Doug Tuthill: ESAs bring healthier market to education

education savings accounts
Step Up For Students President Doug Tuthill writes that Education Savings Accounts (ESAs) provide the best opportunity for turning public education into an effective and efficient market

Markets are like gravity. They are everywhere.

Markets are where supply meets demand. They are how we access the things we need and want, including food, clothing, housing, friends, media, health care, romantic partners, entertainment, and education. Even those needing kidney transplants are dependent on well-designed markets.

Public education also is a market — unfortunately, a poorly functioning one, especially for low-income and minority children, and most teachers.

I’ve been working to improve public education for 42 years. My primary lesson learned is that a well-designed market is a necessary condition before improvements can be systemic, sustainable, effective, and efficient.

Effective and efficient markets invite people to challenge themselves, to take risks, to develop their strengths, to help others, and to contribute to the public good.

Effective markets share some common traits:

  • The barriers for new providers to enter the market are low, leading to diverse options for consumers.
  • There are more opportunities and resources for providers to innovate.
  • Customers have access to the information and purchasing power they need to make good choices.
  • A virtuous innovation cycle exists between providers and customers. Consumer choices inform and drive innovation. Innovation gives consumers more choices. Consumer responses to these additional choices inform and drive more innovation, which again gives consumers more choices.

Public education has few of the characteristics of an effective market:

  • The barriers to entry are high for new providers.
  • There is little opportunity for innovation because district, virtual, and charter schools are heavily regulated.
  • Most parents don’t have access to a diverse set of providers or good information to inform their choices.
  • No virtuous innovation cycle exists between consumers and providers.

Over the last 30-plus years, the gradual expansion of education choice has begun to turn some sectors of public education into slightly more effective markets. Magnet schools, charter schools, dual-enrollment programs, virtual schools, and open-enrollment programs are providing public school students with more choices. Unfortunately, these choices are highly regulated and generally resistant to innovation. Tax credit scholarships and vouchers are giving more students access to private schools, which is enabling more educators to open new schools. But while private schools are less regulated, they are usually underfunded and incapable of investing in the staff, technology, and training necessary to create and sustain effective innovations.

Education Savings Accounts (ESAs) are the latest entry in the education choice space and provide the best opportunity for turning public education into an effective and efficient market. The nation’s largest ESA is Florida’s Gardiner Scholarship for students with unique abilities, which our nonprofit, Step Up For Students (SUFS), helps administer. Most Gardiner students are on the autism spectrum. The average Gardiner ESA is about $10,000. (Editor’s Note: Step Up For Students publishes this blog.)

Once a child qualifies for the Gardiner ESA, state government transfers the appropriate funds to SUFS, which we then deposit into a family-specific bank account. Families may spend these funds on an array of state-authorized education products and services, including physical therapy, occupational therapy, tutoring, curriculum materials, education hardware and software, and schools. Gardiner families may purchase services from district, charter, virtual, home, and private schools.

Families are using their ESA funds to customize their children’s education. Entrepreneurial educators are responding by creating a plethora of flexible, innovative education programs that Gardiner families are purchasing. On any given day, a Gardiner ESA student may, for example, receive instruction from a magnet school, an occupational therapist, a tutor, a virtual school, math manipulatives, and education software.

ESAs are beginning to introduce some healthy market features into Florida’s public education system. Because families have the public funds to purchase services directly from educators, the barriers to entry for new providers are lowering. Parents are purchasing afterschool and summer remediation and enrichment services directly from classroom teachers, charter and district schools are customizing programs for struggling readers using a new reading ESA for public school students, and parents are able to afford a variety of customized services from physical and occupational therapists.

A huge challenge — and opportunity — moving forward will be helping families access the information they need to make good purchasing decisions with their ESA funds. A market’s effectiveness and efficiency are, in part, dependent on the quality of the choices consumers make. If parents are consistently making good choices on behalf of their children, the providers will respond by creating increasingly better educational products and services. If parents are not making good choices, providers do not spend resources on innovation and continual improvement.

SUFS has raised several million dollars from foundations and individuals to build an online infrastructure to facilitate the implementation of ESAs. A key feature will be helping families access the information they need to make the best possible decisions for their children.

Because U.S. public education has never been a healthy market, the infrastructure necessary to support effective and efficient choices must be created from scratch. We’ve begun that process.