For the fourth straight year, Democratic Gov. Katie Hobbs and Republican lawmakers are at odds over what, if any, changes should be made to Arizona's billion-dollar school voucher program.
In her annual State of the State address, Hobbs called on lawmakers to reform the voucher program, also called Empowerment Scholarship Accounts, in order to free up state funds for other priorities, like increasing public education funding and creating programs to help Arizonans dealing with high cost of living.
“While other government entitlements have strict requirements and oversight, the ESA program continues to operate unchecked, squandering taxpayer dollars with no accountability,” Hobbs claimed.
The Republican Legislature and former GOP Gov. Doug Ducey expanded voucher eligibility to all students in the state in 2022, allowing families across Arizona to divert tax dollars away from public schools in order to pay for private schools or home schooling. Before that, eligibility was restricted to specific groups, including special needs students and children living near underperforming schools.
Since the expansion, enrollment has grown from around 11,000 to an estimated 101,000 this year at a cost of over $1 billion, according to Arizona Department of Education projections.
Hobbs argues that too much of that money is being siphoned away from public schools and wasted, citing several cases of voucher fraud prosecuted by the Arizona Attorney General’s Office and media reports about spending on items seemingly unrelated to education.
“In my plan, the original mission of the ESA program, to help kids with disabilities and in military families, remains untouched,” Hobbs said. “But even the program’s most ardent supporters must agree: it’s time we tackle the waste, fraud, and abuse to ensure taxpayer dollars are going towards true educational purposes.”
Since entering office, Hobbs has tried to rein in the voucher program with little success. She first called for a complete reversal of universal expansion and later sought to implement new rules, including income limits restricting which families qualify for ESAs.
Democratic lawmakers said they plan to issue a new slate of bills to reform the program this year, though they declined to elaborate on exactly what that legislation will look like.
“And so I hope that the Republicans know that we are interested in finding those savings that can be used to support the rest of the state budget, and I hope that they're interested as well,” Senate Minority Leader Priya Sundareshan (D-Tucson) said. “Otherwise, it is laughable to say that they are at all any kind of party of fiscal responsibility.”
Same old, same old?
Over the past several years, Democratic proposals have died in the Republican-led Legislature, where GOP lawmakers argue Democrats are attempting to undermine a popular program that gives parents greater choice over their child’s education.
“There are guardrails there and the system is catching them,” House Speaker Steve Montenegro (R-Goodyear) said. “The reason you even saw or seen what you're seeing is because the system's working.”
Republicans cite the explosion in ESA enrollment as evidence of the program’s popularity with Arizonans and argue existing guardrails to identify fraud and illegal expenditures are working.
“What opponents of ESAs want, what opponents of parental choice want is to prevent parents from being the ones that make these choices for their kids,” Montenegro claimed. "And the reality is that by far – and for the most part and in a vast way, in a tremendous way – parents are getting the opportunity to choose the best education for the kids, and we're going to stand behind parents.”
But even some Republicans acknowledge more needs to be done to prevent inappropriate voucher spending.
Extensive reporting by 12News over the summer showed that parents have bought home appliances, jewelry, lingerie and other non-education items since the Department of Education adopted a policy to automatically approve purchases under $2,000.
Superintendent of Public Instruction Tom Horne, a Republican, said that policy change was needed to clear a significant backlog in purchase approvals that had voucher parents waiting months to be reimbursed. He said those purchases would be audited after the fact.
Last month, Democratic Attorney General Kris Mayes said her office is looking into whether that policy violates the law.
Horne has called on lawmakers to send his department more money so that it can add staff needed to review voucher purchases more efficiently and quickly – a request Mayes supported last year.
“It's a lot easier to stop the fraud on the front end than to prosecute and investigate on the back end,” she said at the time.
Easier said than done
Rep. Matt Gress (R-Phoenix), who chairs the House Education Committee, agreed that the Department of Education needs more staff to vet voucher purchases. Both Horne and Gress have pointed out that the staff responsible for vetting purchases hasn’t grown at the same rate as overall ESA enrollment since universal expansion.
“If you look back at 2020, you had a staff to student ratio of 1 to 250 students,” Gress said. “Now it's 1 to 4,200 students.”
A version of the state budget passed by House Republicans last year also included new money for the department to staff up its ESA office. However, that funding was left out of the final version of the budget largely negotiated by the Governor’s Office and Senate Republicans.
Gress said lawmakers will consider sending an emergency funding package to the department this year ahead of budget negotiations “to give ADE a head start on staffing up ASAP.”
“And if the governor is serious about ensuring that these ESA dollars are being used appropriately as Republicans are, then she'll sign the bill quickly,” Gress said.
But the Governor’s Office indicated Hobbs will not approve new money for Horne’s office unless it's attached to other, broader reforms backed by Democrats.
“The Superintendent has $2.9 million in his admin fund he could put to use today to fund more auditors if he wanted,” spokesman Christian Slater said in a text. “Governor Hobbs is not going to direct additional money to the ESA entitlement program until there are meaningful reforms to increase accountability and transparency.”
The Department of Education said Slater’s claim is incorrect and provided documentation showing its spending on ESA staffing is on track to slightly exceed the budgeted amount this year.
