Arizona Faces Compliance Issues in ESA Program Oversight

News Summary

The Arizona Department of Education has struggled with compliance regarding the Empowerment Scholarship Account (ESA) program, failing to meet new auditing requirements enforced by state law. Despite the law coming into effect in September 2024, there has been little communication between the Department of Education and the Arizona Auditor General, leading to concerns over accountability. While the program has expanded to serve over 87,600 students, critics warn that inadequate oversight could lead to financial strains on public schools and allegations of misspending.

Arizona has encountered significant compliance issues regarding the Empowerment Scholarship Account (ESA) program, as the Arizona Department of Education has failed to adhere to a new state law mandating collaboration with the Arizona Auditor General’s Office. This lapse has persisted for nearly a year, raising concerns among lawmakers and education advocates about accountability within the program.

The new law, aimed at establishing risk-based auditing procedures for the ESA program, came into effect in September 2024 as part of the state’s budget. However, the Arizona Auditor General, Lindsay Perry, has expressed frustration, indicating that the Department of Education has ignored requests to meet and develop necessary audit processes. Ten months after the law took effect, there has been no communication or consultation with her office, despite the legal requirements to do so.

While the Arizona Department of Education has focused on managing parental dissent regarding new purchase limits set by the ESA program, auditing procedures have been sidelined. The ESA program, initially designed in 2012 for students with disabilities, has since expanded to include all K-12 students in Arizona, currently serving over 87,600 students. Parents of these students can utilize funds from a debit card to cover a variety of educational expenses, including private school tuition and homeschooling supplies.

However, the program has not been without controversy. Supporters advocate for increased school choice, while critics argue that the ESA program lacks sufficient oversight and puts financial strain on public schools. The fiscal implications of the ESA program are substantial; initial costs projected at $300 million have ballooned to an estimated $1 billion for the 2025-26 school year, with over 90,000 participants expected.

John Ward, the executive director of the ESA program, has indicated that his office’s main focus has been on enrollments and customer service, rather than on meeting auditing compliance requirements. There have been attempts to postpone meetings related to developing auditing procedures until a new handbook was finalized, which only contributed to delays in compliance.

As of late July 2025, the Department of Education had yet to initiate discussions with the Auditor General’s Office, despite the handbook’s approval. Compounding these issues further, the Department of Education has faced a backlog of review requests, leading to a policy of automatically approving purchases under $2,000 to alleviate delays. Consequently, risk-based audits were implemented for expenditures below this amount starting in December 2024, specifically focusing on accounts with past spending issues.

At present, the ESA program handles approximately 11,000 transactions daily, but there is a limited review staff of only 12 members assigned to scrutinize these purchases. Previous instances of fraud within the program have heightened concerns regarding misspending and improper fund use, accentuating the need for enhanced oversight and accountability measures.

Lawmakers, along with public school advocates, have begun to call for better oversight mechanisms, fearing that the expansion of the ESA program may primarily serve wealthier families at the expense of public education resources. Tensions remain between Republican lawmakers who support school choice initiatives and Democratic legislators and advocates who emphasize the necessity for accountability within the ESA program.

As auditing practices attract increasing scrutiny, the Arizona Department of Education has faced challenges in responding to past audit recommendations, further undermining confidence in the organization’s compliance with existing laws. The ongoing situation underscores the need for a cooperative approach to ensure the ESA program operates transparently and effectively while fostering educational opportunities for all students in Arizona.

Deeper Dive: News & Info About This Topic

• Pinal Central: ESA Ignored State Audit Law
• Arizona Mirror: ESA Program Ignored Audit Law
• Arizona Capitol Times: ESA Audits Development
• Google Search: Empowerment Scholarship Account
• KTAR: ESA Reimbursement Backlog
• Wikipedia: Education in Arizona