Education Savings Accounts- How do they work?

Jan 26, 2017

Education Savings Accounts (ESA) and Course Access were the two education policy solutions presented in Governor Greitens’ first state of the state speech on January 17th. This week an ESA bill filed by Senator Ed Emery was the subject of a committee hearing where both pro- and anti-ESA views were heard, so now is a good time to take a look at exactly what an ESA is. 

ESA is a term that refers to a relatively new way of funding a child’s education. Usually we think about education spending as something that city, state and the federal governments invest in schools. An ESA, however, clears a direct path to an individual student and puts parents in control of their child’s education.

Emory’s ESA bill proposes a unique funding method not tried in any other state. While other ESA programs rely on collected tax revenue, the current proposal is funded through donations, making it a new hybrid. The idea is that a fund would be established to collect donations from companies and individuals. Those donations would result in a tax credit for the person making the donation. A tax credit is a dollar for dollar reduction in state taxes owed by the donor. So if you donate $100 to the ESA fund, you would reduce your state tax

The ESA is controlled by the parent through a special spending process such as a restricted debit card that can only be used for approved education expenses. Parents are able to direct ESA dollars in a much more tailored way than traditional spending. The most common use is to pay for tuition to a school. Beyond that parents may direct money to tutoring costs, educational materials, and other approved costs.

A Riverview Gardens School District (RGSD) parent, Lisa Smith, shared her story with senators at the Government Reform Committee hearing on Emery’s bill. Lisa’s children currently attend school in the Mehlville School District under Missouri Statute 167.131 because RGSD was unaccredited (until the Missouri State Board of Education voted to give RGSD provisional accreditation again). Lisa testified that she is thrilled with her children’s progress in Mehlville schools, but due to Riverview’s reaccreditation, her children will have to return to the district because even though her children would be allowed to continue at their current schools, transportation will no longer be provided. An ESA could be a viable option for Lisa’s children. “School choice provides hope to low income families. It allows parents to access educational options that meet their child’s unique needs.”

By the way, you can read more about course access in this recent CEAM blog.

Peter Franzen, Associate Executive Director