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

PHOENIX — New public records obtained by 12News show thousands of parents used Empowerment Scholarship accounts to purchase at least $10.3 million on banned items — including paying themselves, buying condoms, and other sexually explicit items — in less than a year.

Those records show at least 18,000 ESA account holders — close to 20% of the entire program– used voucher funds intended for private and home schooling on a myriad of banned purchases, according to Arizona Department of Education records.

State Schools Superintendent Tom Horne’s office approved all of them from roughly December 2024 to October 2025, records show.

The documents reveal nearly 84,000 banned purchases using ESA funds. Among them:

• Parents paying themselves several thousand dollars each.
• $1,500 gift cards
• Electric dirt bikes
• Custom tires
• Luxury hotel stays
• Insurance payments
• Wedding gifts
• Even sexually explicit items like condoms, lubricants and lingerie 

While this list represents only a sample of the total ESA transactions from late 2024 through last fall, it paints a picture of a system with minimal oversight, critics say.

In addition, the Department of Education and Treasurer’s Office, which co-manage the program, have slow-walked or refused to respond to public records requests on total ESA spending for nearly a year from 12News, leaving gaps in the public’s understanding of how widespread the issue may be.

12News has sought detailed spending records since 2022, when then-Gov. Doug Ducey and the Legislature expanded the program to all Arizona kids. The station ultimately sued Horne and Treasurer Kimberly Yee in an effort to jar loose the records.

12News obtained detailed spreadsheets for this story after filing a public records request with the Arizona Attorney General’s Office, who received the documents from the Department of Education as part of its ESA public monies investigation.

According to Horne’s office, the flagged purchases were identified through a random risk assessment and a full account audit. The department sampled roughly 380,000 transactions and found a banned item around 20% of the time.

But Horne insists that the statistic doesn’t mean 20% of parents committed fraud.

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

He explained that some parents may have filled out forms incorrectly or believed certain purchases should qualify if similar items were available in public schools.

His office maintains that suspected fraud is referred to law enforcement and that the agency has up to three years to conduct risk-based audits — a method, they say, similar to processes used by the IRS and other government agencies.

But Jennifer Jennings, a Princeton University professor who studies school choice and reviewed the records, said she found 18,626 ESA account holders had at least one unallowable purchase. 

That’s roughly one in five account holders or 20%.

“That suggests there is a systemic oversight problem, not just a few bad apples abusing the program,” she said. “Arizona taxpayers deserve to know whether Arizona kids are getting the education they need, and these data demonstrate that the ESA program desperately needs guardrails.”

Meanwhile, Horne’s office has referred at least six cases to Attorney General Kris Mayes’ office related to parents paying themselves.

Mayes declined to comment on this story, citing an ongoing public monies investigation into the ESA program.

Still, critics argue the pattern goes beyond simple paperwork errors.

This isn’t the first time ESA spending has drawn scrutiny.

Last summer, 12News reported that some parents used ESA funds for diamond rings, Kenmore appliances and lingerie. 

Now, the latest batch of records shows more than 18,000 parents made banned purchases that were nevertheless approved by Horne’s office.

Horne and Yee have previously stated that misuse or fraud accounts for less than 1% of total spending. The two Republicans are running against each other for superintendent of public instruction in this year’s election.

But the Attorney General’s Office sees it differently.

A January letter from the AG’s Solicitor General’s Office to Horne noted that “nearly 20 percent” of transactions in “Marketplace,” where parents directly order products from vendors, were unallowable.

While Horne declined another interview on Thursday, his spokesman said in a statement that an unallowable purchase does not automatically equal fraud and emphasized that the department has a collection and recovery process in place.

Yee did not respond to requests for comment.

Since Ducey and the Legislature expanded the program to all Arizona students, it has grown to more than 100,000 kids. 

Supporters of the program note that most parents are using the program as intended. 

Other records obtained by 12News show large payments going toward private school tuition and homeschool curriculum — precisely what the program was designed to support.

However, 12News also found last summer that ESA families had stockpiled $440 million in unused education voucher money that can be used for future college expenses.

The state’s teachers’ union and Save Our Schools Arizona have filed ballot measure paperwork that could let voters put guardrails on the ESA program.