Arizona Expands Privatization of Education Yet Again

Arizona is no stranger to the privatization of education.  It has had charter schools, online charter schools, tuition tax credits and the newest iteration of privatization—Education Savings Accounts (ESAs).  Tuition tax credits and education savings accounts are particular types of school tuition vouchers, by which children are granted tax funded coupons to pay all or more commonly part of private school tuition.  An education savings account program expansion was signed into law late last week by Arizona’s governor.  Now every single child in the state will be eligible, though at this time there are enrollment caps—to be expanded gradually over time— on how many students the state will underwrite each year.  ESAs are basically an experiment in totally portable school funding.

Here is Dana Goldstein describing Arizona’s ESA expansion in the NY Times: “The bill, which the State Legislature passed on Thursday, makes all 1.1 million public school students in Arizona eligible for money from a program that until now was available only to some students, including those with disabilities and those in underperforming schools. Under the law, parents who withdraw their children from public school can use their child’s share of state education funding to pay for private school tuition, home-schooling costs, tutoring and online education, as well as for therapies for the disabled…  Florida, Mississippi and Tennessee have similar programs, but they all restrict eligibility to disabled children. That makes the Arizona expansion the broadest to date. Unlike traditional vouchers, in which states pay private schools directly, E.S.A.s allow parents to distribute public dollars for educational expenses.”

For parents an education savings account is like a credit card which parents can use to buy particular services for a child. This puts parents fully in charge of where and how children are educated. Here is how the Network for Public Education explains education savings accounts in a fact sheet that is part of an excellent new new toolkit, School Privatization Explained: “ESAs provide a huge loophole for unaccountable use of public money. Parents who withdraw their children from public schools get a proportion of the money the state would otherwise have spent to educate their children deposited into an account. The account comes with a debit card families can use to pay for unaccountable education products and services such as private schools, home schooling, online courses, lessons and private therapists and tutors… Most of these (ESA) programs release their funds to parents in exchange for the parents agreeing to forego their right to a public education.”

Goldstein explains the size of Arizona’s monetary awards to parents: “This year, about 3,500 Arizona students, the majority of whom have special needs, are participating in the program.  The average size of an account is $5,700 per year for children without disabilities and $19,000 for children with them.”

Emma Brown, the Washington Post‘s education reporter, describes how Arizona’s new ESA enrollment is expected to grow: “Now, all 1.1 million students across the state will be eligible for the money, though not all will be able to enroll. Under a deal negotiated to ensure the legislature’s approval, 5,500 additional students will be able to enroll each year, up to a cap of 30,000 in 2022….” “Critics said it would weaken Arizona’s public schools by siphoning away students and needed funds and would be more likely to subsidize affluent families’ private-school tuition than to help poor children access new opportunities.”  One worry is that, as has happened in other states, once voucher programs get underway, legislatures have raised the caps more quickly than originally intended, a reality that has depleted state education budgets.

There are all sorts of potential problems with ESAs (and other kinds of vouchers), however. Marketing and glossy advertising is always part of a school choice marketplace, and there are what are technically called asymmetries of information. Parents who are given an education credit card may not be prepared to choose reputable schools, to inquire about the credentials of the teachers, or to evaluate the school’s curriculum. Finally, Erin Richards, writing about the Milwaukee voucher program, describes the same kind of self-dealing and fraud in voucher schools that we have seen in disreputable charter schools.

One cannot, however, ever consider the impact of a voucher program from the sole perspective of the children and families who receive the voucher. There are what economists call externalities, the side effects—unanticipated or intentional—of a policy like school privatization. Here is one of the primary realities: when a legislature adds a separate voucher or tax credit or ESA or charter school program, the state has never, to my knowledge, added an extra tax to pay for it. The cost of running the extra system always comes out of the state budget for public schools. And in the case of Arizona, that is a huge problem. At the Education Law Prof Blog, Derek Black, explains the fiscal realities of Arizona’s expanded ESA program in the context of Arizona school funding: “The funding mechanism and its expected cost to the state is murky… What is clear, however, is that Arizona’s per pupil funding for public schools currently ranks 47 out of 50 states. To make matters worse, it distributes those meager funds unequally. The Education Law Center’s 2017 School Funding Fairness Report grades Arizona’s funding distribution as an ‘F.’…  Arizona spends the least on students who need the most.  That same report also shows that Arizona is doing almost nothing to fix its low funding levels or unequal distribution. Arizona ranks 49th in the nation in terms of the level of fiscal effort it exerts to fund its schools… These cold hard facts show that the state is not really interested in supporting adequate and equal education for its students. Thus, it is no surprise the state would double down and make matters worse. If gross inequity and inadequacy in public schools does not bother the state as a general principle, why would robbing those schools of more money be a problem?”

The Trump administration and Education Secretary Betsy DeVos champion various voucher programs including the one passed in Arizona last week. While federal cheer-leading may have encouraged legislators in Arizona to expand this program, to date there has not been any federal plan passed or even proposed in Congress to expand the various kinds of school vouchers. Neither has Congress created any federal program to incentivize states to pass or expand voucher schemes.