The latest state budget included no new funding to grow the small staff charged with overseeing Arizona’s school voucher program, leaving the Department of Education with just a dozen employees to review spending that is expected to reach $1 billion next school year.
Speaking to the Arizona Legislature’s Joint Legislative Audit Committee on July 21, voucher program Executive Director John Ward said his division has 40 total employees, including 12 that review purchases by voucher families.
He said that pales in comparison to the hundreds of employees the federal Department of Education has to review the hundreds of millions of dollars under its purview.
“We're, a bit, always in survival mode,” Ward told lawmakers.
Ward said Arizona’s voucher system, also called the Empowerment Scholarship Account program, distributed $869 million last year, four years after Republican lawmakers expanded program eligibility to all students in the state. He predicted the program will grow to 90,000 students and around $1 billion next school year.
The staff of the Arizona Department of Education’s Empowerment Scholarship Account is one of the few safeguards that exists under the current law to prevent abuse of the program by flagging potentially-fraudulent purchases or expenditures that don’t qualify under program rules.
Republican Superintendent of Public Instruction Tom Horne said his staff has denied reimbursements for many of those types of purchases, including a $5,000 Rolex and a $24,000 golf simulator.
Some program supporters even argued that Horne’s department is too aggressive in denying those expenditures, claiming he is going beyond the authority the law gives to the superintendent to administer the voucher program. That led state Sen. Jake Hoffman (R-Queen Creek) to recruit Republican state Treasurer Kimberly Yee to run against Horne next year.
“During our audits, every single day, we catch something that represents misspending or inappropriate spending,” Ward told lawmakers.
But he said that the staff is overwhelmed.
Just last year, the Arizona Department of Education faced a months-long backlog in approving reimbursements.
“So the various factors that have done that have resulted in the fact that we're now getting 500 requests a day, and with the current staff we have, and them working hard, they can only process 200 requests a day,” Horne said last year.
Growing enrollment, stagnant staffing
Horne said the Arizona Department of Education has not received funding to increase the number of staff members who oversee the ESA program, as enrollment went from around 11,000 students in 2022 to over 85,000 this year.
Last year, both Republican and Democratic officials agreed the state should provide more funding to add more staff to review voucher purchases.
“It's a lot easier to stop the fraud on the front end than to prosecute and investigate on the back end,” said Democratic Attorney General Kris Mayes, who has prosecuted multiple cases involving school voucher fraud.
Earlier this year, Rep. Matt Gress (R-Phoenix) said he was working on securing new funding to grow Ward’s Empowerment Scholarship Account division.
And a budget proposal that Republicans in the Arizona House of Representatives passed last month included $2 million to add 12 additional staff members. However, that budget, which Gress helped craft, was not supported by Democratic Gov. Katie Hobbs or Republicans in the Arizona Senate.
No new funding
The bipartisan budget Hobbs eventually signed, largely negotiated by the Governor’s Office and Senate GOP leaders, included no new funding for voucher staff.
“No money was forthcoming, and so we're not in a position to do that, and so my staff of 12 purchase review specialists will continue to do the very best that they can,” Ward said.
Hobbs, who has long called for reforms or a complete roll back of the universal expansion of the voucher program, blamed Republicans for the lack of funding for new voucher staff positions. The governor’s office said House Republicans would not agree to adding additional guardrails to the program alongside new staff.
“The Governor’s Office will not expand wasteful bureaucracy at ADE without reforms to protect taxpayer dollars spent on the ESA entitlement program,” Christian Slater, Hobbs’ spokesman, said. “During budget discussions, House Republicans refused to tie staff investments to common sense accountability measures, even ones as basic as evaluating purchases under [$2,000].”
Absent additional reforms, Slater said “more bureaucrats at ADE will not result in the basic guardrails we need on ESAs.”
In order to clear the backlog of reimbursements last year, Horne’s department began automatically reimbursing purchases under $2,000 without review.
At the time, Horne said those purchases could be reviewed later and the money would be “clawed back” if needed.
The department implemented that policy without input from the Arizona Auditor General, even though a 2024 law required the Department of Education to develop “risk-based auditing procedures” for the voucher program “in consultation with the Office of the Auditor General.”
“However, as of July 17 … 10 months after the law's effective date and eight months after the department purportedly implemented a risk based auditing process, the department still has not met with my team to develop those risk based auditing procedures in consultation with my office as required,” Auditor General Lindsay Perry told the legislative committee.
Ward, again, blamed the size of his staff for the issue. He told the Auditor General’s office in January that his staff was not able to meet with her office about its auditing procedures until it finalized a new school voucher manual.
“The ESA parent handbook did not get passed until the June meeting of the State Board of Education,” Ward said.
Sen. Mark Finchem (R-Prescott), who chairs the Joint Legislative Audit Committee, directed Ward to meet with Perry’s office soon.
“In two weeks, I'd like to know from either one of you or both of you, that you have had a meeting and that you are engaged in consultation,” he said.
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To talk about the start of the legislative session, its first policy dispute and more, The Show sat down with Marcus Dell’Artino of First Strategic and former state House Minority Leader Reginald Bolding.
