(C) Arizona Mirror
This story was originally published by Arizona Mirror and is unaltered.
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Arizona school voucher program ignored state audit law for nearly a year, officials say [1]
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Date: 2025-07-29
For almost a year, Arizona’s school voucher program was too busy for Arizona Department of Education employees to even attempt to comply with a new state law requiring ongoing audits of voucher spending.
Instead, the Empowerment Scholarship Account voucher program, known commonly as ESAs, focused on appeasing parents who opposed new purchase limits, while workers struggled to keep up with purchase reviews.
As part of the state budget approved in 2024, the Arizona Legislature required the ESA program to work with the state’s auditor general to create risk-based auditing procedures. The goal of that law, which went into effect in September 2024, is to ensure that students and parents who use the program comply with rules on how the money is used.
But last week, Arizona Auditor General Lindsay Perry told the lawmakers on the Joint Legislative Audit Committee that the Education Department had blown off her office’s repeated requests — over months — to meet with ESA administrators and create the audit processes.
“Ten months after the law’s effective date and eight months after the department purportedly implemented a risk-based auditing process, the department still has not met with my team to develop those risk-based auditing procedures or consult with my office as required,” Perry said during the July 21 JLAC meeting.
The ESA program was created in 2012 to provide vouchers for students with disabilities. After the Arizona Supreme Court concluded the vouchers were constitutional, backers set about expanding who could participate. The program’s growth was incremental at first — students attending failing schools, children in foster care, the kids of military members — and it served around 12,000 students. But in 2022, it was expanded to a universal program by then-Gov. Doug Ducey and the Republican-led Arizona Legislature. The program is now available to all of the state’s roughly one million K-12 students.
The program works by giving the parents of participating students a debit card that can be used to pay for various educational costs, or reimbursing the parents for those costs. The costs can include private or parochial school tuition, homeschooling supplies — and even savings for college tuition.
There are currently more than 87,600 students enrolled, with around 4,000 applications waiting for approval, according to the Department of Education. The majority of those students never attended public school.
Since the universal expansion was implemented, it has been contentious. Republican lawmakers and supporters of school choice say they should get taxpayer funding no matter where their children attend school. Democratic legislators and public school advocates say the program lacks accountability, serves as an entitlement program for wealthy families who were already sending their kids to private school and siphons much needed money away from public schools.
The cost of the program has skyrocketed since the initial $300 million universal expansion in 2022, with a cost of $869 million last year, and an expectation of more than 90,000 participants in the 2025-26 school year at a cost of around $1 billion.
John Ward, the executive director of the ESA program, told JLAC that complying with the new law was not a priority.
“Our main responsibility is to get students who want to be on this program on the program, to review their purchases, and to provide customer service as they call in and need support,” Ward said. “So, that is our core mission. That’s what we’re focused on. It’s very difficult with this very small staff to do much more than daily operations.”
Ward said that when ESA staff tried to push back the meeting to create auditing procedures until after the new handbook had been approved — initially set for March — the Auditor General’s Office refused and insisted on an earlier meeting.
“We didn’t feel like that was a very cooperative approach to take with us, and at that point, we said, ‘Look, we’re going to keep focusing on the handbook. We’re going to keep focusing on daily operations,’” Ward said. “When this handbook is behind us, we will reach out to the Auditor General’s Office, which we’re more than happy to do to work with them on risk-based auditing.”
Handbook negotiations dragged on, as parents objected to purchase limits, such as a $4,000 annual cap on musical instruments and $2,500 for physical education. The new handbook, without purchase limits, was approved in June.
But as of July 21, nearly a month after the ESA handbook was approved, Ward admitted that his office had not reached out to state auditors. The two entities only began phone and virtual discussions about the risk-based audit procedures after the July 21 JLAC meeting when Chairman Mark Finchem, R-Prescott, said he expected them to meet on the subject within two weeks.
“The auditor general takes state law very seriously and making sure that we meet those obligations,” Perry said. “I understand, from Mr. Ward’s perspective, the difficulties with staffing. However, this is not the only issue that we have delayed with the department.”
The Department of Education also repeatedly delayed and failed to provide documents requested in a 48-month follow up to a 2020 audit of the ESA program, with recommendations from that audit that still hadn’t been implemented as of November 2024.
Despite its failure to work with the auditor general to create processes for it, the ESA program implemented risk-based auditing for all purchases below $2,000 last December. That change coincided with a decision to automatically approve all purchases below that amount to clear a backlog of 89,000 purchases waiting for approval.
“At the rate it was going, we never could have caught up with the size of our staff,” Ward said, adding that the $2,000 threshold was decided alongside the ESA Parent Handbook Committee.
For the risk-based audits, Ward said the staff focused on purchases from account-holders who had previous misspending, as well as those for supplementary materials and tutoring, which they found to be higher-risk for fraud than things like tuition expenses.
The 12 employees who review transactions are expected to complete risk-based audits of 250 less-than-$2,000 purchases each day, as well as collectively review all purchases for more than $2,000.
In total, the voucher program approves nearly 11,000 purchases every day, according to its 2025 fiscal year third quarter report. Some of those purchases, of items with clear educational value, are automatically approved by Classwallet, the vendor that manages ESA debit cards and accounts.
Over the past several years, parents have used ESA funds to purchase a nearly $4,000 piano, and several parents used the funds to pay an average of more than $800 apiece for driving lessons in luxury vehicles. Several people have been indicted or convicted of ESA fraud, including a Utah couple who invented 43 fictitious children who enrolled.
“During our audits, every single day, we catch something that represents misspending or inappropriate spending,” Ward said.
However, it’s impossible to say how much fraud and misspending isn’t caught when most purchases under $2,000 aren’t automatically reviewed.
“Have any purchases (in error) been done that your staff has not caught?” Republican Rep. Michael Carbone, of Buckeye, asked Ward.
Carbone later said that he gave credit to the ESA staff for catching “grandiose” misspending.
Beth Lewis, executive director of Save Our Schools Arizona, a public school advocacy group that opposes ESA vouchers, told the Arizona Mirror that it doesn’t seem to her as if the Republicans on JLAC are taking fraud and abuse in the ESA program seriously.
“I mean, if you’re asking about the discovery of the absence of fraud — it’s just it’s wild to me,” Lewis said in reaction to Carbone’s question.
Even as JLAC urged Ward to comply with the existing law and work with the Auditor General’s Office to create risk-based audit procedures, Finchem said that calls for increased oversight of the program were unnecessary.
“There’s a call for overregulation of that program that — quite frankly — there’s a reason it was designed the way it was in the first place,” he said. “I don’t think we want to tinker with that. I am very pleased to see that, more often than not, inappropriate expenditures are not only captured by ADE, but clawed back. That means that your 40 people are doing a good job. I just don’t know that it’s fully fleshed out as to what that job is.”
Republican Rep. Matt Gress, of Phoenix, attempted to get funding to hire 12 more purchase reviewers for the ESA program in the state budget this year, but ultimately failed.
There was money allocated for the hires in a budget proposal approved by the House of Representatives in June, but that budget was created without input from the Governor’s Office or Senate Republicans. The creators of that budget, which included numerous concessions to far-right lawmakers, knew it had zero chance of getting a signature from Democratic Gov. Katie Hobbs.
A spokesman for Hobbs, Christian Slater, told the Mirror that the request for additional ESA employees was discussed during budget negotiations between Senate Republicans and Hobbs, but was left out because “Republicans wouldn’t agree to any accountability measures to go along with the increased staff.”
“House Republicans refused to agree to common sense accountability measures to go along with the increased investments, even refusing to require something as basic as evaluating all purchases under $2k,” Slater said in an emailed statement. “More bureaucrats at ADE will not result in the basic guardrails we need on ESAs. Arizona doesn’t need more government spending on an entitlement program with no accountability, no transparency, and no guardrails.”
Lewis told the Mirror that she believes any Republican who dares to call for increased accountability for the ESA program runs the risk of losing their seat in the next election.
“I just feel as though special interests have said, ‘This is the program. This is how the program stands. There’s no changing of the program and there is no real question-asking about the program and anybody who deviates from that will be primaried,’” she said.
After Republican Superintendent of Public Schools Tom Horne acquiesced to some ESA accountability demands from Democratic Attorney General Kris Mayes, many far-right school choice supporters backed Arizona Treasurer Kimberly Yee in her attempt to unseat Horne in 2026.
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[1] Url:
https://azmirror.com/2025/07/29/arizona-school-voucher-program-ignored-state-audit-law-for-nearly-a-year-officials-say/
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