$124 million in ESA reimbursements approved with no oversight since December

PHOENIX — The Arizona Department of Education since December has automatically approved more than 1 million Empowerment Scholarship reimbursement requests totaling $124 million from private and homeschool parents, a 12News investigation has found.

State Schools Chief Tom Horne’s office for eight months has given carte blanche approval to all ESA requests of $2,000 or less, with plans to audit the 1.2 million requests later.

The minimal oversight comes as 12News has uncovered that ESA parents are using state tax dollars to subsidize their vacations to San Diego, and the $1 billion-a-year program primarily helps wealthy Arizona families while financially hurting high-performing district and charter schools.

RELATED: Arizona ESA funds are being used for San Diego Zoo, SeaWorld trips

State ESA Director John Ward told a legislative panel in late July that “anything above $2,000 was still going to be reviewed prospectively by the ESA staff. Everything at $2,000 and below would be reviewed on a risk basis.”

He went on to tell lawmakers that the 12-person ESA reimbursement staff is “always in survival mode,” and the priority is to get money to parents of the roughly 90,000 kids in the program.

Horne late last year began to fast-track ESA reimbursements because of a massive backlog, and Ward told lawmakers the department doesn’t have the resources to check everything.

“Our main responsibility is to get students who want to be on this program… So, that is our core mission,” Ward said. “That’s what we’re focused on. It’s very difficult with that, with this small staff to do much more than daily operations.”

12News has requested all 1.2 million reimbursement requests through a public records request. 

The Department of Education instead provided about 500 reimbursements that were automatically approved.

Even a snapshot of records was telling. 

• Several Amazon, Target and Costco purchases with no explanation of what was bought.
• Purchases of fun passes that could be used for Arizona Diamondbacks games.
• More than $160 approved for an upscale gym where professional athletes train.
• At least $300 to Dick’s Sporting Goods with no receipts to show what was purchased.
• More than $1,300 to a club dance studio.
• Large packs of sparkling water purchased.

The I-Team’s discovery infuriated state Sen. Lauren Kuby, D-Tempe, who has tried to rein in the ESA program.

“The ESA voucher expansion is a scam. Let’s call it what it is. It’s a scam…It’s not being audited correctly. There’s no transparency. There’s no accountability.”

Horne has said his small staff still rejected $35 million in improper ESA claims this past school year.

He’s also asked lawmakers for more funding to increase oversight of a program that has exploded since 2022.

That’s when former Gov. Doug Ducey and the Republican-controlled Legislature expanded vouchers to all Arizona families with no income caps. Initially, they were designed for students with special needs.

A typical empowerment scholarship is $7,000 to $8,000, but they can exceed $40,000 a year for special needs students.

Ward told 12News some of those reimbursements for less than $2,000 eventually will get examined.

“They are auto-processed, but we are going back to audit them on a risk basis,” he said.

Ward also told lawmakers there are millions of dollars in expired ESA accounts that legally should be returned to the state.

“There is $12 million sitting there that could be swept today,” he said. “We just don’t have the bandwidth at this point.”

The Department of Education — following pressure from lawmakers — is now meeting with the state Auditor General. 

One of the goals is to develop risk-based auditing for those purchases less than $2,000 that have been automatically approved.

RELATED: ‘I really don’t get the controversy’: Arizona parents are using ESAs to pay for college tuition