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Education savings accounts fit different students in different states

July 18, 2015

Faith Kleffel is still working on her jump shot, but for a little girl with Down syndrome, she would keep any defender on her toes. 

Faith’s mom, Julie, says that Faith requires a significant amount of one-on-one attention because of her unique needs. Shortly after Florida lawmakers passed education savings accounts in 2014 (called Personal Learning Scholarship Accounts), Julie applied for an account and used it to help pay for Faith’s personal tutors and education therapies.

“I want her to be able to be an independent young lady, to the extent that she is capable with my support. I believe that these scholarships will help pave the way for her to be able to do that,” Julie said last year.

Faith was one of the first students to use an account in Florida in the 2014-15 school year. More than 3,000 students used education savings accounts in two states (Arizona and Florida) last year. That figure is expected to more than double across Arizona, Nevada, Florida, and Mississippi in the 2015-16 school year (Tennessee lawmakers also enacted accounts in 2015, but the program will begin in the 2016-17 school year). 

When Arizona lawmakers enacted the nation’s first such program in 2011, the law only allowed children with special needs to benefit. The accounts were the first of their kind, and the Arizona Department of Education and state treasurer had few rules (and no experience) to guide them.

After four years, much has changed.

As this table demonstrates.

Arizona lawmakers now allow students from different walks of life to apply for an account. Nearly 1 in 5 Arizona public schools students is eligible to apply for an education savings account, including children assigned to failing schools, students living on Native American reservations in the state, and incoming kindergarten students.

Moreover, the laws enacted in other states in 2014 and 2015 used Arizona’s model for their accounts, but state lawmakers also capitalized on Arizona’s experience to broaden the scope of education savings accounts for state families.

Nevada is notably different. Every student attending a Nevada public school is eligible to apply for an account. Some 445,000 children are eligible, according to the U.S. Department of Education.

Lawmakers in Nevada, Tennessee, and Mississippi revised key elements to fit their states. Arizona families have 13 categories of educational expenditures that they can choose from to help their children succeed. Other lawmakers allowed families different—and in some cases, more—flexibility. In Mississippi, parents and their students can use an education savings account to purchase computers and other technical education equipment. In Tennessee, Mississippi, and Nevada, families can use an education savings account to pay for transportation costs to their children’s new school or educational therapy services. Certain limitations on these expenditures apply, which means lawmakers understand the importance of preserving the educational nature of the accounts.

A key feature that has been preserved across nearly all of the laws is that the state deposits funds into the accounts quarterly. Parents must account for all of their purchases every fiscal quarter, and if a state agency finds a discrepancy with the law, an account can be suspended. In this way, the state protects taxpayers from fraudulent activity.

State lawmakers around the country have taken Arizona’s successful education savings account law and improved upon it in order to better challenge and inspire students in their state. Lawmakers in more than a dozen states may consider education savings accounts in the 2016 school year. These policymakers should be careful to guard taxpayers and students from fraud by conducting regular audits and preserve the accounts’ flexibility so that parents can meet their children’s needs. 

 

 

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