At the end of June, Empowerment Scholarship Account (ESA) vouchers have accumulated $360 million in funds, including those carried over from prior fiscal years, that have gone unspent by the parents who manage these accounts, based on the latest report from the Arizona Dept. of Education (ADE). This amount sharply contrasts with $115 million in opioid settlement funds that state government officials diverted from community investments to cover prison operation costs due to a state budget deficit, driven in part by the lack of forward planning to cover the cost of the universal ESA voucher program. 

The FY2024, Quarter 4 ESA Report Pursuant to Arizona Revised Statutes 15-2406 was published at the start of the month, enabling an analysis of how much ESA voucher dollars were expended with the remainder accumulating in parent accounts.

When the Arizona Department of Education (ADE) provides an ESA voucher, the total dollar amount each quarter goes directly to the parent’s account. The intended use of ESA vouchers is to educate a child, not to accumulate balances that carry over year over year. But increasingly students are receiving very high voucher amounts that parents accumulate rather than spend on their child’s education. As the system is now set up, these unused dollars cannot be allocated to another child or refunded to finance public education unless the student withdraws from the ESA program and does not re-enroll. These funds remain available after graduation and can be used to pay for college, including expensive private universities, something that non-ESA parents cannot access.

At the same time, Arizona is raiding dollars from the Opioid settlement money to make up for shortfalls in the state’s general fund.

Recommendations:

• Audit all independent evaluations submitted to request eligibility for special needs children in the universal program to verify if the criteria used are sufficiently consistent with the federal Individuals with Disabilities Education Act (IDEA).
• End the carry-over of ESA funds from year to year and sweep existing carry-over balances. This would return $115 million swept from opioid settlement dollars and the rest to the General Fund.
• Audit educational expenditures approved to date relative to the educational needs of the child to be conducted by the Auditor General.
• Require that ESA awards are contingent on education plans that thoroughly document how funds will be used to meet the educational needs of the child.
• Require parents to re-apply each year with an educational plan for the child along with documentation of results and an evaluation from the prior educational plan and changes being made (in the absence of any testing requirement).

About

Curtis Cardine, GCI Research Associate has over 50 years in education with a concentration in school finances.  He holds an MA in Organizational Change and advanced degree in Leadership and change. His background includes creating public school charters and served as a teacher, principal and superintendent in charter and public schools. He attended private religious schools during his elementary and high school years which were funded by his parents. He can be reached at ccardine@azgci.org.

Dave Wells holds a Ph.D. in Political Economy and Public Policy and is the Research Director of the Grand Canyon Institute. He can be reached at dwells@azgci.org or (602) 595-1025 ext. 2.

The Grand Canyon Institute (GCI) is a nonpartisan, nonprofit organization dedicated to informing and improving public policy in Arizona through evidence-based, independent, objective, nonpartisan research. GCI makes a good faith effort to ensure that findings are reliable, accurate, and based on reputable sources. While publications reflect the view of the Institute, they may not reflect the view of individual members of the Board.

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