The Questions Behind Implementing ESAs

Phil Vaccaro and Nita Bhat of EY-Parthenon joined me to discuss their work partnering with Arkansas to help the state design and implement its Education Savings Account (ESA) program. They shared the big questions every state must consider when developing and operationalizing their ESA programs and discussed the thinking behind some of Arkansas’s choices. I confess, when I think about ESAs, I hadn’t thought about all the questions that goes into operationalizing them beyond passing the legislation, so this was a very interesting conversation for me. I look forward to hearing from all of you!

Michael Horn:  

Welcome to the Future of Education, where we are dedicated to building a world in which all individuals can build their passions, fulfill their potential, and live a life of purpose. To help us think through how that might work with some new designs cropping up in a number of states throughout the US right now, we have two special guests today from EY Parthenon, Phil Vaccaro, a partner there, and Nita Bhatt, a senior director. Nita, Phil, thank you so much for joining us. I can't wait to have this conversation.

Phil Vaccaro:  

It's great to be here, Michael. Thank you for inviting us to participate.

Michael Horn:  

You bet. I'm excited to dig into this because you all did this fascinating work that we're going to talk about in some depth around education savings accounts, particularly ESAs, and their implementation in a state. People might pause there and think, "Wait a minute, implementation of ESAs? What does that even mean?" We're going to get to that and why it's so important in just a couple of minutes. But let's start at a high level. What brought you to this work in education in Arkansas in general? Phil, why don't you start us off?

Phil and Nita’s Journey to the Work 

Phil Vaccaro:  

In some ways, Nita and I bring a similar background to the work, but I started as a teacher in the New York City school system, worked for the school district for five years under Mayor Bloomberg, and then switched over to the Parthenon team to do this work in education from a consulting standpoint. For the past 14 years, my goal has been to stay relevant from a commercial standpoint, tracking what states and districts are doing, what their top priorities are, focused around system-level change and school improvement. We've seen various waves of what education reform looks like and which policies have been more or less in vogue. Over the last few years, private school choice policies have really accelerated in terms of their adoption across states. This builds on a trend that’s been a long time in the making with school vouchers and the broader school choice ecosystem. We've supported school systems with strong choice environments. This is where we currently are with these new policy initiatives around education savings accounts.

Michael Horn:  

Gotcha. Nita, how about you? What's your own story into the work?

Nita Bhat:  

Yeah, absolutely. Thanks, Michael. For me, it goes back to how and where I grew up, which was in Miami, Florida. I remember going to four different public elementary schools and high school, applying to and being waitlisted at a bunch of magnet schools, some fairly far away from my house, because my parents wanted me in a specific program or felt some aspect of my schooling wasn't meeting their expectations. We didn't have the right vocabulary for it at the time, but that was my parents saying they didn't want the house they could afford to limit the quality of education they wanted me to get. Fast forward after college, I had the opportunity to teach at different neighborhood and public charter schools in Philly, another angle on school choice. Then, at Parthenon, over the last decade, I've served in some interesting school choice contexts, including in New Orleans, which has really shaped my thinking, where I gained an appreciation for how to design a system that promotes not just choice for kids and families but good school choice. That's what brought me to this work with ESAs in Arkansas.

The Core Components of ESAs 

Michael Horn:  

Super interesting and an unbelievable background with your parents engaging in that before people thought about these questions in the same depth. As I mentioned, my audience is certainly familiar with education savings accounts. It's something we've talked about on the show, but they're clearly different from some of the other forms of private school choice we've seen historically: tax scholarships, vouchers, even the charter space. I'm curious, in your minds, what makes a funding vehicle an ESA? What are the core components to level set us about what exactly we're talking about with ESAs? Nita, why don't you lead us off on this one?

Nita Bhat:  

Rather than getting too technical, I want to take this conceptually. What makes an ESA unique from vouchers is two main things. First, ESAs are being rolled out to serve a much broader set of students than ever before. While vouchers were primarily targeted at low-income families, at least in the beginning, ESAs, in today's avatar, are intended to serve many more students. In some states, any family is allowed to apply, so it's called universal. The second thing is that ESAs can be used for a much broader array of expenses than vouchers. Vouchers typically went from the government directly to a private school to support tuition, whereas ESAs involve the state putting the money into a digital wallet for each participating family, and then they can deploy the money where they choose to, whether it's a private school or to curate a curriculum, buy books, uniforms, or a course at the public school or a local charter school. That's the difference. In terms of why we think they have taken off, the pandemic illustrated that traditional school models aren't working for everyone. In fact, that may be true for a large number of students. Nationally, we see the rate of chronic absenteeism, where kids aren't coming to school, has doubled between before and after the pandemic. Parents and advocates are saying they want to take education back into their own hands.