Arizona ESA accounts hold $440M in unspent funds

PHOENIX — The 12News I-Team has exclusively obtained public records that show more than $440 million is sitting in education voucher accounts for private and homeschooling.

RELATED: State Board approves no hard caps on ESA voucher purchases, but the Department of Education will impose spending guidelines on questionable expenses

And parents who stockpile those tax dollars can use them to pay for their kids’ college.

The I-Team obtained the documents through a public records request to the Arizona Department of Education after State Treasurer Kimberly Yee refused to release the information.

Both agencies have oversight of Arizona’s Empowerment Scholarship Accounts or ESAs. They are expected to cost about $1 billion for the upcoming school year. As of Monday, 84,196 students were enrolled for ESAs.

The data does not disclose who has the money, but it does indicate some families are hoarding cash.

• More than 10,000 accounts are sitting on at least $10,000 each.
• Nearly 200 people have more than $100,000 each.
• Ten accounts have more than $200,000 each, and one account has $261,159.

Meanwhile, Arizona continues to rank at or near the bottom in public school funding in the United States, according to numerous outlets. The Education Data Initiative, for example, in February found Arizona ranked 49th in spending and 49th in funding for public education.

Gov. Katie Hobbs, a Democrat, told 12News that it wasn’t the purpose of ESAs to fund a college education.

“This is yet another indicator of why we need common-sense guardrails,” said Hobbs, who has tried to rein in the program. “I don’t think any taxpayer, even taxpayers who support ESAs, and a lot of them do, would support this.”

The ESA program has rapidly expanded in Arizona after former Gov. Doug Ducey, a Republican, and the GOP-controlled Legislature in 2022 approved a universal voucher program with no income caps.

12News previously found the ESA program primarily has helped high-income earners while hurting high-performing charters and school districts.

A typical empowerment scholarship is $7,000 to $8,000 per year, but kids with disabilities can receive more than $40,000 a year.

And families don’t have to spend all the money.

Data 12News obtained shows students with disabilities have the largest accounts.

However, students without disabilities have a combined $220 million in unspent taxpayer funds. 

The amount of unused ESA money increased by 23 percent from a year ago — about $80 million dollars more.

And state law allows families to spend these leftover dollars on college.

That frustrates Democrats like state Rep. Nancy Gutierrez, D-Tucson.

“It’s unfair,” she said. “This voucher money is supposed to be used for the student that year. That’s not happening. And it’s infuriating.”

Gutierrez, a public school teacher, said ESA funding could bankrupt the state.

“It’s an unsustainable model,” she said. “It’s ludicrous…It’s unjust.”

State law says a student can use ESA funding for any community college, Arizona university, or private college.

State Schools Chief Tom Horne declined to comment on the $440 million in unused funds. 

His office directed 12News to GOP lawmakers, who have refused to make any changes to the ESA program. 

State Rep. Nick Kupper, R-Surprise, said in a written statement: “If there is around $440M sitting in the accounts of the 85,000 students using ESAs, I would say it sounds like it’s a popular program.”

He added: “Interestingly, there are mechanisms for getting unused ESA monies back when a student leaves the program, but there aren’t the same mechanisms to do that with public school monies. Perhaps we should take a look at correcting that.”

State ESA Director John Ward told 12News the state has never recouped money from ESA accounts.

Yet, he said his staff plans on looking at the nearly 10 percent of accounts that are considered inactive and have close to $50 million following questions from 12News.

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