Arizona School Voucher Enrollment Exceeds Budget Estimate

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Enrollment in Arizona’s school voucher program has officially surpassed the number accounted for in the state budget, reigniting the quarrel among Republican lawmakers and Gov. Katie Hobbs over the program’s financial viability.

The budget passed earlier this year set aside $624 million to fund demand from what lawmakers projected to be a maximum of 68,380 students. (That estimate was widely criticized by voucher opponents for exceeding the student body of Mesa Unified, the state’s largest public school district.) But that estimate has been outstripped just three months into the fiscal year, and stands at 68,455 as of Oct. 10.

Reacting to the update, Hobbs issued a scathing criticism of the program, known formally as Empowerment Scholarship Accounts, warning that the ballooning costs are likely to cut into other state-funded initiatives.

“The school voucher program is unaccountable and unsustainable. It does not save taxpayers money, and it does not provide a better education for Arizona students,” she said in a statement posted to X, formerly Twitter. “The runaway spending threatens funding for state troopers fighting drug trafficking, social workers protecting Arizona’s most vulnerable children, and doctors caring for Veterans who sacrificed their health to protect our country.”

The Democrat also blasted the program for bankrolling ski resort passes, luxury car driving lessons and pianos, among other expenses recently revealed in an ABC15 investigation. The program has few accountability measures in place, and an Arizona Department of Education spokesman justified those purchases as likely meeting an educational need.

Hobbs has been an outspoken opponent of the universal expansion that led to the explosion in enrollment and unsuccessfully lobbied to repeal it in her first executive budget proposal. Since then, she has floated an enrollment cap as a possible solution to pursue next year, but Republican lawmakers, who championed the expansion, have said they are not interested in placing any limits on the vouchers.

The program was initially crafted to help fund educational alternatives, including private school and homeschooling efforts, for students who met specific criteria, such as attending a D or F rated school, being part of a military or foster family or having special education needs. But its proponents always sought to expand it to all students, and they achieved that in 2022, when Republican lawmakers shepherded through an expansion that meant any student, regardless of their lack of public school history, could qualify for vouchers.

ESA proponents push back

Superintendent of Public Instruction Tom Horne, a Republican and strong supporter of ESA vouchers, refuted Hobbs’ calamitous predictions, saying that the Department of Education’s total K-12 budget is on track for a surplus.

“The Governor’s calculation is in error,” he said in a joint statement issued with GOP legislative leaders. “She is counting the $7,200 paid for each ESA student without offsetting the $13,000 paid per student that would otherwise be spent for that student to attend a public school. The overall numbers bear this out as the expenditures for all public school spending, including the ESA program, are $72 million below budget.”

Horne has repeatedly touted the ESA program as a cost-saving measure, reasoning that per-pupil funding amounts paid to public schools in the state education budget are higher than the average ESA grant. But that argument ignores students who never attended a public school and so represent a new cost, and the fact that the payment formula for ESA’s was changed several years ago to the rates for charter schools, which receive higher per-pupil stipends than public school districts.

Ben Toma, the speaker of the Arizona House of Representatives and the sponsor of the universal voucher expansion, chastised Hobbs for lashing out against a large portion of the state’s student population on social media and called on her to put forward real policy proposals. The Peoria Republican dismissed concerns about the increase in voucher use, saying it is within 1% of the initial legislative estimate.

“We remind the Governor that she leads the entire state of Arizona, and if she seeks changes to the ESA program, she ought to propose serious policies, not tweet vague threats,” he said in a written statement. “The State Legislature has yet to see any policy proposals from her office. Arizona will continue to responsibly fund students, not systems.”

Senate President Warren Petersen added that the ESA program is a priority for legislators seeking to give Arizona families more power over their children’s education, and unequivocally rejected any attempt to do away with it.

“Arizona families want choices for their children’s education. ESAs are one of the many choices the legislature is prioritizing,” the Gilbert Republican said. “We’re always open to improving our state’s programs, but for the sake of Arizona families who want to choose the best educational settings to meet their children’s needs, ESAs are here to stay.”

Budget deficit on the horizon

The debate around ESAs has been complicated by the Grand Canyon State’s deteriorating financial outlook. A new legislative analysis estimates that the end of the fiscal year will see Arizona face a budget deficit of $400 million, setting the stage for contentious budget talks in the upcoming legislative session.

And public education advocates have already started to weigh in, pointing to the skyrocketing cost of ESA vouchers, for worsening the shortfall. Both the Arizona Department of Education and the Governor’s Office estimated over the summer that the universal expansion would cause ballooning costs by the end of the fiscal year, reaching more than $900 billion — far above what was set aside in the state budget.

On Oct. 2, Save Our Schools Arizona, a public education advocacy group focused on opposing the expansion of private school vouchers, sent a memo to Hobbs, state Treasurer Kimberly Yee and legislative leaders urging them to take action against the ESA program.

“As of this week, SOSAZ calculates that the ESA voucher program is $22,945,005 in the red,” warned Executive Director Beth Lewis and Policy Director Melinda Iyer. “By the end of this fiscal year, the program is on track to cost taxpayers $296.6 million more than the legislature budgeted — meaning the program will be 47.5% over budget.”

Marisol Garcia, president of the Arizona Education Association, the state’s largest teacher’s union, denounced Republican lawmakers for creating the budget deficit by passing laws that benefit the wealthy.

“In 2021, right-wing Arizona politicians chose to side with their campaign donors and lobbyists and pass a huge tax break for the 1%,” Garcia said, in an emailed statement. “And in 2022, they pushed through a hugely unpopular universal ESA voucher program. We’re seeing the impact of those decisions today.”

The 2.5% flat income tax rate, passed in 2021 and touted by former governor Ducey and Republican legislators as a relief for everyday Arizonans has significantly reduced revenues for the state and represents negligible benefits for middle- and low income earners.

Petersen, however, placed the blame for the state’s upcoming financial troubles squarely on the Biden administration’s shoulders. Taking aim at the ESA program to mitigate the deficit is a nonstarter, he said.

“Unfortunately, the immediate crisis negatively impacting our budget is the skyrocketing inflation caused by reckless policies being pushed by Democrats at the federal level,” he said, in his joint statement with Toma and Horne. “As a result, many of our citizens are struggling to pay for basic necessities, they’re spending much less and now our state is limited in the tax revenues we’re able to generate. We will evaluate ways to cut spending to accommodate any budget shortfall, but our school choice program will not be on the chopping block.”

Arizona Mirror is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Arizona Mirror maintains editorial independence. Contact Editor Jim Small for questions: info@azmirror.com. Follow Arizona Mirror on Facebook and Twitter.

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