ADE official: 12News was accurate in reporting that 20 percent of parents had misspent $10 million in the education voucher program

PHOENIX — State Schools Chief Tom Horne and supporters of the Empowerment Scholarship Account program have been pointing to a new report as proof that fraud and misuse in Arizona’s billion-dollar school voucher program are rare.

There’s just one problem: the report appears to have labeled questionable — and even banned — purchases as perfectly acceptable.

Meanwhile, the Department of Education’s expert who oversaw the study said reporting by 12News Investigates earlier this year, which found 20 percent of parents misused education voucher dollars, was accurate. 12News also reported that one in five ESA purchases — such as cellphones, TVs, and diamond rings — were on the “unallowable” list in that Department of Education audit.

“I don’t quibble with your number of 20 percent,” said Joseph Guzman, associate superintendent for accountability, research, and evaluation under Horne. “It’s not the amount. It’s the number of identified people or families or parents, if you will.”

Guzman oversaw a recent study that found overall misspending in the program for more than 100,000 kids was minimal.

However, 12News found at least two dozen transactions that should have been banned under Department of Education ESA rules.

The Claim: Misuse Is Very Low

Horne, on March 12, issued the new report along with a press release stating that roughly 2 percent of purchases are unallowable expenses.

“Following some outrageous and reckless news reports of widespread purchasing fraud in Arizona’s Empowerment Scholarship account program, ADE is releasing results of a statistical analysis recently conducted by a Stanford PhD, to set the record straight,” Horne said in the release.

Guzman, who earned a PhD at Stanford in 2000, oversaw the new study. Horne called the findings “very reliable,” citing Guzman’s credentials and the methodology behind the report.

There are roughly 100 items that are prohibited from purchase with ESA funds, according to a parent handbook that recipients must follow to receive thousands of tax dollars to homeschool or send kids to private schools.

In the most recent study, 12News found at least two dozen purchases identified in Guzman’s report that appear to violate the ESA handbook — yet were still categorized as “allowed.”

Another 100 or so transactions fall into a gray area, including thousands of dollars spent on services from vendors that are difficult — or impossible — to verify.

Among the purchases 12News flagged:

– $3,200 sent through PayPal with no explanation

– $3,060 paid to a meditation provider

– Multiple Amazon charges with no receipts

– $1,000 tied only to a residential address

– $514 to an insurance company

– Hundreds spent at retailers like Pottery Barn and Sur La Table

– Gaming consoles — explicitly prohibited under program rules

Further, ESA staff in the initial release of the report flagged more than one-third of all purchases as problematic, with more than 200 lacking receipts or proper accreditation for tutoring. 

However, that information was quickly scrubbed from the Department of Education website after 12News raised questions.

Despite these findings, Guzman acknowledged he did not personally review individual transactions.

“I didn’t do a review of the records,” he said when asked about specific purchases.

Pressed on why questionable spending was approved, his answer was blunt: “I don’t have a good answer for you.”

Even within the department, ESA specialists appear to interpret rules differently, leading to inconsistent decisions on what qualifies as appropriate spending, according to other data the Department of Education initially posted online but later removed.

A Bigger Pattern Already Identified

This isn’t the first time concerns have surfaced.

An earlier risk-based randomized audit by the Department of Education — covering nearly 385,000 transactions — from December 2024 to September 2025 found something far more significant:

– 84,000 instances of misspending

– Roughly 20% of transactions flagged as not allowed by ADE staff

– At least 18,000 accounts involved

Some of the purchases were hard to ignore:

– One account spent over $11,000 on nearly 80 banned items

– A buyer purchased three bounce houses

– Others bought luxury hotel stays, large TVs, upgraded swimming pools, and pool bars

– Cases of parents paying themselves and buying gift cards

All of it is using taxpayer-funded education dollars.

Guzman did not dispute those findings.

“I don’t quibble with your number of 20 percent,” he said.

So, Why Does the New Report Look So Different?

The newer study — now being promoted by Horne — is from July 1, 2025, to late February, and it tells a far more reassuring story for supporters of ESAs.

It occurred after 12News had exposed over 84,000 instances of misspending and threats of prosecution from Attorney General Kris Mayes. 

It examined a much smaller sample:

– From a different time period

And it used what appear to be different standards for determining what counts as misspending.

The result: a dramatically lower estimate — around 1.9%.

Guzman insists both findings can coexist.

“Different years, different data sets,” he said, arguing that the overall dollar amount of misspending remains relatively small.

But critics say that the explanation misses the point.

The Real Issue Isn’t Fraud — It’s the Rules

Princeton University Professor Jennifer Jennings, who has analyzed ESA data for 12News, says the debate has been misframed.

“The issue is not fraud,” she said. “The issue is what’s allowed in the first place.”

Jennings pointed to purchases categorized as acceptable that include:

– Ski trips and vacations

State education officials continue to maintain that misuse in the ESA program is minimal, especially relative to its billion-dollar size.

But an independent review is now underway.

The Arizona Auditor General is examining the program — a process that could provide the clearest picture yet of how taxpayer money is actually being spent. That office declined to comment. 

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