Education savings accounts in North Carolina?

Legislation to significantly expand education savings accounts in North Carolina— or ESAs, as they are commonly known —   was introduced in the General Assembly earlier this week. 

House Bill 420  sponsored by State Representative Donnie Loftus (R-Gaston) would convert and expand the current North Carolina Personal Education Student Account Program to a program that not only makes awards to special needs children but also to children who attend private schools and home schools.

Before we get too far down the road, you’re probably asking: What’s an ESA? Briefly, ESAs are taxpayer-funded and parent-controlled checking accounts that allow parents to use the money for educational expenses, such as tuition and fees, textbooks, tutoring, curricula, testing and other supplies.  North Carolina currently has an ESA program for special needs students. In addition to tuition and fees, parents of eligible students can use ESA funds for educational therapies, educational technology, and other approved expenditures. 

But back to HB 420. The bill would significantly expand eligibility of the current ESA program and also consolidate the Opportunity Scholarship Program. For example, beginning in 2024-25, in addition to awards for special needs students, home school students could receive awards up to 28 percent of the state per pupil expenditure in the previous year. In addition, K-12 students could receive awards of up to 33 percent of state per pupil expenditures. That award would increase to 66 percent in 2025-26.   Also. the legislation calls for converting the popular Opportunity Scholarship Program to an Education Savings Account. In 2026-27. That means all eligible students could receive awards up to 100 percent of the state per pupil expenditure in the previous year.

HB 420 lays out a bold program. But a bold program is needed to empower parents to direct how and where their children are educated. 

There are a lot of moving parts here.

If an ESA is passed, we need to ensure schools have the capacity to serve available students. That may mean a multi-year runway to a full universal type of ESA.  Schools must have the ability to ramp up capacity. The market needs time to send signals to developers and investors. And we need time to address the kinks in small programs so that they do not replicate when the program is scaled up.

In the January 2023 Civitas Poll of North Carolina registered voters,  69 percent of respondents said they support education savings accounts, 18 percent said they oppose, and 13 percent were unsure. 

North Carolinians certainly support ESAs.

 Kudos to Rep. Loftus for beginning this discussion. It’s much needed. Now, let’s make sure we get it right.