EDUCATION NOTEBOOK: 
Applying the Ownership Society Agenda to Education

January 26, 2006

The "Ownership Society" will take center stage Tuesday at President Bush's State of the Union address. The administration is already highlighting the President's plan to expand Health Savings Accounts, a key component of the Ownership Society agenda that encourage people to save for their own medical expenses. Applying Ownership Society thinking to our public education system should be next on the agenda.

The Ownership Society is about reforming government programs to allow individuals to control their own lives, rather than having the government dictate decisions for them. Few areas of American life are in greater need of this kind of reform than the nation's public education system.

Every year, American taxpayers spend more than $500 billion dollars on public education. From kindergarten through 12th grade, the average public school student can expect taxpayers to invest more than $100,000 on his or her education. This investment is largely controlled by government officials-individuals have little control over how this money is spent, beyond being able to choose in which school district they live. As a result, many students do not receive a quality education that is tailored to their needs.

The federal government is positioned to change this. Washington spends more than $66 billion in taxpayer funds each year on K-12 education. Thus far, the focus of the Bush Administration's education policy has been to make states and public schools across the nation more accountable to the federal government through testing and standards set in the No Child Left Behind Act. Giving parents greater control over their children's education has been, at most, a secondary concern. In his State of the Union address next week, President Bush should begin to apply Ownership Society principles to federal education policy.

One simple, achievable initiative would be to expand the amount that families can contribute to their children's Coverdell education savings accounts. Families can use the savings in these accounts, where earnings accrue tax free, to pay for K-12 schooling, including tuition at public, private, and religious schools. Or the savings can be used for certain higher education costs. At present, families can contribute up to $2,000 per child each year.

Following the logic of the Heath Savings Account expansion, the President could call for an increase in the annual contribution limit for Coverdell accounts to $10,000 per child each year. If Coverdell accounts allowed larger annual contributions like "529" accounts for college savings, states might create tax deductions for contributions to Coverdell accounts. More than two dozen offer tax advantages for contributions to 529 college savings plans.

While expanding education savings accounts would be a good first step toward advancing Ownership Society goals in education, few poor families-those worst served by America's public schools-would benefit because the tax benefits are small and deferred.

To give underprivileged families ownership in education, President Bush could announce a pilot school voucher program through the Department of Education's Choice Incentive Fund. Each year since 2001, the Presidents Bush's budget has included $50 million for a Choice Incentive Fund. Each year, Congress has left the idea on the drawing board rather than taking up legislation to implement it.

President Bush explained the purpose of the Choice Incentive Fund in a 2004 speech: "The program would award federal grants to communities and organizations that help students, especially those from low-income families and those trapped in under-performing organizations, to find a better education."

The time is right, following the early success of the federally-funded D.C. Opportunity Scholarship Program, for President Bush and Republicans in Congress to invest political capital in expanding educational options for low-income families.

For example, President Bush could propose to provide local governments and non-profits in 10 areas with $5-million grants for opportunity scholarships for children from low-income families to attend private schools. Priority could be granted to governments and non-profits that arrange matching grants from private philanthropies or local governments.

In addition to helping children from low-income families, the Choice Incentive Fund would be a model for future Ownership Society reforms in federal education programs. If there is strong support for school choice through the Choice Incentive Fund program, Congress could consider reforming Title I programs for disadvantaged children to further empower parents, for example.

The idea of the Ownership Society resonates with Americans families who support individual empowerment and personal responsibility. In few areas will it make more of a difference than in education.

Dan Lips is Education Analyst at the Heritage Foundation, www.Heritage.org.