A primer on education savings accounts, what they would look like in North Carolina

Renaissance Classical Christian Academy in Fayetteville, North Carolina, is one of 845 private schools in the state serving more than 123,000 students. Renaissance Classical Christian’s curriculum, known as the Trivium, is known for helping children learn and grow with measurable results comprised of three phases: the grammar stage, teaching young children knowledge; the logic stage, teaching teens understanding; and the rhetoric stage, teaching young adults wisdom.

Editor’s note: This article appeared Monday on carolinajournal.com.

Republicans have introduced a bill this session that would create education savings accounts in North Carolina. Here is a quick primer on what ESAs are, what other states are doing on this issue, and what could be on tap here in the Tar Heel State.

What are ESAs?

Education savings accounts are government-funded accounts controlled by parents that can be used for approved education expenses. ESAs shouldn’t be confused with a Coverdale ESA or a 529 account, both of which allow parents to fund education accounts using their own after-tax dollars and allow the investment to grow for tax-free withdrawals if the funds are used to pay for approved education expenses.

ESAs are one of the most ambitious forms of school choice because they exemplify the belief that education dollars should follow the child, not just fund a system.

What other states are doing

Six states have passed a universal ESA to date — Arizona, Arkansas, Iowa, Utah, West Virginia, and Florida. Here is more detail on the specifics of each ESA plan.

Arizona: This state’s Empowerment Scholarship Accounts are available to all students and are valued at around $7,000 each. Arizona became the first state to pass a universal ESA in 2022.

Arkansas: The Children’s Education Freedom Accounts were signed into law in March. The accounts will be phased in over two years until eventually becoming universally available to all students. The value of each account is based on 90% of the prior fiscal year’s per pupil allotment, which for the most recent year is around $6,600.

Iowa: This state’s ESAs became a reality in January and will fully kick in for all students by the 2025-2026 school year. The value is tied to the state’s per pupil allotment for public school students — around $7,400 for the current fiscal year.

Utah: The Fits All Scholarship account are valued around $8,000 per year. Although they are available to all students, priority is given to families to lower-income families before wealthier families have access to an account.

West Virginia: The Hope Scholarship is worth less than what other states offer — around $4,300 for the 2022-2023 school year.

Florida: The Sunshine State became the most recent state to enact a universal ESA after Gov. Ron DeSantis signed a bill into law in late March. Each ESA is worth around $8,700 a year, making Florida not only the largest state to enact an ESA, but also the most generous in the amount provided.

Several other states are either poised to pass ESAs or are on the cusp of expanding special-needs ESAs to all students.

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BY Special to NextSteps