Louisiana’s recent adoption of its new GATOR Scholarship program now makes 18 states that have created education scholarship accounts (ESAs) as a mechanism to empower families with school choice.
Most (14) of those states will operate their programs this coming school year, building on the nearly half-million students who received an ESA in 2023-24. That number will continue to grow as more programs come online or expand student eligibility.
For those unfamiliar with ESAs, these K-12 scholarships are flexible spending accounts funded by the state and controlled by parents. With an ESA, parents can customize and direct funds to a combination of approved uses, such as tutoring, therapy for students with disabilities, instructional materials/curriculum, online programs, private school tuition, contracted services with school districts, exam fees and savings for future education expenses, among others.
States looking to adopt ESAs can learn a lot from programs that are already operating. Strategies for efficient program management and maximizing access for families, both described below, are two of the most important takeaways for ESA success.
Five ways states can ensure ESA programs are implemented well
In the broadest sense, ESAs are more likely to fulfill their promise if they allow parents to use the funds for a wide range of high-quality educational goods and services. State statutes and/or agency regulations will determine what types of goods and services qualify, but the statutes shouldn’t compel parents to spend funds in highly restricted ways. The state also should ensure that parents can easily navigate the many options available to them, by providing comprehensive information and user-friendly guidance.
These basic principles should be part of every new ESA program. Yet there are a number of additional, specific provisions policymakers can embed into ESA programs that promote sound, responsive and efficient implementation. Here are the top five:
- Contract with a qualified nonprofit organization to oversee day-to-day operations and customer service. Three states—Florida, New Hampshire and Utah—currently give nonprofit scholarship organizations primary oversight of their ESA programs. The nongovernmental program managers hold contracts with the respective education agency in their state and are responsible for everything from the application process to expense reviews and customer service. States have found that a responsible private partner can focus solely on the ESA program’s mission, increasing their ability to prioritize families as customers and to respond to families’ needs with greater agility than a state agency.
- Set aside a reasonable share of funds to administer the program. While the administrative amount needed depends partially on the specific requirements pertaining to payment processing and expense review, authorizing an initial administrative fee between 5% and 10% is workable. Because ESA implementation typically costs more up front, this can be addressed with an extra allotment of start-up funds. The share set aside for overhead should decrease somewhat as the program matures, as it scales up to serve more students.
- Ensure parents only have to opt in to the program once. An ideal mantra for ESA programs should be “once in, always in.” Requiring families to reapply every year only adds frustration and unnecessary procedures for both the user and the administrator. Instead, asking parents to make a very brief, simple and timely annual acknowledgment that they wish to continue will suffice. A well-crafted statute will set out just a few clear conditions that terminate a student’s participation in the ESA program: aging out, opting out or misspending funds.
- Authorize administrators to implement a targeted system of expenditure auditing. Available evidence shows that with their current procedures in place, ESA programs have vanishingly low misspending rates. This is fortunate, because as a program grows, staff have less capacity to manually review every expenditure. Manual review of every single expenditure can slow down the process, causing parents weeks or even months of frustration. ESA policies instead can authorize targeted sample auditing. This draws from established standards in other fields and can even incorporate artificial intelligence technology. Auditing more targeted samples, administrators can be freed to narrow their focus on reviewing the most potentially problematic expenditures, which in turn limits waste by reducing overhead costs.
- Set program eligibility to match the requirements for compulsory attendance. In eight states, policymakers have approved ESA programs with universal eligibility for K-12 students. That means any child required by law to enroll in elementary or secondary schooling – be it public, private or homeschool – can sign up for an ESA. When ESA programs remove income-based and other requirements to program entry, the administrative burden once associated with application processes lessens. Staff no longer have to review tax returns or Individual Education Plan (IEP) paperwork to qualify students. This key policy feature is a win not only for students and families but also for program managers.
Three ways to guarantee families have the access to ESA programs they need
Streamlining and simplifying implementation can be beneficial, but those are not the ultimate goals for designing an ESA program, which is to serve students and families. Understandably, tensions can exist between administrative efficiency and smooth, easy access for parents. Policymakers will want to consider those tradeoffs in these important program features:
- Application window. Providing a broad timeframe in which families can sign up to receive an ESA helps promote fair access and healthy participation. Ideally, the opportunity to apply should be open year-round to accommodate various decision timelines. In programs where rolling application windows are not approved, families should at least be able to apply in January through June for the coming school year. Closing the window earlier may ease the burden on administrators—but comes at the expense of students who could benefit from participation.
- Payment methods. Depending on state-specific ESA statutes, families may make purchases from approved schools and other providers through an online marketplace or through reimbursement of private purchases, even though that may stretch administrative capacity. The reimbursement approach gives families a convenient option to readily secure goods and services, while the online marketplace, when done well, provides a level playing field that is transparent and user-friendly and doesn’t require families to spend funds and wait for reimbursement. Laws should not necessarily restrict purchase methods to these two options. Future technologies may make viable other payment or procurement methods that enhance flexibility for families while preserving fiscal safeguards.
- Appeals process. Sound policies spell out what can disqualify families or service providers from participating in an ESA program. A fair and reasonable appeals process can help make sure that these decisions are rendered properly. While it may increase the administrative burden to provide evidence that justifies disqualification and to reinstate those who file successful appeals, families deserve this right to preserve essential access. An appeals process also helps promote user confidence in the program.
Conclusion
Education scholarship accounts offer students newfound opportunities and empower families with resources to support their child’s development and growth. To achieve their intended purpose, ESAs need to be well run to maximize access while limiting friction and frustration for participants. The insights described here from existing ESA programs can help achieve that. Taking time to carefully design the contours of policy on the front end can do a lot to provide for smoother oversight and more satisfied customers on the back end.
