School choice advocates, including Arizona Treasurer Kimberly Yee, call for reforms in Empowerment Scholarship program following 12News investigations

PHOENIX — Arizona Treasurer Kimberly Yee and a major school choice advocacy group are calling for changes to the Empowerment Scholarship Account program after a 12News investigation found millions of dollars in questionable spending.

RELATED: As GOP lawmakers in Arizona rebuff changes to school voucher program, a Florida school-choice Republican is pushing major reforms there

12News Investigates in February uncovered at least $10 million in ESA funds spent on items such as gift cards, luxury hotel stays, and wedding gifts, raising concerns about program oversight.

The Republican official and the American Federation for Children are now calling for reforms. 

They join the Arizona Education Association, which is also pushing for additional changes, including a family income limit for eligibility and clawing back unused ESA money for public education.

Yee, who is running in the GOP primary against State Schools Chief Tom Horne, said improvements are needed to ensure ESA spending complies with state law. 

“It is imperative that the State of Arizona’s ESA platform vendor operates effectively, provides a user‑friendly system for Arizona families and verifies that expenditures comply with Arizona law,” she said in a statement. “Today I directed the Arizona State Treasurer’s Office to publish a formal Request for Information (RFI) to invite potential vendors to share input on new and existing systems, capabilities, and technology platforms to support Arizona’s growing ESA program.”

Yee’s office has the contract with Florida-based ClassWallet, which manages funds for more than 100,000 kids in the $1 billion-plus annual program. The company did not return a request for comment.

Horne on Thursday blasted his rival.

“The Treasurer risks tremendous disarray in the program at the same time parents are enrolling students for the next school year. The Class Wallet contract is up for renewal in July, and the lengthy process to consider a change should have started last October,” he said in a statement. 

Yee’s proposal includes tightening oversight of online purchases and potentially hiring a new contractor to manage the program after 12News uncovered the current system allowed improper purchases.

Last year, however, Yee had expressed confidence in the program, saying she trusted parents to make appropriate decisions in what she described as an “educational free marketplace.”

Meanwhile, the American Federation for Children is backing an initiative that could be before voters in November.

It would create a new online shopping system limited to approved vendors, eliminate reimbursements for parents and ESA debit cards, prohibit luxury or non-educational purchases, and ban parents who misuse funds.

“AFC is financially supporting this campaign and is dedicated to doing what it takes to get it to the ballot,” said Brian Jodice, a spokesman for the group.

The Arizona Education Association is also gathering signatures for its own ballot initiative. 

Its proposal would ban luxury purchases, restrict the program for families earning more than $150,000 annually, and redirect unused ESA funds back to public schools.

12News Investigates last year found about $440 million in unused ESA funds.

Marisol Garcia, the union president, said she welcomes AFC in seeking ESA reform.

“I think we can all agree the system has waste, fraud, and abuse,” Garcia said. 

She added that the Arizona Legislature should step up and make fixes to the program.

If both initiatives qualify for the ballot and are approved by voters, a judge would determine how any overlapping provisions are implemented.

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