As Arizona Probes School Choice Fraud, Advocates Dismiss Scheme as ‘Inside Job’

The indictment of former education department staffers has once again put a spotlight on the state’s $1 billion education savings account program.

Arizona Attorney General last week announced a 40-count indictment against five people in an alleged conspiracy to defraud the state’s education savings account program out of over $600,000. (Arizona Attorney General)

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The indictments of five people last week alleged to have participated in a criminal conspiracy to defraud Arizona’s education savings account initiative put a spotlight on one of the nation’s largest and least restrictive programs granting families state funds for private school or homeschooling.

That fact that three former education agency employees were among those indicted shows that the program lacks adequate fraud prevention measures, said Democratic Attorney General Kris Mayes.

“It was very easy for these individuals to do this,” Mayes said during a press conference. They’re accused of faking birth certificates and special education evaluations to bilk over $600,000 from the program. “I think we all have to be asking the question: ‘Is it being replicated?’ ” 

But ESA advocates saw little in the news that would lead them to push for more guardrails on Arizona’s system or halt the movement for ESA laws in other states. Some dismissed it as an “inside job” that reflects more on government corruption than the thousands of families looking for better educational options for their children. To this group, the fact that Arizona investigators uncovered the alleged plot shows that existing safeguards worked.

“I don’t think there’s any program that can regulate out the possibility of bad actors,” said Lisa Snell, senior fellow at Stand Together Trust, a foundation funding school choice initiatives, and one of the leading voices nationally on ESAs. “In any sector, there are people that are taking advantage of taxpayer money.” 

She pointed to the national school lunch program and Medicaid as two government programs that have proven vulnerable to corruption. And she noted an investigation last year that found Los Angeles teachers union members received excessive overtime pay.

“Government employees committing fraud is a tale as old as time, and by no means unique to education,” said Mike McShane, director of national research at EdChoice, an advocacy organization.

‘This kind of abuse’

Unlike their counterparts in several states, Arizona private schools accepting ESA students don’t have to be accredited and their staff members don’t have to pass criminal background checks. There are also no testing requirements for students, and while homeschooling parents are required to use funds to teach core subjects, many pull curriculum materials from the internet. 

Some argue that, with a little over 30 employees, the program lacks the staff to accommodate its rapid growth to nearly 76,000 students since 2022. 

“What I’m most concerned about is how ripe the program clearly is for this kind of abuse,” Mayes said in detailing the 40-count indictment.

Suspects Dolores Lashay Sweet, Dorrian Lamarr Jones and Jennifer Lopez were ESA program specialists at the department who allegedly admitted real and fictitious students — some with identical birthdays — to the program and then approved expenses on their behalf. Jadakah Celeste Johnson, and Raymond Lamont Johnson, Jr., also indicted, are Sweet’s adult children. 

In an odd coincidence, just hours after the indictments, educators met in Washington, D.C. at the conservative American Enterprise Institute to debate whether Democrats should get behind the ESA movement. Arizona’s program came up frequently.

“No academic accountability. No financial transparency. No student safety measures,” said Bethany Little, managing principal at Education Counsel, a consulting firm. 

“I agree with you on the flaws of Arizona’s law,” responded Ravi Gupta, a former Obama staffer and charter school leader who said he supports the idea of ESAs, but sometimes questions their implementation. 

The American Enterprise Institute hosted a debate over ESAs last week. Ravi Gupta of The Branch, far left, and Marcus Brandon of the North Carolina Campaign for Achievement Now argued in favor, while Bethany Little of EducationCounsel, far right, and North Carolina state Sen. Graig Meyer, argued against. Nat Malkus of American Enterprise Institute, center, moderated. (Aaron Clamage Photography/American Enterprise Institute)

In several other states that have embraced ESAs, administrators say they’ve put guardrails in place to prevent fraud and corruption. 

In Utah, where applications for the state’s new ESA program opened last week, advanced software is designed to spot fake documents, said Jackie Guglielmo, vice president of ESA programs at the Alliance for Choice in Education, which runs the program. If the system flags something irregular, a member of the customer support team will manually review it and might ask for additional documentation, she said.

New Hampshire officials employ accounting procedures to differentiate people processing applications from those who approve vendors. A third group approves expenses. A bill to expand the program passed the state House last month.

Democratic Arizona Gov. Katie Hobbs has proposed tightening accountability for the program by having an outside auditor track how private schools are using ESA money. 

But Snell, with Stand Together Trust, said she doubts there are any reforms that would satisfy most Democrats. She was among the school choice supporters gathered at a San Diego resort over the weekend to highlight the growth of microschools, homeschool co-ops and other unconventional programs. 

Not all of the programs represented accept ESA funds, but many attendees view their success as critical to the future of their movement. John Thompson, a researcher from Kennesaw State University, which organized the event, said the notion that ESAs are a fad is “very crazy and wrong.”

“It’s not going backward,” he said.

Kaity Broadbent of Prenda Learning, a microschool network, said alternative models are responding to parents who feel their children weren’t well served in a typical classroom.

“This generation of parents cares about mental health,” she said. “They don’t just need their kids to get into Harvard. There’s a new vibe.”

While sessions focused on policy and accountability, no one mentioned the indictments.

‘Bigger than any superintendent’

Inside Arizona, however, the news upset advocates who say thousands of children are benefiting from the flexibility ESAs offer.

“This type of thing is just devastating to those of us who really depend on the program,” said Kathy Visser, who administers a Facebook page for ESA families and vendors. “It angers us because accountability matters more to us than anyone else.”

Hobbs has also proposed background checks for staff members at private schools accepting ESA funds and for students to attend public school for a minimum of 100 days before they qualify for the program. But Republicans have opposed the measures, likening them to “death by a thousand cuts.”

This was the second batch of indictments involving the program since last summer, when a grand jury in Maricopa County indicted three women accused of fraud and theft of over $87,000 from the program. 

They allegedly created receipts and claimed reimbursements for “bogus” educational services, according to a prosecution report. When investigators examined one woman’s account linked to the ESA program, they found charges at retail stores, restaurants and companies like Uber and Airbnb. The case is ongoing.

Also last summer, the former head administrator of the ESA program, Christine Accurso, and another high-ranking official, Linda Rizzo, stepped down following a “cybersecurity incident” in which student names and their disabilities were disclosed to a parent through ClassWallet, the program’s online financial platform. 

Superintendent Tom Horne, a Republican and strong advocate for ESAs, hired Accurso when he defeated Democratic incumbent Kathy Hoffman in 2022. After Accurso’s resignation, Horne put John Ward, who has years of auditing experience, in charge of the program. 

While a tip from a credit union alerted officials to large amounts being withdrawn from Sweet’s account, Horne, in a statement, said it was his department that raised concerns about Jones and Lopez and that he is working to “root out potential fraud and abuse.” 

But in an email to The 74, Hoffman said the state legislature should reform the program and fund more fraud prevention efforts.

“Ultimately, the problems with this program are bigger than any superintendent,” she said. “The ESA program does not have — and has never had — enough oversight to ensure tax dollars are being spent appropriately.”

Disclosure: Stand Together Trust provides financial support to The 74.

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