The Trump administration’s top education official visited Arizona to tout a new federal voucher program that will let Americans redirect their tax dollars to pay for school expenses — a program Arizonans won’t actually be able to access unless Gov. Katie Hobbs opts in by the end of the year.
Hobbs has already rejected the program multiple times following stiff opposition from her fellow Democrats and public school advocates.
But some public school supporters think the federal voucher could actually be a boon for their districts.
The Republican tax cut and spending legislation known as "The Big, Beautiful Bill" that was signed by President Donald Trump in 2025 included a provision allowing taxpayers to claim a credit up to $1,700 for making contributions to nonprofits known as scholarship granting organizations.
Those organizations can then use the money to award scholarships to students in their state that can be used for private school tuition and a variety of other educational expenses, including some public school programs and supplies.
“This is what real empowerment looks like, giving parents the freedom to choose the path that best serves their child, instead of forcing every student into a rigid, one-size-fits-all system,” Education Secretary Linda McMahon said during a visit to the East Valley Institute of Technology, a career and technical education school in Mesa.
According to the Department of Education, students from families that earn up to 300% of the Area Median Income are eligible to benefit from those dollars. That’s about $337,200 for a family of four in the Phoenix area.
But states have to opt in to the federal voucher program before their taxpayers can participate. So far, 30 states, including Democratic run states like New York and Colorado, are participating.
And earlier this year, Gov. Katie Hobbs vetoed several Republican bills that would have opted Arizona into the program.
In a veto letter, Hobbs connected the federal voucher to Arizona’s state-level Empowerment Scholarship Program, which gives participating families an average of about $7,000 per year to pay for private and homeschool expenses.
“We have seen what happens when these types of programs lack accountability, transparency, and oversight. I hope the administration ensures any federal school choice program will have the much-needed guardrails Arizona’s ESA program lacks,” Hobbs wrote, referencing reports of misspending and abuse in Arizona’s state-level voucher program.
The Arizona debate
As that Republican bill worked its way through the Arizona Legislature, critics argued it was just another avenue to funnel tax dollars to private schools to undermine the public education system.
And they argued that, without proper guardrails in place, the federal voucher system was susceptible to problems already seen in Arizona, including misspending on luxury non-education items and a failure to background checks on some of the vendors paid using public dollars.
Both the Arizona Education Association, the state’s teachers union, and Save Our Schools, a public school advocacy group, opposed the measure.
“Now this body proposes to be one of the first states in the nation to irresponsibly sign up for this voucher scam that like Arizona's program is designed as a tax shelter for the rich, is set up to serve the wealthiest students who are already in private schools, has zero accountability to taxpayers, has zero academic standards, and has no requirements for student safety,” Save Our Schools Co-Executive Director Beth Lewis told lawmakers in January.
But Republican backers were also quick to point out that the federal voucher, unlike Arizona’s ESA program, can also benefit public school students, because it will allow public school district officials to set up their own nonprofits to take advantage of the tax-deductible donations to pay for qualified expenses.
“It can help families with children in public and private schools,” Arizona House Speaker Steve Montenegro (R-Goodyear) said. “It can help them pay for tutoring, services for students with special needs, books, technology, and other qualified educational expenses.”
Still, Lewis argues the vouchers would disproportionately benefit the wealthiest Arizonans, who can afford to take advantage of the full $1,700 tax-deductible donation. She argued most Arizona families don’t have the financial flexibility to do that.
“So you might get some computers in Scottsdale. You might be able to use this tax credit for some kindergarten in Paradise Valley,” Lewis said. “It's not happening in Yuma. It's not happening in Tempe. It's not happening where I live in Chandler.”
But not all public school advocates are against the idea of the federal voucher program.
“I know that a lot of people are skeptical and my hope is that we won't be short-sighted in the conversation, that we'll proceed thoughtfully, but that we won't dismiss it out of hand and that it will get a full and thorough review before the end of the calendar year so that Arizonans can have a choice with respect to that investment of federal tax liability,” said Scott Menzel, superintendent of the Scottsdale Unified School District.
Menzel pointed out that Arizona ranks near the bottom on national education funding rankings, and said the federal voucher could provide an avenue to take pressure off their school budgets to pay for expenses like tutoring, afterschool programs, books and other supplies.
Arizona already has a $400 state tax credit that families can use to help their local schools, but Menzel said the federal voucher’s higher dollar amount could make an even larger impact.
He estimated his Scottsdale district could generate $3 million simply by convincing its own employees to opt into the tax credit.
“If you think about all the families who could potentially contribute, now you can get over $10 million relatively easily to be able to pay for things that would take some of the pressure off the (maintenance and operations) budget,” he said.
Chad Wilson, superintendent at EVIT in Mesa, said the federal vouchers could fill the gap to cover expenses not paid for by the state at his school, which serves public school and voucher students.
“All of our programs carry with it supplies, and in some programs those supplies are significantly pricey, because the industry requires them to be pricey, and our students have to come out of pocket for those dollars so they can be part of the program,” Wilson said.
But Menzel said he understood why some public school advocates are skeptical.
“There's very little trust that there won't be a bait and switch here, that in order to get the votes to pass the One Big Beautiful Bill, they had to do something that would be a tip of the cap to public schools, because across both sides of the aisle, there are many supporters of public education,” Menzel said. “And so there's some suspicion that, yes, it looks good on paper, but they're going to tweak the rules or in some way pull the rug out from underneath us.”
And then there’s the concern in some blue states that the federal voucher will pave the way for statewide programs that mirror Arizona’s ESA.
But Menzel said that’s not a concern here, because school choice is already the norm in Arizona, which has long been home to a robust charter school system and was the first state to expand voucher eligibility to every student when it adopted the universal ESA program in 2022.
“It will result in people being able to direct part of their tax funding, and some of that money will go to support students and families that have chosen non-public options,” Menzel said. “But from my perspective, it's the first time where in this competitive environment, there's a mechanism where we can also generate additional revenue.”
Menzel acknowledged that Scottsdale, one of the most affluent suburbs in the state, is in a better position to take advantage of the program.
But he hoped the education community would think creatively about how other districts with lower-income populations could benefit as well, such as encouraging rural districts to band together to create SGOs that could serve those districts across the state.
The rules
Democratic lawmakers at the Arizona Capitol universally opposed the bill that would have opted the state into the school voucher program when it came up for a vote earlier this year.
Many pointed out that the federal government hadn’t actually approved the rules for its voucher program yet.
“And I’m concerned, because if it’s anything like the system that we have in Arizona and our universal voucher program, there will be no testing, no safety, no thought to waste, fraud and abuse,” Rep. Nancy Gutierrez (D-Tucson), a public school teacher, said in April. “And I don’t think thousands of dollars in tax credit money should be going just out the door.”
McMahon, the education secretary, said “there’s certainly oversight that goes with this.”
But Congressman Andy Biggs, who supports the program, said parents will have wide latitude to use the money as they see fit, within rules established by the scholarship granting organizations themselves.
“There really is virtually no limitations as long as you're using it for educational services, everything from tutoring to technology, etc.,” he said.
The U.S. Department of the Treasury and Internal Revenue Service plan to release the rules for the program by the end of September.
In June, Deputy Assistant Secretary for Tax Policy Kevin Salinger previewed those rules.
He confirmed that the program will apply to public and private school students. And, in states like Arizona, homeschool students will also be able to use the tax credit funds.
Salinger also addressed some of the concerns brought up by Democrats like Gutierrez, including how the government plans to prevent misuse of tax credits that are supposed to pay for educational expenses.
That includes tying each contribution to a unique “donor number” and requiring states to “take reasonable steps to prevent fraud and abuse, including processes to prevent duplicate awards to the same student for the same expense.”
And, according to Salinger, scholarship granting organizations will be required to produce annual audits conducted by an independent third party. Smaller organizations may also be able to use audits “conducted by an internal committee unrelated to the organization’s management, with the report signed under penalties of perjury.”
In his June remarks, Salinger acknowledged that those rules are not final.
And Menzel, the Scottsdale superintendent, said the state would be smart to wait to make its ultimate decision until the Treasury issues those finalized rules.
“And that's why I'm a trust, but verify,” he said. “Let's see the rules in September and if the rules are such that we can truly benefit and our students can benefit from this, then I would hope that the state would move forward and opt in.”
What's next
Though she already vetoed a bill that would have opted Arizona into the federal voucher program, Hobbs seems to agree with Menzel’s assessment.
“She hasn’t taken a position on the program yet,” Hobbs’ spokesman Christian Slater told KJZZ. “The administration is waiting for the federal government to share implementation guidelines on the program.”
Biggs, who is running against Hobbs in the state’s gubernatorial election, is trying to make the governor’s indecision a campaign issue.
“Because of her refusal to join this visionary program, families and students will not have the opportunity to take advantage of these dollars to help fund a better education for their kids,” he said while appearing with McMahon at the Mesa event.
But neither McMahon nor Biggs could say why Hobbs’ desire to wait until the final rules are published is unreasonable, beyond their belief that the states, SGOs and the federal government will administer the vouchers appropriately.
“So I wouldn’t hesitate to opt in,” McMahon said.
According to a fact sheet provided by the U.S. The Department of Education, participating states must provide a list of qualified scholarship granting organizations by Jan. 1.
But McMahon said states can still opt in and provide that information at any time after that deadline.
Full conversation on The Show
LAUREN GILGER: Arizona's Empowerment Scholarship Accounts school voucher program is controversial enough, but now the Trump administration's top education official is calling on Arizona to join into a federal voucher program that would allow Arizonans to redirect their tax dollars to pay for school expenses. Here is U.S. Education Secretary Linda McMahon in Mesa on Tuesday.
LINDA MCMAHON: This is what real empowerment looks like: giving parents the freedom to choose the path that best serves their child instead of forcing every student into a rigid, one-size-fits-all system.
LAUREN GILGER: The federal voucher program was included in President Donald Trump's One Big, Beautiful Bill, but states have to opt into it for families to take advantage, and Gov. Katie Hobbs has yet to do that. But here's the real trick: The dollars from this new federal program can be used for public school expenses as well. KJZZ's Wayne Schutsky has the story from our Politics Desk, and he's here now to tell us more. Hi there, Wayne. Good morning.
WAYNE SCHUTSKY: Good morning.
LAUREN GILGER: OK, so there is a comparison here to the state's ESA voucher program here in Arizona, but this federal program works pretty differently, it sounds like. Can you explain that?
WAYNE SCHUTSKY: Yeah, that's right. The state program essentially redirects the money that follows your child from their public school to whether it's private school tuition or your homeschooling expenses. So they're taking that chunk of money that would otherwise be going to a public school. In this case with the federal program, it's a tax rebate ... a tax credit. So up to $1,700 that you're giving to one of these nonprofit organizations that would be set up that could then pay for those school expenses on behalf of a child, you're just basically getting to take that on your taxes and get a credit to lower your tax burden. So it's not taking money directly away from public school funding. It's taking it just from private donors who decide that they want to lower their tax liability.
LAUREN GILGER: Sure. OK. So the ESA program in Arizona is only for private schools, home schools, things like that. But this federal program, as I mentioned, can be used to pay for expenses for kids enrolled in public schools. Like what? What kind of expenses?
WAYNE SCHUTSKY: Yeah, so again, the rules are not quite finalized yet, but the Treasury has given a little bit of an indication, and from education folks I've talked to, it could be things like school supplies, books, it could be tutoring, after-school programs, that kind of thing. Potentially even some expenses like transportation — but again, that's not totally clear because the rules aren't finalized.
But again, what I've heard from some public school people is that essentially, yeah, there's these different categories of expenses that this could kind of take a little bit of pressure off the budget, as they say, "You know, we've been underfunded for years."
LAUREN GILGER: Right, 'cause this could end up back at public schools. We'll talk about that in a moment. So that's a little bit about how it works. Now let's talk about the politics of this here in Arizona, right? I mentioned Democratic Gov. Katie Hobbs has not opted into this program yet. You have to opt into it, and she has to opt into it by the end of the year. In fact, she vetoed several attempts from Republican lawmakers at the state Capitol last session, right, that would have kind of forced her hand there.
WAYNE SCHUTSKY: Yeah, she vetoed a standalone bill that would have basically said, "We opt in," and then she vetoed some budgets that I believe also included that provision tucked in there. At this point, initially when she vetoed it, she kind of compared it to the state voucher program, saying, "We've seen all these problems without accountability, all these kind of things. We want to make sure there's accountability in this program."
Now, more recently, she kind of built on that, and her office told me that, "We don't want to opt in until we see what the rules are." And the Treasury is supposed to release the final rules for the program by the end of September. So at that point, we could potentially see the governor change course. She didn't really give any indication one way or the other where she would go on it from there.
LAUREN GILGER: OK, but she could opt in when these final rules come down. OK. And other Democratic-run states have also opted in, right, Wayne?
WAYNE SCHUTSKY: Yeah, I believe 30 states total have opted in at this point, and that includes New York and Colorado, so two states with Democratic governors. And again, the idea is that this is a tax credit that people can use whether they're going to private schools — depending on the state, I believe home schools are covered, and then, yeah, public schools.
LAUREN GILGER: Let's talk about what critics here had to say, though, right? Because critics also told you that this is just another way to undermine the public school system, funnel tax dollars into private schools. Is it?
WAYNE SCHUTSKY: I mean, it's not necessarily funneled away from public schools like the ESA program, the state program, does. Because like I said, that's taking money that would have otherwise gone to the public school if your child was attending, and then redirecting it to that tuition at a private school or to those homeschool expenses.
This is folks choosing how to spend their money to lower their tax liability. So it's not like if this person didn't give $1,700 to this nonprofit that's going to help pay for school expenses, like they would have automatically gone and given that to a public school. That's not a given. So it is different in that sense. There were some other criticisms in terms of equity and things like that.
LAUREN GILGER: Right, let's talk about that. But first, I want to talk about what you heard from the superintendent of the Scottsdale Public School District, right? Because he actually said he would support this, that his district could really benefit.
WAYNE SCHUTSKY: Yeah, ahead of Secretary McMahon's visit, I started asking around because I was like, given this potential that public schools could benefit, I can't believe that all public school advocates are fully off-board with this, like we had been hearing publicly from some of the louder groups.
And as I asked around, I talked to Dr. Menzel, who I've known for quite a while going back to my days in Scottsdale, and he said, "No, I believe this — if the rules come out as it's been kind of portrayed by the federal government, that this could work to public schools' benefit because, again, we believe we're underfunded. We believe we've been underfunded for years, and so if this can take a little bit of burden off of our general budgets by covering some of those after-school expenses, covering some of those books, some of those supplies, some of that technology that we need for our students — then why is that a bad thing?"
LAUREN GILGER: Could this add up to a significant amount of money for a district like Scottsdale?
WAYNE SCHUTSKY: Kind of like quick estimations, what Menzel said, he's like, "If we can just get our employees to opt into this, take it out of their paycheck as a tax credit" — or I don't know how it would work at that level, but "if we can get just our employees on board, $3 million a year. If we could get all of our families on board, we think we can get another $10 million a year."
... So not nothing. In the realm of school budgets, it's still a relatively small chunk. But again, as Menzel kind of said to me, everything helps in this environment where they're seeing competition from charter schools, they're seeing competition from private schools, homeschool with all the ESAs. He's like, "In this competitive environment, this is the first chance we have to maybe generate additional revenue," is basically what he told me.
LAUREN GILGER: Interesting. So that brings us to the other criticism here, though, which is that this might not be that much for every district. Like what about rural districts? What about districts where a lot of kids are from poor families?
WAYNE SCHUTSKY: Yeah, Beth Lewis with Save Our Schools, one of the big public school advocacy organizations, when she spoke against this bill at the Legislature, that's basically what she said. She said, "You know, this might work in Scottsdale where a lot of families have the extra income that they can go and give to one of these organizations and benefit from the tax credit. But once we start talking about lower-income communities, rural communities, places where a lot of the families may not even have a large tax burden because they're not making enough money in the first place, they don't have the money to spend extra on that. And then they're not going to see the benefits in the tax credit. So how are we helping these groups?" So essentially she called it kind of another wealth transfer to the already wealthy communities in our state.
LAUREN GILGER: All right, we'll leave it there for now. Lots to watch for as that kind of deadline ticks closer. KJZZ's Wayne Schutsky with our Politics Desk. Wayne, thanks.
WAYNE SCHUTSKY: Yep, thank you.
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