How our neighbor to the south is expected to save millions through school choice
Iowa recently joined the growing list of states offering its students and families the opportunity to participate in a school choice program called education savings accounts, or ESAs. A fiscal analysis of the program by EdChoice’s Marty Lueken found that, in the long run, it will “generate $55.0 million in net fiscal benefits annually from its first cohort of students.”
Iowa’s ESA program, formally called the Iowa Students First Education Savings Accounts Program, provides eligible students up to $7,413 to use toward non-public school tuition, tutoring, credentialing, therapies, online learning, and more. “This amount is worth 49 percent of the total per-pupil cost for Iowa public schools [$15,283],” writes Lueken, which “implies net fiscal benefits worth more than $7,800 when a student switches from a public school to a private school via the ESA program” — fiscal benefits that are then distributed among state taxpayers, local taxpayers, and school districts. The total cost of the ESA program represents 1.6 percent of the $7.9 billion funding that Iowa public schools receive from local, state, and federal sources, according to Lueken’s calculations.
While the program has generated net fiscal costs during its first year (the 2023-24 school year), “this short-run net cost represents 0.2 percent of total funding devoted to Iowa public K-12 schools” and becomes “variable as public schools can fully adjust for a change in student enrollment over time.”
Over time, districts can adjust educational costs fully for the cohort of students who switch from public schools. The analysis uses average total cost per student for public schools to estimate long run savings, or $15,283 per student. For the program’s first year, we estimate $179.3 million in savings annually in the long term for the program’s first year cohort. Thus, the program will generate $55.0 million in net fiscal benefits annually over the long run from that particular cohort of students.
Cost savings are one of the many advantages of school choice policies for a number of reasons. First, spending on education freedom programs represents a small portion of overall school spending. Second, average per student costs for choice programs are substantially less than average spending per student in public schools. Third, school choice programs such as ESAs reduce the overall costs of K-12 education.
If the financial incentives aren’t convincing enough, there are plenty of other positive effects of education freedom programs, from academic achievement growth to boosting civic outcomes such as political tolerance, civic knowledge and skills, and voluntarism, to reducing district segregation, aiding disadvantaged students including those with special needs, and helping encourage innovation.
Still not convinced? Fine. But just know that your counterarguments on all the supposed negative effects of education freedom have been rebutted by decades of academic research, meta-analytic and systematic reviews, and the most important, personal life-changing stories.