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Democratic Gov. Katie Hobbs is urging Republican Superintendent of Public Instruction Tom Horne not move forward with a plan to automate the approval process for some of Arizona’s school voucher program reimbursements.
The Arizona Department of Education announced last week that it plans to clear a backlog of reimbursement requests from families who use the state’s universal school voucher program by automatically reimbursing 85,000 purchases of up to $2,000, with plans to audit them later.
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The announcement came as the department struggled to deal with a backlog of over 89,000 reimbursement requests. The total cost to automatically reimburse the vast majority of them would be approximately $170 million, Hobbs said in a Thursday statement.
In a letter sent to Horne on Thursday, Hobbs pointed to instances when money from the voucher program, formally known as the Empowerment Scholarship Account program, was misused. She specifically cited the recent indictment of two people who don’t even live in Arizona for an ESA fraud scheme in which they applied to the program with the names of fake children and then used the money for personal living expenses.
The ESA 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 school tuition, homeschooling supplies or the money can be saved for college.
“The people of Arizona expect their elected officials to be strong stewards of their taxpayer dollars, not to enable fraudulent spending,” Hobbs said in the letter.
Horne in a press release last week said that if post-reimbursement audits show that money was used improperly, that it can be “clawed back.”
Supporters of Horne and the ESA program backed the decision by pointing out that the Arizona Department of Education has operated in this manner in the past, conducting risk-based audits after reimbursements are made. However, the state’s ESA program has ballooned since that time.
The program originated in 2012, but was expanded in 2022 from serving a limited group of about 12,000 students who met specific criteria to a universal program available to all of the state’s roughly one million K-12 students. There are currently more than 83,000 students enrolled, according to the Department of Education.
In a press release Thursday, Horne shot back at Hobbs saying that this year’s state budget included the provision for the Arizona Department of Education to move to this style of audits of the program. The provision does not prevent the department from investigating ESA voucher expenses for suspected fraud.
“The method we are instituting, known as risk-based auditing, is specifically provided for in the budget statute that the Governor signed last session,” Horne said in the press release. “Maybe she should start reading what she signs.”
In his response, Horne went on to say that the program is “among the most accountable” in the state. He added that the backlog problem originated after the governor signed a bill that allows private school tuition to be paid under the reimbursement system instead of using a third party vendor, which contributed to the backlog, according to Horne.
“Implementation of this course of action is a complete dereliction of ADE’s responsibility to ensure the appropriate use of public funds,” Hobbs said. “You must reconsider these actions and propose a solution to administering the ESA program that does not give a blank check for even more rampant fraud.”
The ESA program has been a point of contention between Republicans, who championed the expansion and laud it as a successful example of school choice for other states to follow, and Democratic leaders as costs to maintain the program have skyrocketed and has led to major budget battles in the state.
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