The Family Educational Relief Program

How do you lower costs while improving quality? Use the free market.

That is a straightforward, easy to understand concept. We’ve seen it work with phones, computers, and other technologies. It’s true for various services and products as well.

Combine that concept with this one we often say, about government’s role and its interference:

Whenever government attempts something beyond the proper role of government (protection of life, liberty, and property), it causes unintended consequences—usually exactly opposite to the stated goals of the interference.

Today we’ll apply the free market and getting government out of the way to education. If we can allow the free market to do its thing and innovate, we’ll get better quality education at lower cost—guaranteed better than government has been doing.

from the cover of Waiting for 'Superman'

We need to let go of the fear that says, “We can’t trust the free market with something so important to us.” No. We can’t trust government interference with something so important to us.

Isn’t education, though, a basic responsibility of government? Definitely not at the federal level; it isn’t an enumerated power in the Constitution and was never granted to the federal government. The fact that there is a federal Department of Education is a usurpation—a seizure of power not granted.

At the state level, at least in Texas, for better or worse it is written in the state constitution that the state will provide a free education to all students up through high school. So that means it has to be done.

How much did school closures due to
COVID-19 set Texas student's back?
Infographic from FamiliesEmpowered.org

But, if you lived through 2020, you know, better than you did before, that government doesn’t actually follow through on its promise to educate your children. And, when it doesn’t, it makes you pay for it anyway. For parents who have used an alternative method of educating their children—private school, homeschool, charter school—they’ve been aware of that inequity for a long time.

The Texas legislature is in session. That means (besides that our freedoms are in jeopardy), if we’re going to do something about this—following a year when public schools failed pretty spectacularly—this is the time.

My State Senator, Paul Bettencourt, filed bill SB 1968  last Friday, and later that day Representative Mayes Middleton filed the identical House companion bill, HB 4537. It is called the Family Educational Relief Program.

The bill looks to me to be similar to an Education Savings Account (ESA), although there are some differences. Arizona is noted for doing ESAs several years ago, limited to special education students. The parent would have the option of taking 90% of the amount allotted for the child, to be used in any combination of ways the parent sees fit. It’s similar to a medical savings account in that way. Only approved expenses could come out of the account. But the person manages their own funds.

The Texas bill isn’t aimed at special education students, but at special needs; namely low income. While it could be expanded in future years, as a pilot it is aimed at those whose incomes qualify them for federal free or reduced-cost lunches. Lack of choice harms low-income families’ children most.

There’s a Need

Texas educates approximately 5.5 million K-12 students, roughly 10% of the children in the US’s 50 states. 

A few years ago, we heard from Colleen Dippell, founder of FamiliesEmpowered.org, which specialized in helping families get access to charter schools. She told us in 2017 that there are 900,000 Texas students (almost 1 in 5) attending over 1,000 failing Texas schools—meaning the school didn’t meet the minimal yearly progress (a pretty low bar) for three years in a row.

One approach to solving that deficiency has been charter schools, which are growing ever more prevalent. But her estimate at that time was that there were 130,000 students on wait lists for charter schools. Charter schools simply can’t meet the demand. You might also note that there are multiple bills we have to oppose this session aimed at making it harder for a charter school to start or expand.

Meanwhile there are 100,000 empty seats in private schools.

There’s a demand. And there’s a supply. But they aren’t getting together.

Maybe it’s because the pent-up demand is coming primarily from low-income families who can’t afford to pay private school tuition, and the private schools can’t exactly provide education for free.

This bill uses money already being spent on those students and allows them to use it for private school tuition. It could also be used for online courses—of the parents’ choice, rather than what has been inflicted on them by their school districts during closed schools this past year. It can be used for curriculum, or therapies, or other materials as well.

 

What Are the Details?

If we use round numbers, we can say $10,000 is allotted per student per school year. Of that $10,000, 90% means $9,000 put into a trust for the student, with the parents as trustees, instead of the school district’s board of trustees.

The remaining 10% stays with the school district to pay maintenance and operations costs and loan interest. In other words, for every student in the program, the school district gets $1000 for a student they don’t have to educate. That means, the more students use the program, the higher per pupil spending the school district has. There’s incentive to let the students go into the program.

There are limitations. One is that the payments can’t go to a household member or relative (within three degrees of consanguinity). In short, homeschoolers can’t use it to pay one parent to teach, for example. But a homeschooling family can use it for curriculum, online programs, therapies, etc.

We homeschooled for ten years. Our total costs added up to much less than that for the entire decade, including field trips and camps. That was for all three children. In other words, all our expenses, barring of course loss of income from a second parent working, would be easily covered under this program.

If the account has money remaining at the end of the school year, it rolls over in the child’s account for the following year. That means there’s incentive for the parent to shop around and get a good deal—free market at work.

The Arizona version was arranged to roll over yearly and could eventually be used for college tuition. This Texas version also rolls over to each next year but is only available as long as the child is eligible for public school. That means it could be used for dual-credit courses at a community college, as we did with our kids by age 15 or 16. Or it could be used for university courses—in person or online. But, unlike the AZ plan, once the child graduates and is no longer eligible, any funds remaining return to the program fund for other students to use. That means there’s even incentive for the state to hope families use the fund, because the state educates those students with a possible rebate at the end.

What about parochial schools? Is that a problem? No, it isn’t. The Supreme Court recently ruled in a Montana case that money used by parents for the education type of their choice is not an establishment of religion when it goes to a parochial school; in fact, it would be an infringement on freedom of religion to bar that educational choice only for religious reasons. So that is now settled law.

 

What about Accountability?

Service providers and vendors must get pre-approval according to rules set by the Comptroller to participate (i.e., to get paid by a parent out of the child’s fund).

Private schools have to show notarized documentation related to following the rules, including the number that can be accommodated, safety measures at the location, etc., and would need to be accredited. Actually most private schools in Texas are unaccredited, so this is a limitation. Or it is incentive to get accredited. (Note: there is no correlation between accreditation and education quality.)

Private tutors, therapists, or teaching services must provide notarized documentation of their qualifications, licensing, current employment (when applicable), and criminal history.

Online course or program providers must show notarized documentation of their qualification to serve the students, accreditation, etc. Services and vendor types not listed must also provide evidence of qualification to serve.

In other words, it’s on the service providers to apply, and the Comptroller’s office to verify their validity, so the parent doesn’t have to.

Theoretically, if a parent wanted to use something not on the list, they could let that service provider about the program and suggest they apply. But otherwise the parents simply use those services already verified by the Comptroller. The state’s agent would post a list of approved service providers and vendors for parents to use.

While an education service provider may not charge a child participating in the program an amount greater or less than the provider’s standard amount charged for that service, a parent can choose to pay out-of-pocket for anything either not on the list or any cost beyond the limits of the student’s allotment. For example, in a market where this program is well established, it is likely private schools would work to make costs fit within the allotment; however, more expensive private schools can still be used, but the parent would pay anything over and above the allotment. This is still better than having to pay the full tuition over and above the taxes the parents pay the state without receiving any educational service from the state.

 

Where Does Funding Come From?

image found here

The Comptroller allots money for the program. The amount allotted is the only limitation on how many students could participate. Funds come from the state's education funding and also from grants, gifts, and donations as well as from additional general funds the Comptroller may put toward the program.

About those grants, gifts, and donations: A company wishing to donate could make a tax-deductible gift to the program. Even better, it could apply for a tax credit—up to half the entity’s estimated tax payment could be allotted to this program. (This comes under Chapter 230, Subsection B, which is longer and more technical than I want to go into here.) This would actually increase funds going to education without raising more tax revenue to do so.

A small percentage of the student’s allotment (no more than 3% of any of four payments or a total of 5% annually) goes to the Comptroller’s office for administering the program.

No Curriculum Interference: Another good feature is that the Comptroller’s office has a hands-off approach to curriculum; it only handles the funding. If the TEA or Commissioner of Education were handling the fund, they would no doubt attempt to control what is taught and how, which kind of defeats a main purpose of school choice.

There’s no federal money used, which means there’s no federal control over what is taught or how, or anything else to do with the program. That’s a definite plus. I think it also means, any education block grant to the state is divided up among students still in public schools, leaving more of any such funding to spread among fewer students—another incentive for public schools to support this program.

 

Any objections?

The people who have drafted this bill have decades of work and experience behind them, working toward school choice. They have addressed every objection opponents have voiced.

·         It particularly helps low-income students.

·         It does it without causing public schools to lose funding; it even increases their per student amount.

·         Vendors, service providers, and private schools are all held accountable—as are the parents serving as trustees of their child’s accounts.

It doesn’t address the opponents’ unvoiced objections—that they want to maintain control over what is taught, and that’s more important to them than actually providing an education to every student.

It’s voluntary. This is only for parents who are interested and involved in their children’s education. Uncaring parents don’t have to bother with it; they can leave their children right where they are.

 

It Introduces the Free Market

The most valuable thing about this program is that it introduces the free market into this tiny corner of what has been a failing government monopoly. Free market, once introduced, is likely to grow. That is likely to lead to innovation, which means better education at lower cost, something people have been saying couldn’t be done, even by adding obscene amounts of money. It can’t be done by government. But when government gets out of the way, and allows caring parents and the free market to see to education, the possibilities are unlimited.

If you’re in Texas, let your state senator and representative know you support the Family Educational Relief Program. If you’re outside of Texas, let your representatives know about it and ask them to do something similar in your state.