An Education Savings Account Program for Texas

Testimony

An Education Savings Account Program for Texas

Public testimony before the Texas Senate Education Committee on Senate Bill 3

RE: Senate Bill 3 — Relating to the establishment of an education savings account program and a tax credit scholarship and educational expense assistance program.

My name is Aaron Smith and I am a policy analyst with Reason Foundation, a non-profit think that conducts public policy research in several areas including education. While Reason is based in Los Angeles, I reside in Houston where I previously spent over five years working for YES Prep Public Charter Schools as senior director of analytics.

Much of our work at Reason Foundation is focused on school finance and the fundamental idea that students benefit when funding is allocated transparently, equitably and in a manner that maximizes productivity. We recently released a policy brief that identified seven key problems with Texas’ funding system, three of which are especially relevant to Senate Bill 3.

I. Outdated and Politicized Formulas

For example, Texas adjusts each school district’s revenue entitlement by the Cost of Education Index, which is based on data from the late 1980s. Additionally, the state’s Target Revenue funding stream arbitrarily favors students in some districts over others.

II. School Districts Allocate Funds Inequitably

Research has shown that district-level policies can shortchange individual schools by as much as $1 million. As a result, many students do not receive the resources they’re entitled to. Quite often, these students live in low-income communities.

III. Insufficient Supply of Quality Schools for Families

Myriad data points illustrate that our education dollars are not serving all students effectively. But above and beyond. things like STAAR scores and NAEP results, two data points stand out.

First, at the state level, more than 130,000 Texas families are wait-listed for charter schools.

Second, at the district level, schools of choice are oversubscribed. For example, magnet programs in Houston Independent School District received 71,743 applications for only 18,569 seats in the 2015-16 school year.

It is painfully obvious that the supply of schools of choice is not keeping up with parental demand.

With 1,379 schools on Texas’ Public Education Grant (PEG) list, thousands of kids are literally zoned to failure.

A comprehensive Education Savings Account program would not only help address these issues, but can also serve as a template for school finance reform in Texas. By using funding weights and pushing individual allotments down to the student-level, we can be sure that funds are allocated equitably and transparently. And by making funds portable across schools we can increase the supply and diversity of options available to serve kids.

Some will claim that we shouldn’t use public funding to pay for private school tuition, but this is what we already do in higher education. Low-income students can access taxpayer dollars through federal Pell Grants to help pay for tuition at private institutions such as Southern Methodist University (SMU) and Texas Christian University (TCU). Yet to this day, I’ve never heard anyone say that these schools drain funds from Texas A&M; take the best students from the University of Texas; operate without accountability; or that students at the schools shouldn’t receive public funds because of the schools’ religious affiliations.

It’s time for Texas to move from district-centered funding to student-centered funding and a comprehensive Education Savings Account (ESA) program would be a good step in that direction.

Aaron Garth Smith is an education policy analyst at Reason Foundation, a nonprofit think tank advancing free minds and free markets.