Education Savings Accounts

States adopt three main types of policies to expand private school choice: school voucher programs, scholarship tax credit programs, and education savings accounts (ESAs).

ESA programs involve the deposit of public funds into government-administered accounts. Eligible students and their parents can use the funds for a variety of purposes, including private school tuition, tutoring, and dual or concurrent enrollment credits.

Recent Legislation

In the 2021 and 2022 Sessions, the Legislature considered the Student Empowerment Act, which would have allowed for the creation of accounts, administered by the State Treasurer, to be used by certain students for qualified educational expenses.

Provisions establishing the Act were included in 2021 Sub. for HB 2119, 2022 HB 2550, and 2022 Sub. for HB 2615. None of the bills were enacted.

State Programs

Eight states (Arizona, Florida, Indiana, Mississippi, New Hampshire, North Carolina, Tennessee, and West Virginia) have enacted ESA programs.

The programs in Indiana, North Carolina, and West Virginia began in 2022; however, there is currently an injunction in place preventing the program in West Virginia from operating.

Program Eligibility

Generally, states limit participation in ESA programs to students with Individualized Education Plans (IEPs); household income under a certain amount or percentage of the Federal Poverty Level; or both. As of September 2022, Arizona expanded their program to provide universal student eligibility.

Program Funding

States cap the amount of funding students receive.

Some states make the funding cap a certain percentage of the total state education funding (state base aid). Arizona and Indiana set the cap at 90 percent of state education funding. Florida and West Virginia set the cap at 100 percent of state education funding. Tennessee sets the cap at 100 percent of state education funding and categorical grants for students with special needs.

Other states provide a set amount for the funding cap based on a per student amount. Mississippi sets a cap for each school year, and it may vary based on funds available. For the 2022-2023 school year, the cap is $6,779 per student.

A few states also set a cap on the total annual state cost for the program. Indiana sets the total amount based on allocations; the cap for the 2022-2023 school year is $10.0 million. Mississippi sets the total amount at $3.0 million.

Program Administration

Administration of ESA programs varies by state.

Programs in Arizona, Mississippi, and Tennessee are administered by each state’s department of education. Florida’s program is overseen by the state’s department of education, but is administered by two scholarship funding organizations.

Programs in Indiana and West Virginia are administered by the State Treasurer.

Programs in New Hampshire and North Carolina are administered by other entities. New Hampshire’s program is administered by the Children’s Scholarship Fund New Hampshire and North Carolina’s program is administered by the North Carolina State Education Assistance Authority.