Top Republican lawmaker: Arizona auditor general's school voucher concerns 'should be addressed'

Following a scathing report by state auditors, both Republicans and Democrats say something needs to change in Arizona’s billion-dollar school voucher program.

A report by the Arizona Auditor General’s Office identified problems with the ways the Department of Education identifies questionable purchases and audits the Empowerment Scholarship Accounts program, which now helps more than 100,000 students pay for private and parochial school costs.

That includes allegations that the department doesn’t have documented procedures, isn’t following its own policies for auditing purchases under $2,000 and isn’t always following up when it identifies potentially-problematic transactions.

Republican state Superintendent Tom Horne defended the department and said his staff is following the law, including 2024 legislation that required the department to adopt so-called “risk-based auditing.”

“And so they told us to use risk-based auditing and that’s what we’re doing, so we review the high-risk people, which is exactly what the legislature told us to do,” Horne said during a debate on PBS.

But the audit report accused the department of flouting that law, which also required Horne to consult with the Auditor General’s Office when developing those auditing standards.

“Program management did not consult with us as required by statute, which would have provided them additional information to consider when developing risk-based audit procedures for reviewing Program expenditures,” according to the Auditor General’s report.

Calls for reform

The report led to swift criticism from Arizona Democrats, who have sought to more heavily regulate the state’s voucher programs ever since Republicans, under former Gov. Doug Ducey, expanded eligibility to all students in the state in 2022.

Prior to that change — when vouchers were reserved for specific groups like those with disabilities and children attending underperforming public schools — there were around 12,000 students enrolled in the program.

There are 101,845 enrolled today, with thousands more expected to come on board next year, according to the Department of Education.

Democrats argue that expansion failed to include needed guardrails to ensure public voucher dollars are spent on legitimate educational purchases, pointing to reports by 12News that found some families used the money for extravagant items like jewelry and refrigerators.

“Under the ESA voucher program, it’s open season on your taxpayer dollars,” Rep. Nancy Gutierrez (D-Tucson), a public school teacher, said in a video posted online. “End the waste. End the fraud. End the abuse.”

Republicans in the Arizona Legislature have long dismissed those complaints, accusing Democrats of cherry picking data to attack a program they oppose.

But they’re not levying that same criticism at the Auditor General, who is overseen by a legislative audit committee run by Republicans.

That committee, co-chaired by Rep. Matt Gress (R-Phoenix) and Sen. Mark Finchem (R-Prescott), has broad authority to direct Auditor General Lindsey Perry to investigate various state programs and agencies.

And Republicans have regularly lauded Perry for her efforts to ensure state agencies, counties, school districts and other entities are fiscally responsible.

“I just want to express my appreciation on behalf of the constituents I represent,” Gress told Perry at a committee meeting in December. “You’ve changed (the Joint Legislative Budget Committee) from a sleepy committee that maybe met once a year … to, I think, a powerhouse committee that’s making a difference and moving the needle.”

Democrats in the Arizona Senate are now calling on Republicans to use their oversight power to commission a full audit of the voucher program.

“Senate Democrats continue to raise concerns about fraud and abuse within the ESA voucher program, yet our Republican colleagues continue to ignore the facts while claiming to support transparency,” Sen. Eva Diaz (D-Tolleson) said.

It’s unclear whether the committee will act on that request.

Gress didn’t respond to texts seeking comment.

But House Speaker Steve Montenegro (R-Goodyear) indicated he is taking the audit report seriously.

“I have reviewed the auditor general’s report and remain committed to ensuring the ESA program is administered responsibly, with proper oversight, clear auditing procedures, and full compliance with the law,” Montenegro said in a statement. “Any concerns identified by the Auditor General should be addressed directly and appropriately.”

However, Montenegro said he doesn’t support the reforms included in a proposed ballot measure backed by Democrats and the Arizona Education Association, which would add income caps to the program, ban luxury purchases and require voucher vendors to pass background checks.

“If reforms are needed, they should strengthen accountability and improve administration, not punish families or eliminate school choice in Arizona,” Montenegro said.

In the past, Republicans have largely resisted efforts by Democrats and Gov. Katie Hobbs to reform the Empowerment Scholarship Accounts program by adding income limits and guardrails on purchases, though GOP lawmakers did agree to include the “risk-based audit” requirement in the budget in 2024.

A spokesman for House Republicans didn’t respond to a follow up question asking whether Montenegro supports including new voucher reforms in the upcoming state budget.