Arizona seeks $50M from dormant school voucher accounts

PHOENIX — State Schools Superintendent Tom Horne said his office will begin looking at recouping nearly $50 million in dormant school voucher accounts following a 12News investigation.

It would be the first time the Arizona Department of Education has attempted to claw back unused Empowerment Scholarship Account funds. 

The dormant vouchers represent nearly 10 percent of the $444 million that parents have accumulated in their ESA accounts, the 12News I-Team found. State law allows parents to save that money and use it for their kids’ college.

However, Horne said it won’t necessarily be a priority to get the dormant money for his 12-person ESA staff, who already review about 2 million ESA spending requests a year from parents, which includes weeding out fraud.

“ADE is reviewing those funds. ESA staff is limited, and the governor opposed our request for more personnel in the latest state budget,” Horne said. “We have to balance tasks like that with our day-to-day work serving ESA parents.”

Democrat Gov. Katie Hobbs and the Republican-controlled Legislature worked together to craft a state budget for the fiscal year that began July 1.

Hobbs, this week, lambasted the stockpiling of ESA dollars. 12News previously found that the education voucher program, which has just more than 84,000 kids enrolled as of this month, primarily helps families in wealthy neighborhoods while hurting high-performing school districts and charters.

The governor’s office told 12News that Horne needs to quit making excuses and “take accountability, and prove he’s willing to do the right thing to protect taxpayer dollars.”

Hobbs, in a statement, added: “Superintendent Tom Horne seems to conveniently forget that ESA was originally intended to help children with disabilities in low-performing schools. Instead, his response shows the program continues to prioritize subsidizing private education for wealthy families.”

While Horne says his office hasn’t gotten to the money left in dormant accounts, 12News found there are roughly 12,000 inactive accounts that hold the $49.5 million.

The I-Team, through a public records request with Horne’s office, also found:

• There were 900 accounts with nearly half the pot — $22 million.
• Just 18 inactive accounts totaled almost $2.5 million.
• The largest inactive account had $240,033.

The I-Team also found that 10,000 accounts had more than $10,000 among the $444 million in total leftover ESA accounts at the end of this past school year, 

And 12News found nearly 200 of all accounts had more than $100,000 in leftover money.

The findings stunned Simone Bell, an ESA parent who lives outside Show Low.

“I have $3.50 in my son’s account right now,” she said. “We’re waiting for funding eagerly so we can start back up….Some of those numbers are crazy to me, like $250,000 rolled over. How do you have $250,000? I have $3. I’m wondering how are they not using it?”

Bell, who said she is not wealthy, added the ESA program provides about $40,000 per year for her teenage son, who has a disability. 

“I’m grateful that they gave me an option for my son to step over his shadow, and we’ve come a long way,” she said. “We’re definitely using it for him to learn.”

Students with disabilities have had access to ESAs since 2011, when they were created. 

In 2022, then Republican Gov. Doug Ducey and the Legislature expanded education vouchers to all families — regardless of income or disabilities.

It has since exploded with parents accessing it for their kids who were already in private or home schooling prior to the expansion. The vouchers are expected to cost $1 billion for this school year.

Yet, 12News found that millions of dollars are not being spent.

With nearly $50 million in inactive accounts, that means parents had not renewed or even touched the money for at least a year. Records obtained by 12News did not indicate how long accounts had been inactive.

“Once a child is no longer an ESA participant, the money is supposed to revert back to the state,” said Dave Wells, research director of the Grand Canyon Institute.

That watchdog organization has monitored ESA spending for several years.

“To have that kind of money be really dormant and not being utilized is really costing kids in the state,” he said.

State law allows that unused money to sit for three years. Then, the Department of Education is required to bring the process to take it back and must notify parents before recouping the funds from their accounts.

“If it’s not being used, if there’s nobody active, let’s use it,” Bell said.