Proposed Enhanced MESPs: Creating Educational Savings Accounts for Public School Students

Jennifer Smith

By Jennifer Smith, MASB Director of Government Relations

DashBoard, Sept. 27, 2017

Last week, the Senate Education Committee approved Senate Bills 544-549, which would create the "Enhanced Michigan Education Savings Program." The program would allow parents to set up an educational savings account, similar to the MESP accounts, to be used for any educational expenses at public schools. The bills also create an income tax deduction for anyone who contributes to an enhanced MESP.

Under the proposal, the Department of Education would determine which public school services and programs would be eligible to receive funds from these accounts. It would also be able to designate other organizations as eligible to receive funds. School districts would be required to create a complete list of all services and the costs for providing each service, as well as additional reporting to MDE and the Department of Treasury if the district wanted to receive funds from the educational savings account. We do expect language to be added to the bills to state that core educational programs would not be eligible.

The Senate Fiscal Agency analysis says that this package will have a “significant fiscal impact” on the state and local school districts. It estimates that creating this new system could cost between $60-100 million plus ongoing administration costs. Districts would face unknown increased costs due to having to estimate the costs of eligible services and processing students who may choose to purchase those services. If parents used the funds from these accounts for eligible services, some of those costs would be offset.

Finally, the bill would reduce revenue to the state’s General Fund and the School Aid Fund due to the income tax deduction the bills create. The amount is unknown but “potentially significant.”

MASB opposes the bills for many reasons, not the least of which is the reporting requirements for districts and overall costs to the state and School Aid Fund. It also could create further inequities in education between wealthier families and poorer ones, as not all parents would have the means to participate in the program. The sponsor has stated this is a creative way to help fund public schools, however, asking parents to pay for public education is not good policy.

The bills are now before the full Senate for its consideration. At this time we do not know when or if they will be brought up. Further changes are also expected, but we don’t believe they will offset the large number of concerns that have been raised. MASB will continue to monitor these bills and keep you updated on any movement.

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