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Education Savings Accounts: A targeted solution during the coronavirus crisis

Minnesota’s once forecasted surplus has turned into a multi-billion dollar deficit, and state leaders have been left to figure out what to do in order to balance the budget.

Schools are expected to face budget challenges as well, especially given many were already in the red before the coronavirus pandemic hit. And private schools face an even higher risk of closing altogether.

But there is a possible solution to help school districts save thousands of dollars during a time of upcoming budget problems without asking for spending increases that the state can’t afford: K-12 emergency/temporary Education Savings Accounts.

K-12 ESAs (different from Coverdell ESAs) are accounts the government offers eligible families—often in the form of a debit card—to help pay for education-related products and services. The government already sets aside tax dollars for every child’s education, but in an ESA, the money is able to follow the child. Given the numerous COVID-19 related concerns facing education, ESAs could be a solution to address a variety of the concerns and ensure students can continue learning safely.

For one, ESAs are usually funded significantly below per pupil spending at district schools because the funds are typically a percentage of what the state would have spent to educate the student in a public school. In Arizona, where ESAs were first enacted and have had a significantly positive impact not only on families but also with helping to relieve taxpayer spending, ESA recipients received an average award of $6,148 for non-special needs students in FY 2019—which required less in taxpayer funding than the state’s $10,120 public school per pupil spending. And ESAs increased per pupil public school spending, reports the Goldwater Institute, by “redistributing state and federal dollars back to remaining public school students.” ESAs is Arizona also alleviated budget pressures public schools face as they work to meet the needs of special education students.

Second, ESAs could help private schools survive the coronavirus, and prevent an influx of students into public schools that may already be struggling with oversize classrooms. Giving parents the opportunity to choose their preferred education setting for their child would help enable smaller classes and reduce transmission of the virus.

These Education Savings Accounts could be funded through state allocations from the CARES Act, that I have written about here.

As schools and state leaders work to figure out what education will look like post-COVID, smaller class sizes will most likely be a focus. But budget challenges are expected to impact what districts can do. Creating emergency Education Savings Accounts for families could be the solution districts need and the support parents are looking for.

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