into account both financial considerations and educational quality,” said Burke, who also serves as the Will Skillman Fellow in Education Policy at The Heritage Foundation, a conservative think tank in Washington, D.C. “The traditional public school system does not allow for the type of customization from which so many children would benefit.”