How much do Arizona Empowerment Scholarship Accounts really cost?

PHOENIX — At the heart of Arizona’s budget battle is a familiar and deeply divisive issue: education vouchers.

Governor Katie Hobbs has called them a “billion-dollar boondoggle,” and she didn’t mince words last week when addressing the state’s Empowerment Scholarship Account (ESA) program.

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“It’s just unconscionable to me that we’re allowing the kind of waste, fraud, and abuse that we’re seeing in this program to continue,” she said.

Hobbs, a Democrat, has long opposed the program, and her criticism comes as lawmakers struggle to finalize a state budget. But just how much are ESAs costing Arizona—and are they worth it?

This year, Arizona’s ESA program is expected to cost more than $1 billion, covering roughly 10% of school-age children in the state, or 102,188.

Supporters, largely Republicans, argue the program is not only beneficial but cost-effective.

State Schools Superintendent Tom Horne is among its strongest defenders.

“This program is not only a good program, it is necessary to be sure that students’ needs are met,” Horne said. “Public schools get the same amount per pupil that they’ve always gotten. This doesn’t take away their money per pupil.”

Backers point to the numbers: a typical ESA voucher costs between $7,000 and $8,000 per student annually, compared to nearly $12,000 per student in public schools, according to national education data.

On the surface, vouchers appear cheaper.

But critics say the math isn’t that simple.

According to the nonpartisan Grand Canyon Institute, the ESA program may actually be adding high costs to the state budget—especially after its expansion in 2022 made vouchers universally available.

“The fact of the matter is, it doesn’t really save money,” said Rick DeGraw, a board member with the institute. “The overwhelming number in the ESA program are kids who already were home-schooled or already in private schools.”

In other words, the state is paying for students it previously didn’t fund.

Records from Horne’s office show there were about 12,000 ESA students in summer 2022, just before it was expanded to all Arizona kids regardless of household income.

Within a year, there were nearly 40,000 more kids.

Research Director Dave Wells estimates the additional cost could reach $400 million in the upcoming fiscal year.

“That’s the extra cost the state is having to pay for that program compared to if they didn’t have the program at all,” Wells explained.

Notably, the state’s budget office or Joint Legislative Budget Committee has not conducted a similar analysis to determine the program’s net cost—leaving lawmakers to debate competing interpretations of the data. 

The JLBC also underestimated the number of home and private school students who would join the program.

Concerns have also been raised about how some ESA funds are being used. Investigations by 12News have uncovered questionable spending, from luxury items to out-of-state trips.

“To be spending money on diamond rings, expensive cameras, trips to San Diego, trips to Las Vegas…all adding up,” DeGraw said.

The debate over ESAs has become a major sticking point in negotiations at the state Capitol.

Hobbs is pushing for an income cap—proposing that families earning more than $250,000 annually no longer qualify. Her office estimates that change could save nearly $90 million per year.

Republicans, however, strongly oppose the idea.

State Sen. John Kavanagh, the majority leader, questioned the fairness of such a limit.

“Why would you put an income cap?” he said. “Should a wealthy family that sends their kids to a district school have to pay tuition?”

Meanwhile, voters themselves may soon weigh in. 

There could be two ballot measures this November aimed at placing new restrictions on the ESA program. One proposal—backed by the state teachers’ union—would limit eligibility to households earning $150,000 or less.

Instead of restrictions, Republican lawmakers are focusing on a different approach to balancing the budget: tax cuts and a 5% reduction in most state agencies.

House Speaker Steve Montenegro on Tuesday afternoon urged the governor to approve their proposal, calling it an “Arizona-first budget” that helps families. 

But the plan does not include additional education funding through Proposition 123, a priority for Hobbs. She has already indicated she will veto the budget.

The deadline to pass a budget is June 30. 

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