$175 million from Arizona taxpayers are just sitting in ESA accounts

New records show parents are holding onto tens of thousands of ESA dollars. The most has $210,000.

Arizona's Empowerment Scholarship Account (ESA) program, which does not have many guardrails to keep the program in check, has 79 account balances with more than $100,000, according to public records from the Arizona Treasurer’s Office.¹

The records, which only include data through 2023 when the program had roughly 59,000 students (compared to the current number over 75,000) shows an accumulated balance of 175 million in taxpayer dollars just sitting there unused, which is completely legal, but raises eyebrows among the Arizona education community.

A similar story from 2020 showed the cumulative balance at around $30 million from nearly 7,000 students. That number in three years ballooned nearly 600%.

The aforementioned 79 accounts make up a cool $10 million. The top dog? An account with a staggering $210,000. The top account in 2020 was $128,000.

Save Our Schools Arizona, a group that launched in 2018 to oppose Arizona’s efforts to expand the ESA program universally, still remains deep within the fight for more public school resources at the expense of the so-called vouchers.

Tyler Kowch, the communications director, criticized the program by calling it a “welfare for the wealthy.”

“It should come as no surprise that many ESA voucher recipients are simply sitting on their funding to use as a de facto college savings fund,” he said. “The vast majority of voucher recipients were already attending private schooling – this is just another example of AZ taxpayer dollars being funneled to education extras while our public schools and the 90% of Arizona families that choose them are forced to foot the bill for not only these extras but college as well."

There is some evidence to back up his criticism of it being for more wealthy parents, as Fourth Estate 48 reported back in 2022.

Arizona Superintendent of Public Instruction Tom Horne has been a vocal supporter of the ESA program, and his administration (like the two previous ones) has already been masked in some scandals with the program. Just seven months into his current tenure his ESA director resigned amid a breach within the program which led to a subsequent Department of Homeland Security investigation.

Horne’s office didn’t directly answer any questions for this article, but a spokesman said the Department of Education would be open to legislative changes. They wouldn’t comment further on what exact changes they would support instead punting to the Legislature for making those changes.

The office wouldn’t comment on the accounts amassing $175 million because the office had not reviewed the documents.

Instead they just confirmed through statute that it is completely legal to keep the funds for up to four years after the student gradates from high school.

The law states that in order to enroll a qualified student for an Arizona empowerment scholarship account, parents must agree to specific terms, including using the funds only for eligible expenses such as tuition, fees, and required textbooks at an eligible postsecondary institution.

Of course while there are plenty of accounts who are using the funds to save up for an “eligible postsecondary education,” that isn’t the case for all students on the program.

While a lucky few are sitting on mountains of cash, the majority are scraping by. 16,802 accounts have less than $1 in their account. And about 31,000 accounts hold under $1,000, totaling a mere $4.9 million.

And while there has been a lot of criticism over expanding the program to all students, the accounts that amass the highest totals are likely those who were able to join the program before the universal expansion due to some type of learning disability, having a military parent or attending a D or F rated school, among other reasons.

Depending on the disability of the student, accounts can see tens of thousands of dollars per year and there isn’t anything requiring parents to spend the entire account money each year; only before the funds would expire four years after their senior year in high school. Or until they complete college or a vocational school.

On the other side of the coin, 14 account holders have overspent their allocated funds.

This all comes as the governor’s office and state lawmakers grapple with a looming budget deadline on June 30 where Democrats – including Governor Katie Hobbs – want to put more checks onto the ESA program which is contributing to more than a billion dollar deficit in the state.

Republicans, however, are not into the idea of decreasing any amount of money for the program they pushed through the legislative process in 2022, despite a growing electorate that was against the universal expansion because of how much it costs taxpayers without proper checks and balances and what it means to public schools in the state.

The current budget making its way through the Legislature this week does not offer any real cuts to the program though despite how much its fiscal impact has on the current billion dollar deficit. Democrats are not happy, as expected.

Hobbs’ office did not respond to multiple attempts for comment on this story.

Recent data shows wealthier Arizonans have been taking advantage of the program more than lower-income Arizonans and that a lot of the students on the program in 2024 never even went to public school. That means parents with private school tuitions to pay are taking advantage of taxpayers’ money in order to help pay their child’s education.

But that isn’t too surprising given that was what the conventional wisdom at the time said would happen.

In a nutshell, Arizona’s ESA program is on a financial rollercoaster. With piles of cash and a surge in students, the stakes have never been higher. But a fairer, more accountable system is essential to truly empower Arizona’s students and sustain the program's mission of educational freedom.

1. These records ended up taking over a year to receive because the Treasurer’s Office and the Department of Education kept punting back and forth over who actually housed the records.