Mayes, Horne could be headed for a legal showdown over Arizona school voucher audits

Democrats have been critical of Arizona’s universal school voucher program since then-Gov. Doug Ducey signed it into law in 2022. And while they’ve tried to scale it back or outright repeal it since, those efforts have gone nowhere in the Republican-controlled Legislature.

But Attorney General Kris Mayes says she may sue state schools Superintendent Tom Horne over one way he’s handling a portion of the Empowerment Scholarship Account, or ESA, program.

Wayne Schutsky from KJZZ’s Politics Desk spoke more about it on The Show.

Full conversation

MARK BRODIE: So what is Attorney General Mayes not happy about?

WAYNE SCHUTSKY: She's not happy about this policy that Horne adopted about a year ago, where he, essentially these voucher expenses that come through his office that have to be approved before a family gets reimbursed, basically anything up to $2,000, they're just automatically reimbursing. And then they're going to go back and audit them later, they say. Versus how it was done in the past, basically everything that came through was being audited, and that's still happening for those larger purchases.

BRODIE: So in theory, Attorney General Mayes is saying that the Education Department should be auditing everything on the front end as opposed to letting the smaller, smaller $2,000 or less purchases go through and then auditing them later.

SCHUTSKY: Yeah, basically saying that by going it later, you know, you're providing more opportunities for things to slip through the cracks. It's, yeah, you should basically be approving everything on the front end, as has been done in the past.

BRODIE: So why is Horne saying that he's doing it this way?

SCHUTSKY: So last year when he first rolled this out, it essentially was to clear a backlog. So when the state expanded the voucher program from 11,000-ish students to universal where it can now apply to anyone, and we're reaching 100,000 students now, they didn't provide really any new funding for more people in the Department of Education to look at those expenses.

And that led to a backlog. Horne said at the time, like a monthslong backlog. So essentially you had parents sending in expenses that they wanted to be reimbursed for from these accounts and then having to wait weeks, months to get reimbursed. So he basically pitched this as a way to clear the backlog and be able to get families their money.

BRODIE: Is it legal, the way he's doing it?

SCHUTSKY: He says it is.

BRODIE: I guess the court will decide.

SCHUTSKY: He basically says it's risk-based auditing that is allowed within like the text of the law and that, you know, that's what they're doing, that basically they're looking at highest-risk stuff right away. And then these 2001s, they will go back and if there is something bad in there, they will go and claw back that money at a later date.

Now Mayes makes a different argument and for a long time now has called on the department and Horne and sent them letters and all these things asking that, demanding that they reverse this policy and take corrective action.

BRODIE: So would Horne, in theory like to be able to do that if only he had the auditors to actually pull this off?

SCHUTSKY: He hasn't gone that far to say it, but he has definitely said that, "I need more auditors." Like when he first did this policy, that's what he pointed out. He's like, "we don't have enough people here." He's gone to the Legislature, he's tried to work with Republican lawmakers to get this done. And unfortunately it just hasn't happened.

Even Mayes said she agrees with that, that his office does need more people to do this. That's part of the solution here. It made it as far as a draft of the budget last year pushed by House Republicans, but then it wasn't in the final draft that was negotiated by Gov. [Katie] Hobbs and Senate Republicans.

So that money's still not there.

BRODIE: Is there a sense of how much fraud the auditors are finding sort of after the fact for these $2,000 or smaller purchases? And how much success they have in getting that money back?

SCHUTSKY: I mean, I don't have the exact numbers. Horne said he has identified, there are instances. Yeah. And he's pointed to moments where there's things like when whether they were considered luxury purchases, like maybe equipment for a student that they could use but maybe was higher-end than is required, or even stuff that shouldn't be used at all, jewelry or something like that.

He's pointed to instances where we have been able to find that and we have gone and got that money back. He's also pointed to instances of fraud or potential fraud. He's referred to the attorney general, calling her a hypocrite, saying, "hey, I sent these over to you and you didn't investigate them or prosecute them. So what's the deal with that?" So you kind of have a little back and forth going on here now.

BRODIE: Well, so what is Mayes' response to that? That that Horne has sent her cases of fraud and she's not prosecuted.

SCHUTSKY: Her spokesman didn't comment on specific cases, but basically said that every case is reviewed for the likelihood of prosecution, which is the standard that prosecutors, whether it's the attorney general or county attorneys, use. And if we don't prosecute, it's because we don't think there's a likelihood of conviction. Did point out that there's a lot of pending cases, I think like eight active cases, into potential fraud.

And we've also had two cases that led to either guilty pleas or convictions which did involve referrals from the Department of Education. So those have already been taken care of. And they're in like the hundreds of thousands of dollars. So not insignificant amount of money, but still kind of a drop in the bucket when we talk about the total cost of this program.

BRODIE: Yeah. Has Mayes given any kind of timeline as to when she might decide," yes, I'm going to sue," or "no, I'm not?"

SCHUTSKY: Not quite yet. It was it really, this comments came at a press conference that was about something unrelated, but, you know, they always opened it up to reporters. And it Craig Harris from 12 News, who's been detailing some of these questionable expenses in the program, who asked her about it, and then that's when she confirmed that, yes, litigation is not off the table, was the comment she made.

But she did say they're urging Horne to make corrective action to avoid litigation. So she's not, you know, she'd rather he changed the policy. However, he hasn't given any indication, barring some change, like more auditors or something like, that he would do that and that he thinks it's legal to do so.

BRODIE: One of the things that seems so interesting is the position that Tom Horne is in right now, right, because he's getting criticized from the left, from Democrats for being too, like, not restrictive enough on auditing this stuff.

And he's getting criticized on the right. He has a primary challenger from the right who's saying he's being too restrictive on ESAs. Like this seems like a classic rock and a hard place situation for Tom Horne.

SCHUTSKY: That was the phrase I was going to use. Yeah, Tom Horne's been a longtime supporter of the voucher program. So it's not like he's, he's seen as someone who's trying to rein it in or anything. But he has said that "I've taken steps to flag, you know, purchases that are, you know, obviously not allowed," like I said, some of those luxury items or things that have nothing to do with a child's education.

And that has led to some criticism from the right, who basically led by Sen. Jake Hoffman, leader of the Freedom Caucus, who are basically saying that Horne is stepping beyond the bounds of what the text of the law says and that he's being too restrictive. And then Hoffman was able to recruit Treasurer Kim Yee to run against Horne.

And that was the big cudgel they used when she announced her campaign, is that he's trying to undermine the voucher system. And then, as you said, on the left, they're saying, "no, you're not doing enough. You're being too permissive, and you're letting these tax dollars be used wastefully."

BRODIE: It'll be so interesting to watch, I think, into the new year, how that plays out in the campaign.