Aaron Smith – Education Next

The Progressive Case for K–12 Open Enrollment

Aaron Smith — Wed, 09 Aug 2023 09:00:36 +0000

School choice victories made waves this year, with states like Arkansas, Utah, and Iowa adopting expansive choice programs that pay for private-school tuition and other educational expenses.

But what flew under many people’s radar is another form of choice that also achieved impressive gains, with four states adopting open enrollment policies that enshrine the right for students to attend any public school that has an available seat.

Unlike legislation to create private school choice programs, which faced stiff opposition from Democrats, these open enrollment bills garnered noteworthy bipartisan support. In total, nearly 95% of Republican and 82% of Democratic votes across four red states—Idaho, Montana, North Dakota, and West Virginia—were cast in favor of public school choice. West Virginia’s House Bill 2596 passed unanimously in both of the state’s legislative chambers. Only in North Dakota did a majority of Democrats in either chamber vote against the measure.

Open Enrollment Vote Count by Political Affiliation

State	Republicans				Democrats
	House		Senate		House		Senate
	Yea	Nay	Yea	Nay	Yea	Nay	Yea	Nay
Idaho (SB 1125)	57	0	28	0	6	5	7	0
Montana (HB 203)	68	0	34	0	31	1	16	0
North Dakota (HB 1376)	77	4	24	19	3	9	1	3
West Virginia (HB 2596)	87	0	29	0	12	0	5	0
Total	289	4	115	19	52	15	29	3

Note: Arkansas also improved its open enrollment law, but its bill was part of an extensive package of reforms including private school choice and teacher pay. All tallies reflect initial votes in each respective legislative chamber.

But most of the recent momentum for open enrollment has been in red states with Republican governors and legislatures. For all kids to have unfettered access to public schools—34 states still allow school districts to discriminate against students based solely on where they live—Democratic policymakers in blue and purple states like Pennsylvania, Virginia, and North Carolina must lead the way. There’s a strong case to be made for Democrats to do exactly that.

First, open enrollment is a key step toward making public schools available to all-comers, a progressive value that most states fail to uphold. Research shows that many schools remain racially segregated decades after Brown v. Board of Education. For instance, a Government Accountability Office report found that in 2020–21, more than one-third of students attended schools where at least 75% of students were a single race or ethnicity. The biggest driver of persistent segregation is school-district boundaries, including demographic trends shaped by racist government policies like redlining and segregated public housing.

As a result, Black and Hispanic students are often concentrated in high-poverty schools, which studies have found to be less effective in raising student achievement than lower-poverty schools on average. “Every moderately or highly segregated district has large racial achievement gaps,” according to Sean Reardon, an education professor at Stanford University.

School district policies often make it difficult for these students to transfer to schools outside of their neighborhoods. Whether it’s public schools refusing to accept transfer students entirely or charging families transfer tuition—New York’s Rye Brook School District charges up to $21,500 per transfer student for its public schools—the system leaves many students without options. While open enrollment alone can neither eliminate segregation nor achievement gaps, it’s an immediate remedy for students who are zoned to underperforming public schools.

Open enrollment can also help strengthen public schools, another key aim for progressives. In the wake of the Covid-19 pandemic, public-school enrollment nationwide has fallen by more than 1.2 million students compared to pre-pandemic levels. Research shows that parents want more agency over their children’s K–12 experiences and are increasingly choosing private schools or homeschooling. Giving families significantly more options within the public education system could help mitigate enrollment declines across many school districts.

Some districts will lose students to open enrollment, but this can be a good thing: A study by California’s nonpartisan Legislative Analyst’s Office found that school districts that lost students to open enrollment responded by engaging their communities and taking steps to improve their instructional offerings, with some achieving “significant drops in the number of students transferring out.” The study also reported that school districts with the greatest enrollment declines improved at a faster pace than a comparison group of districts with similar demographics, but without any students transferring out through the program. These results aren’t causal, but they should allay fears that public school choice will leave some students behind.

Finally, progressives should embrace open enrollment because it’s good for students. Studies of states like Colorado, Wisconsin, and Minnesota show that students tend to transfer to higher-performing school districts when given the opportunity. Research also suggests that they use open enrollment for diverse reasons, such as to escape bullying or to access specialized instructional approaches. Some studies show that disadvantaged students use open enrollment at lower rates, suggesting that they may face barriers to doing so. Yet other studies find that Black students are more likely than their peers to participate and that good policies such as transparency requirements and free transportation, can improve access for low-income students.

At a time of deep political divisions, open enrollment holds immense promise as a bipartisan policy to improve public education that lawmakers should rally behind. With a Morning Consult opinion poll showing 70% of Republicans and 68% of Democrats supporting open enrollment, all states should move swiftly to adopt public school choice. Although Democrats and teachers’ unions often fear that school choice will undermine public schools, open enrollment can clearly make public schools stronger. Democrats in a few red states have shown that it’s possible to do what’s best for kids. Those in blue and purple states should step up next.

Aaron Smith is the director of education policy at Reason Foundation.

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ESA Expansion Underscores Urgent Need for School Finance Reform

Aaron Smith — Tue, 13 Jun 2023 09:00:48 +0000

More than a decade since Arizona adopted the nation’s first education savings account program, there’s been a decisive shift towards policies with expansive eligibility. With 2023 dubbed the year of universal choice, six states now have programs that nearly all students can participate in. To fully realize the potential of ESAs, state policymakers must now turn their attention to reforming K-12 funding systems.

Those funding systems weren’t originally designed to accommodate school choice. Every state is unique, but virtually all have revenue streams that aren’t connected to enrollment levels. As a result, school districts retain a portion of a student’s education dollars when the students leave. That creates a tension between ESA dollar amounts and state budgets: Funding participants on par with public schools creates additional new costs, but failing to provide that level of funding could discourage participation and undermine the goal of growing a robust marketplace of education providers.

As ESA programs grow in popularity, some states will incur additional costs for students who switch away from “off-formula” school districts. These districts are primarily supported by local dollars that don’t follow students when they choose to attend other schools. In other words, states don’t contribute formula aid for these students when they’re enrolled in public schools but pick up the tab when they switch to ESAs. The magnitude of these problems will vary by state but are increasingly important with the rise of universal eligibility provisions giving non-public school students access to state funding for the first time.

State policymakers should strive for a unified K-12 funding system where dollars flow seamlessly to ESA participants without breaking the bank.

ESA Funding Approaches Across States

To begin, it’s important to understand how states currently structure ESA funding. Twelve states have statewide ESA policies, four of which exclusively serve students with disabilities. Of the other eight states, all but New Hampshire and South Carolina—which limit participation to lower-income students—have universal or near universal eligibility once fully implemented. Table 1 summarizes the key funding design elements for these states.

Table 1: ESA Key Funding Design Features

Program	Description	Differentiated Aid	Amount Per Student	Estimated Share of State and Local Funding
Arizona’s Empowerment Scholarship Accounts	90% of the state’s base amount per student plus differentiated aid.	Yes	$6,966 estimated average for students with no disabilities (2023) Range for students with no disabilities is $6,000-$9,000 (2023) Various disability categories are eligible for additional funding.	74%
Arkansas Children’s Educational Freedom Account Program	90% of the state’s prior year base amount per student.	No	$6,614 (2024)	63%
Florida’s Family Empowerment Scholarship	State’s base amount per student plus a share of other categorical grants.	Yes	$8,942 estimated average (2024) $7,775 estimated average for students with no disabilities (2024) Funding amounts vary considerably by county, grade level, and disability status.	87%
Iowa’s Education Savings Account Program	State’s base amount per student.	No	$7,635 (2024)	57%
New Hampshire’s Education Freedom Account Program	State’s base amount per student plus differentiated aid.	Yes	$4,857 average (2023) $3,787 base plus $1,893 for low income, $2,037 for special education, $741 for ELL, and $741 for non-duplicated 3^rd grade students who are below proficient in reading. (2023)	25%
South Carolina’s Education Scholarship Trust Fund Program	Per student amount set by statute, subject to annual adjustment in general appropriations act.	No	$6,000 (2025)	46%
Utah Fits All Scholarship	Per student amount with total funding subject to legislative appropriation, which is initially set at $42.5 million.	No	$8,000 (2025)	86%
West Virginia’s Hope Scholarship Program	Prior year’s statewide average net state aid per student.	No	$4,300 (2023)	34%

ESA funding shares calculated based on 2019-2020 U.S. Census Bureau revenue data. ESA amounts were obtained from state sources and EdChoice.org. Note, that the average funding amount for all ESA participants was not available for Arizona and the figure represented is for non-disabled students only. As such, Arizona’s ESA share is likely understated. Since state policymakers have little say over federal dollars, the estimated shares of funding exclude these dollars.

There are three key takeaways from this comparison. First, the per-student amounts ESA students receive—and the share of public education funding this represents—vary considerably. Average ESA amounts range from less than $5,000 in West Virginia and New Hampshire to more than $8,000 per student in Florida and Utah. In all cases, this is less than the per-student funding public schools received in 2019-2020, the most recent year federal data are available. The percentages are likely low estimates, because education funding has generally risen across states since that time.

Excluding federal dollars, estimated ESA shares range from 25% in New Hampshire to 87% in Florida. Utah and South Carolina are the only states where ESA dollars aren’t tied to the base funding amounts (West Virginia doesn’t have a base allotment). While Utah provides the highest dollar amount for non-disabled students, it also caps the number of participants based on appropriations. Florida’s ESA program is unique in that it is partially funded by tax credit donations, caps the number of participants eligible for differentiated funding, and establishes funding amounts that vary considerably across school districts.

Five states don’t provide differentiated funding for high-need ESA participants, although four of these states—Arkansas, Iowa, South Carolina and Utah—have separate school choice programs serving disadvantaged students. In contrast, Arizona, New Hampshire, and Florida target additional dollars to ESA participants in a way that mirrors their respective funding formulas. For example, participating students in Arizona with a speech language impairment or emotional disability receive up to an estimated $10,000 while students with disabilities in New Hampshire generate an additional $2,037—the same per pupil amounts students receive in public schools. While differentiated funding is costlier, it gives students access to the resources they would’ve received had they attended public schools and could provide greater access to specialized services.

Finally, West Virginia’s approach to ESA funding highlights the shortcomings of its resource-based school finance formula in an era of robust choice. Rather than using a base amount to deploy dollars, the Mountain State funds inputs such as staff salaries, transportation, and other operating expenses. As a result, it lacks a clear mechanism for setting ESA amounts. To get around this problem, the prior year’s average state aid per student is used. But this figure isn’t tied to the state’s formula, which delivers more dollars per student on average since it is funded with both state and local revenue. If West Virginia’s ESA funding were instead tied to formula amounts—which is possible but more complicated with a resource-based funding formula— ESA students would receive a greater share of per student education dollars.

A Closer Look at ESA Funding Amounts

Comparing New Hampshire and Arizona illustrates how school finance systems interact with school-choice funding. Both states employ funding formulas that allocate dollars based on student characteristics, including additional amounts for various categories of student disadvantage. They also have similar approaches to ESA funding, since program amounts are tied to their respective formulas. Yet, despite New Hampshire spending nearly twice as much per student as Arizona on K-12 education, its ESA participants receive far fewer dollars than Arizona’s participants on average.

New Hampshire delivers only 23.5% of state and local education dollars through its primary funding formula. Outside of the formula, school districts are heavily reliant on local funds, which are based on local tax rates and property wealth. As a result, the state’s base funding allotment—which largely determines what ESA participants receive—is a paltry $3,787 per student, even though school districts receive $19,182 per student on average. New Hampshire’s public schools are well-funded, but only a fraction of these dollars is delivered through its formula.

The Granite State’s reliance on local dollars has another important implication: About 16% of its school districts operate off-formula, meaning they raise their entire funding entitlement with property tax dollars. Because these districts’ revenue is unaffected by marginal enrollment changes, they retain all funding when students leave for the ESA program—even though the state incurs an additional per student expense. It’s easy to see how using state funds for ESAs could also be costly in a state like Nebraska, where nearly two-thirds of its school districts operate off-formula.

In comparison, 67.8% of Arizona’s education dollars are allocated through its formula, with outside-the-formula dollars contributing less to overall funding. This is why its base funding allotment, which ranges from $6,000 per student to $9,000 per student, is more robust.

A state’s school finance system can affect ESA policy design. A streamlined school finance system yields an ESA amount that’s close to parity with per-student funding in public schools. Meanwhile, a funding system with a sizeable share of non-formula dollars can place a low ceiling on ESA values and create additional burdens for taxpayers.

Modernizing K-12 Funding Systems

School choice will be an enduring part of the K-12 ecosystem, and funding systems must be modernized to reflect this. Absent reform, ESA amounts will likely remain well below parity with public school funding, and large shares of education dollars will stay in school districts for students the districts no longer serve. Reasonable people can disagree on what share of K-12 funding should follow school-choice participants, but ESA amounts should be determined by intentional policy design rather than as byproducts of antiquated school finance systems. Policymakers can focus on three steps to make the funding systems more amenable to ESAs.

First, states should adopt a student-centered funding formula that allocates dollars based on student characteristics. Without a clear and consistent dollar amount attached to each student determining ESA amounts can be unnecessarily complex. The vast majority of states already have this type of mechanism in place, but others—such as Idaho, North Carolina, and Alabama—lag behind. While this alone doesn’t ensure funding portability, it’s the cornerstone of a unified funding system.

Next, policymakers must maximize the share of education dollars flowing through their state’s formula. This addresses the issue faced in New Hampshire where, despite having student-centered allocation, outside-the-formula dollars keep the state’s ESA values low. This is probably the most critical yet underappreciated component of funding portability. There isn’t just one way to do this, with much depending on a state’s existing tax policy, constitutional restrictions, and other political and economic considerations. But potential solutions range from Indiana’s full-state funding model to Texas’s recapture mechanism, as well as California’s strict limits on local operating dollars. While reforms of this magnitude are challenging, the basic idea is simple: limit outside-the-formula dollars.

Finally, ESA funding amounts should include differentiated funding. Just as school finance systems target additional state dollars to higher-need students, ESA programs should adopt the same principle to ensure accessibility for all students and ensure the right incentives are in place for providers. Fortunately, as Arizona and New Hampshire illustrate, this is easy to do once a student-centered funding formula is in place and funding is already delivered based on student characteristics.

Reforms of this magnitude can be a big lift. As an alternative, state legislators can find other ways to ensure more dollars follow ESA students even within a disjointed funding system, but these fixes will depend largely on local context and could still present political and even constitutional hurdles in some states.

Conclusion

Unless K-12 funding systems are modernized, ESA funding amounts and state budgets will continue to be at odds in many states. While overhauling school funding systems is difficult work, school-choice advocates could find an unlikely bedfellow in funding-equity advocates in state legislatures. Both coalitions want transparent, fair systems that attach greater resources to higher-need students. In many ways, funding equity and portability are two-sides of the same coin. Short of comprehensive funding reform, policymakers can pursue targeted fixes that increase the share of dollars following ESA students. Regardless, any discussion of school finance reform must recognize the role of school choice in public education. Only a unified funding system can provide policymakers, and parents, with the levers needed to match strategic priorities with dollars.

Aaron Smith is director of education reform at the Reason Foundation, where Christian Barnard is a senior policy analyst.

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How to Garner Rural Republican Support of School Choice

Aaron Smith — Wed, 17 Aug 2022 09:00:30 +0000

A study found nearly 7-in-10 rural families have access to one or more private schools within 10 miles of their home.

With RealClear Opinion research finding that 82% of Republican voters now favor school choice policies such as vouchers, education savings accounts, and tax-credit scholarships, school choice legislation in Republican-dominated state legislatures seems like it should have an easy path to the governor’s desk. But this wasn’t the case in 2022 , when red states such as Georgia, Iowa, and Utah failed to usher school choice bills across the finish line.

In Oklahoma, where House Republicans outnumbered Democrats 82-19 during the 2022 session, Republican House Speaker Charles McCall refused to give a hearing to a school choice bill backed by both the state’s governor and Senate leader. According to McCall: “I’m a rural Oklahoman. We see things through the lens of our individual districts.”

While rural Republican opposition to school choice is long-simmering, it’s more apparent now that funding families instead of systems is enshrined in the GOP’s platform and quickly becoming a litmus-test issue for right-leaning voters. Rural Republican policymakers are the main reason Texas, a reliably red state, is in the minority of states that don’t have private-school choice programs on the books despite years of legislative efforts to change that.

Although this rural voting bloc has proved to be a roadblock for school choice advocates, creative approaches to K-12 funding might be able to win them over. Offering rural school districts a financial cushion for any students they lose to a school choice program could be the way to finally get rural legislators on board–and it would be far cheaper than strategies used in Arizona and Florida that involved massive statewide public school funding boosts to make school choice expansion politically viable.

The Role of Rural Superintendents in School Choice Battles

Why are Republican legislators so willing to buck their party and side with teachers’ unions when it comes to school choice? In The Progressive magazine earlier this year, public school advocate Jessica Levin claimed, “Republicans representing rural areas know vouchers won’t benefit their constituents because of the lack of private schools in these areas and because public schools often are important for jobs and community-building.”

But research by the Brookings Institution casts doubt on the first part of Levin’s explanation, finding nearly 7-in-10 rural families have access to one or more private schools within 10 miles of their home. It seems more likely that rural Republicans’ opposition comes down to how the expansion of alternative education options could affect public school jobs and the broader community.

Back in 2005, the Texas Tribune editorial staff explained the important role that superintendents play as employers: “In many parts of rural Texas, where schools and prisons are the only economic engines, the school superintendent is one of the most powerful people in the county.” This is the reality in many parts of the U.S.

Rural superintendents reasonably don’t want to deal with the fallout of shrinking budgets that can come if there is an exodus of public school students to private options. Such a prospect is especially challenging given the school districts’ diseconomies of scale. Losing funds could lead to layoffs and potential negative effects on local culture. While these concerns are valid, they shouldn’t outweigh the benefits of giving families agency over their K-12 education, including positive effects on parent satisfaction, participant test scores, and long-term outcomes.

Nevertheless, some lawmakers are reluctant to go against their influential superintendents on the issue of choice. In 2006, Clint Bolick—then president of the Alliance for School Choice and now a justice on the Arizona State Supreme Court— remarked that “rural superintendents have been the bane of our existence.”

School choice advocates have recently started to push back against some lawmakers’ loyalty to their superintendents. In Iowa, Kentucky, and Texas, Republican officeholders backed by teachers’ unions lost their primary elections this year over their opposition to school choice.

This approach may help choice programs advance in these states, but advocates should also consider other strategies for expanding educational opportunities for students if efforts at the ballot box don’t prevail.

The Way Forward

In 2022, Arizona passed the most expansive school choice program in the country. The bill’s sponsor, House Majority Leader Benjamin Toma, credited the win to $1 billion in new funding for public education, writing “We were able to make that investment knowing it was buying radical reform.”

Arizona certainly isn’t alone in appropriating more money for public schools, with many states—including Georgia, Iowa, and Utah—using large budget surpluses to boost K-12 funding for the 2022-23 school year. However, Arizona was alone in using new dollars to secure a historic school choice victory that fundamentally changes public education in the state. But there might be a cheaper pathway to neutralizing rural Republican opposition to school choice: Holding rural school districts harmless.

Admittedly, hold harmless policies are frequently criticized by advocates of fair school funding—including these authors—and with good reason. Hold harmless policies fund schools based on outdated enrollment counts or revenue levels. These policies divert funding away from schools attracting new students and create unfair funding patterns if left in place for years.

However, the political realities of K-12 education finance make it so that even a school choice bulwark like Arizona must put a billion dollars on the table to entice enough Republican legislators to support school choice expansion. Holding rural school districts harmless is a far less expensive option and it could be entirely offset by the fiscal savings that a universal school choice program accrues.

A Test Case: Oklahoma

As a test case, consider the failure of Oklahoma policymakers in the 2022 legislative session to pass S.B. 1647, which would have created an education savings account program. The bill failed in the state senate with a vote of 22 to 24. Remarkably, 18 of the 24 “nay” votes were Republicans. As expected, these 18 Republicans represented the jurisdictions containing about three-quarters of the state’s small, rural districts. For the sake of simplicity, we are assuming small districts of fewer than 750 students can be counted as rural districts.

How much would it have cost Oklahoma’s choice-supporting policymakers to offer financial assurances to the rural districts largely represented by these 18 “nay” Republicans?

Consider a scenario where all Oklahoma school districts with fewer than 750 students would be held harmless for any students they lose to an education savings account program. Such a remedy would extend beyond the state’s existing one-year declining enrollment hold harmless policy. Excluding charter schools, this would include about 70 percent of the state’s school districts. Next, assume that each of these districts loses 5 percent of their students to the ESA program. Based on state school finance data from the 2020-2021 school year, we estimate it would cost the state roughly $30 million each year to continue funding these small districts as if they hadn’t lost any students.

For context, the Oklahoma legislature appropriated $3.164 billion for K-12 education in FY 2022—a $171.7 million increase from the previous year. It’s also worth emphasizing that the Sooner State, like many other states, already has special funding allotments for small and isolated school districts, so targeting additional dollars to rural districts is nothing new.

To be sure, there are multiple ways to construct a policy that would assuage rural districts’ fears of losing money to school choice programs. It would also be wise for legislators to cap any program like this to prevent small districts from relying too heavily on hold harmless funding. But even with a generous cap, holding rural districts harmless for any enrollment losses to school choice programs appears relatively cheap and could be an effective way to get rural Republicans on board with school choice. It’s also a policy that could pay for itself given the fact that school choice programs can provide savings for state education budgets.

After years of resistance from rural Republicans, school choice advocates are rightfully frustrated. Recent efforts at the ballot box seem encouraging for choice supporters, but this coalition should consider an approach to policy making that recognizes the concerns of rural superintendents while securing universal school choice for families. This path could provide much-needed changes to K-12 education and save taxpayers money in the long run.

Aaron Smith is the director of education policy at Reason Foundation. Christian Barnard is a senior policy analyst at Reason Foundation.

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