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December 2012 Policy Study, Number 12-13

   

Education Savings Account:

A Path to Give All Children an Effective Education and Prepare Them for Life

   

Introduction

   

 

Arizona’s unique education savings accounts are state-funded bank accounts that families use for education expenses. Parents operate the accounts, and they have discretion over different services and materials (see the bulleted list in the next paragraph). The state’s department of education and treasurer’s office coordinate to deposit student funds from the school funding formula into the accounts. Conceived by the Goldwater Institute in 2005 and passed into law in Arizona in 2011, the accounts offer parents and children more choices in a child’s education and allow children to access options either online, across states, or through new devices such as iPads.[4]

 

Like HSAs, which allow patients to buy prescription medicine, pay co-pays after a doctor’s visit, and pay hospital fees, education savings accounts also give individuals discretion over how money is spent on different products and services. With education savings accounts, the state department provides parents an account number and a check or debit card, and parents use the card or online programs such as PayPal to make purchases or to pay school tuition. In Arizona, approved expenses include the following:

 

• Private school tuition
• Textbooks
• Education therapy
• Online classes
• Tutoring
• Standardized testing
• 529 college savings plans
• College tuition
• Individual public school classes and extracurricular programs

 

Arizona Governor Jan Brewer signed the accounts into law in 2011, after the state supreme court ruled unconstitutional the state’s two opportunity scholarship or voucher programs (one for children with special needs and another for children in foster care). The 2011 law made students with special needs eligible for the accounts, and the accounts were expanded in 2012 to include children in failing schools, children of active-duty military families, and adopted children. Because the court’s ruling cited the vouchers’ limited uses — that is, a voucher could be used only for the single purpose of private school tuition — the new accounts were designed to include multiple uses.[5]

 

   

 

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