Milton Friedman first proposed giving families control of their children’s public education dollars in his 1955 essay “The Role of Government in Education.” Friedman argued that the best way to improve student learning was to make the public education market more effective and efficient, and this could happen only if families were empowered to choose their children’s schools. Friedman believed the quality and efficiency of schools would improve if they had to compete for customers (i.e., families) rather than the government assigning families to schools. He further believed that a market-driven public education system would be more equitable and especially benefit lower-income students.
Wisconsin state Sen. Polly Williams was a Black Democrat from Milwaukee who in the late 1980s wanted to help lower-income and minority students attending what Williams described as “failing schools.” Like Friedman, Williams’ solution was school choice, but her approach differed. While Friedman’s market solution was designed to improve the entire public education system, Williams’ focus was not systemic improvement. Her intent was to help lower-income and minority students trapped in failing district schools by giving them public funds to attend private schools.
Williams’ vision became reality in 1990 with the passage of the Milwaukee Parental Choice Program (MPCP), which became the nation’s first publicly funded school choice program. Willams’ approach, which became known as the social justice model of school choice, emerged as the prototype that most school choice advocates and state legislatures embraced for the next 20 years. A small and persistent group of school choice advocates continued to promote Friedman’s market solutions, but social justice remained the dominant school choice rationale.
The first steps toward the merging of the Friedman and Williams models of school choice began in 2011 when Arizona passed the nation’s first education savings account (ESA) program, and in 2014 when Florida began creating the country’s largest ESA programs.
ESAs are flexible spending accounts that families may use to pay for a variety of education products and services in addition to private school tuition and fees.
Jack Coons and Steve Sugarman were among the first to advocate for a voucher with ESA-type functionality when they called for “divisible vouchers” in their 1978 book, Education by Choice. Friedman also called for flexible spending vouchers in a 2003 interview with Education Next.
By enabling families to spend their public education funds on education products and services beyond schools, ESAs allow the supply side of the public education market to expand, which in turn encourages more families to use ESAs, which in turn causes further expansion of the market’s supply-side, which then causes even more families to use ESAs. This ongoing interaction between supply and demand and the information that is shared through this continuous exchange is key to how Friedman envisioned the public education market better serving all students. Particularly those students Polly Williams was most concerned about.
In 2021 West Virginia created an ESA program with no eligibility restrictions other than age and residency. Eight more states have followed West Virginia’s lead, and today Alabama, Arizona, Arkansas, Florida, Louisiana, Iowa, Ohio, Oklahoma, and Utah also have passed various types of ESA programs with universal eligibility. While these states are not all funding every eligible student who wants a scholarship, their ESA programs are growing the demand side of their public education markets. Florida funded over 405,000 ESAs in the 2023-24 school year.
Moving forward, the merger of Williams’ social justice vision with Friedman’s market-based approach for achieving this vision will accelerate as more states give all their students access to ESAs.
The nine states currently working to implement ESA programs with universal eligibility have work to do before their public education markets successfully address Friedman’s and Williams’ social justice aspirations.
Determining the proper barriers to market entry for supply and demand is an ongoing challenge. For example, should ESA-funded tutoring be limited to state certified teachers, or is that too restrictive? Should ESA-funded tutors only be required to pass a background check, or is that not restrictive enough? Should homeschool parents who are teaching their children be able to pay themselves with their children’s ESA funds? If not, are we blocking lower-income families from participating in homeschooling?
ESA financial transactions present another challenge. In some states, they are cumbersome and costly. Requiring detailed documents for reimbursements and reviewing every reimbursement request regardless of the amount is expensive, time consuming, and delays payments to families, which puts undue financial pressure on lower-income families. States need to decide if the benefits of reviewing every ESA purchase, regardless of the amount, are worth the costs.
Information is the lifeblood of every market. Without access to the appropriate information, families cannot make good purchasing decisions and good purchasing decisions is how families teach educators (i.e., the supply-side of the market) what they need and want. States need to determine what information families require to help ensure they are purchasing the most appropriate educational services and products for each child. States should also ensure busy families can easily access this information.
These regulatory issues are challenging because of the magnitude of the transformation the public education market is undergoing in ESA states with universal access, and the contentious political environment in which these market improvements are occurring. But these challenges must be successfully addressed if the Friedman/Williams model for achieving greater equality of opportunity through a more effective and efficient public education market is to succeed.
