State schools chief Tom Horne’s Office flagged 18,000 ESA parents for misspending $10.3 million, but only 6 were referred for prosecution

PHOENIX — A 12News investigation has uncovered more than 18,000 parents using Arizona’s Empowerment Scholarship Account program were flagged for $10.3 million in misspending—but just six were referred for prosecution.

RELATED: Condoms, gift cards and wedding gifts: Arizona parents allegedly misspent $10 million in ESA funds

Those six are all accused of spending money on themselves, a felony, according to the Attorney General’s Office.

But Arizona Superintendent of Public Instruction Tom Horne’s office will not say how many of the 18,000-plus accounts have been suspended, as required by Department of Education rules for the ESA program. And, it’s unclear how Horne plans to get that money back.

The misspending occurred from late 2024, when Horne began approving all ESA purchases under $2,000 with no review, to around October 2025. Horne decided to green-light all of those purchases because of a backlog in ESA requests.

The number of parents engaged in misspending accounts for about 20% of the program during that time.

12News Investigates found some parents bought gift cards, an above-ground pool, bounce houses, a hot tub, iPhones, condoms, and other sexual products.

The state’s ESA program is designed to provide families with public funds for private school tuition, homeschooling expenses, and other approved educational costs. It’s going to cost more than $1 billion this fiscal year for more than 100,000 students.

Tom Horne, Arizona’s Superintendent of Public Instruction, oversees a large part of the ESA program. 

When asked about the flagged spending last week, he downplayed any concerns.

“Well, it’s not fraud,” he said. “Most of it is just mistakes.”

Horne declined an interview for this story. 

In an email, his spokesman Doug Nick said the department is “serving ESA parents effectively and according to the law.”

He declined to say how many accounts have been suspended.

“In order to collect a point-in-time piece of information, we have to ask people to stop what they’re doing when their priority is to manage that process continuously,” he said. 

Nick noted that when an “unallowable expense is determined, action is taken on that account that may include suspension and potentially further auditing – an ongoing process.”

Nick said suspected fraud is reported to law enforcement, and the agency has a collection and recovery process. 

He also said the agency uses risk-based auditing to catch misspending, and the process can occur over multiple years.

The Attorney General’s Office noted just six cases have been referred for possible criminal fraud charges — each accused of paying themselves with ESA funds.

For many families, especially those with children who have disabilities, the ESA program has been transformative.

Jennifer Jennings, a Princeton University professor who studies school choice programs nationwide, reviewed the ESA records obtained by 12News. 

She said the lack of oversight threatens families who rely on the program appropriately.

“Especially for parents of kids with disabilities, this has been a lifeline for them for more than a decade,” Jennings said. “But this kind of behavior—and the fact the state’s not policing it—essentially puts those families at risk.”

Among the purchases listed in the records was a $258 red-and-blue LED light therapy device marketed for vaginal care as well as condoms and lingerie. Other banned purchases include designer handbags, a $1,690 pool chaise lounge, $1,714 for dog training, and men’s cologne.

“If I was the state superintendent, I would make a hard pause on any further purchases,” Jennings said. “These kids need to be educated for their futures, and I see very little evidence that’s happening.”

The ESA program is co-managed by the state treasurer and the superintendent of public instruction.

Kimberly Yee, Arizona’s state treasurer, declined an interview for this story.

Her spokeswoman said Yee does not control day-to-day ESA operations and is not an “overseer of ESA expenditures.”

 “The oversight of ESA spending is and always has been the responsibility of the ADE,” she said in a statement.

Yee is currently campaigning against Horne to become the next superintendent of schools. 

When asked previously whether she supports limits on ESA spending, Yee defended the program.

“I believe in school choice and an educational free marketplace,” she said. “If you take a look at the examples that you choose to use, that’s 1/100th of a percent of the total receipts that are coming into the ESA program statewide.”

But the records obtained by 12News appear to contradict that math.

The state has not released complete spending data for the past year. 

However, a sample of available records shows at least $10.3 million in flagged purchases in less than a year.

One family alone spent more than $9,000 on banned items, including the latest iPhones, an inflatable bounce house, and an above-ground pool.

Jennings said those examples likely represent only a fraction of the improper spending.

“I’ve never seen anything like this,” she said. “I am absolutely astounded. I’ve been sharing some of these findings with colleagues who have also studied school choice for a long time, and they are absolutely blown away and very confused how a program could be designed with so few guardrails.”

After filing a lawsuit against Horne and Yee, 12News Investigates recently obtained additional ESA spending records dating back to 2022 — the year the program was expanded to all Arizona students.

Those documents are under review.

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