Executive Summary

Sixty years ago the late Nobel Prize-winning economist Milton Friedman published a radical idea: just because we fund schools through government doesn’t mean elected officials know how to run schools or what education is best for other people’s children.

To improve American education for all students, Friedman argued that parents should decide what schools are best for their children, schools and teachers should be free to innovate and public funding should follow students to schools of their parents’ choice.

[1]  “Education spending will be most effective,” Friedman explained, “if it relies on parental choice and private initiative—the building blocks of success throughout our society.”

[2]Similar to Adam Smith, Thomas Paine and John Stuart Mill, Friedman advocated a system of publicly-funded vouchers because it would free parents to choose the schools they thought were best for their children, regardless of where they could afford to live, and schools would have to compete for students and their associated funding.

Today parental choice in education not only includes publicly-funded voucher scholarship programs but also privately-funded tax-credit scholarship programs, as well as personal use tax credits and deductions to help offset out-of-pocket costs of private schooling, homeschooling, special education and related expenses. Altogether these programs are helping more than 1.2 million students.

[3]Education savings accounts (ESAs) are the latest advance in educational choice, fostering an unprecedented level of personalized learning opportunities for students customized by those who know and love them best: their parents.

The concept behind ESAs is simple. Parents who do not prefer a public school for their child simply withdraw him or her, and the state deposits most or all of what it would have spent into that child’s ESA instead. Parents receive a type of dedicated-use debit card to pay for authorized expenses, including private school tuition, online courses, testing fees, tutoring, and special education therapies. Any leftover funds remain in the child’s ESA for future education expenses, including college.

ESAs are also fiscally responsible. ESA funds are disbursed quarterly, but only after parents submit expense reports with receipts for verification. Regular audits also help prevent misspending. If parents misuse funds they forfeit their child’s ESA and must repay misused funds or face legal prosecution.

Today ESAs are helping nearly 3,000 Arizona and Florida students, and so far this year ESA programs have been enacted in Mississippi, Tennessee and Nevada. If recent polling results are any indication, several more states should follow suit—including Kentucky.

Fully 62 percent of American voters support ESAs, and they are up to 40 percent more likely to vote for pro-ESA political candidates. Operational and recently enacted ESA programs offer important lessons for state policymakers, including:

1. Make ESAs universal2. Fully fund ESAs3. Blow the lid off program caps4. Beware of pilots5. Let all education providers compete6. Private administration is best ESAs empower parents to customize their children’s learning to degrees no one-size-fits-all system could ever match—no matter how lavishly funded.

Read the full report here. Vicki Alger, Ph.D., is a member of the Friedman Foundation for Educational Choice Speakers Bureau. She is also a Research Fellow at the Independent Institute in Oakland, California, with a forthcoming book on the history of the U.S. Department of Education. Alger holds Senior Fellowships at the Fraser Institute in Vancouver, British Columbia, and the Independent Women’s Forum in Washington, D.C.

[1] “Milton Friedman, “The Role of Government in Education,” Friedman Foundation for Educational Choice, http://www.edchoice.org/who-we-are/our-founders/the-friedmans-on-school-choice/article/the-role-of-government-in-education/.

[2] Milton Friedman, “Our Best Chance for Better Schools,” New York Post, February 10, 2002, http://nypost.com/2002/02/20/our-best-chance-for-better-schools/.

[3] Friedman Foundation for Educational Choice, Fast Facts as of September 30, 2015, http://www.edchoice.org/our-resources/fast-facts/.

Home school figures as of 2012 from the U.S. Department of Education, Digest of Education Statistics, Table 206.10, prepared November 2014. Home school growth figures from Brian D. Ray, “Research Facts on Homeschooling,” National Home Education Research Institute, January 6, 2015, http://www.nheri.org/research/research-facts-on-homeschooling.html. Leading reasons parents choose homeschooling is personalizing learning and better academics. Research confirms that regardless of parents’ socioeconomic status or education levels, homeschooled students typically score 15 to 30 percentile points higher than their public school peers on standardized tests.