“Alt-Schools Fiasco”: Arizona’s Universal ESA Voucher Scheme Will Bankrupt the State

“Alt-Schools Fiasco”: Arizona’s Universal ESA Voucher Scheme Will Bankrupt the State

The #AZLeg universal voucher scheme is bankrupting AZ

When Governor Ducey and the Republican-led Arizona Legislature passed universal ESA vouchers earlier this year, public school advocates warned them it would siphon hundreds of millions away from local public schools in year one.

Arizona lawmakers insisted the program would be thinly utilized and have little impact on public school funding, teacher pay, and student resources – but now, five months later, the ESA voucher program is set to bankrupt our state.

It’s Looking Like Alt-Fuels 2.0

Set your clocks back to the year 2000, when Arizona lawmakers passed subsidies for alternative-fuel vehicles. Lawmakers were told the program would cost the state $10 million, but after only a few months, state officials blew the whistle: the actual cost was likely to surpass $600 million based on demand for what amounted to a 30-50% coupon for a brand new car. Lawmakers were forced to use the Rainy Day Fund to cover costs, then yanked the program out from underneath 17,000 Arizonans who had purchased vehicles anticipating a government handout. After numerous lawsuits and the loss of $120 million in taxpayer dollars, the program went up in flames and Arizona became a national laughingstock for poor planning. 

Did Someone Say “Alt-Schools Fiasco”?

22 years later, Arizona lawmakers have failed to learn from the past. Just two months into the new law, nearly 30,000 applications were filed for new universal ESA vouchers, totaling an immediate $210 million hit to the state general fund (half of which funds Arizona’s public schools). With over 5,000 applications currently under review, the total will inevitably reach over $245 million this quarter. This dwarfs the JLBC (Joint Legislative Budget Committee) legislative budget analysis, which vastly underestimated the impact at $33 million for the entire 2022-23 school year.  Applications continue to pour in, the vast majority from families whose children already attend private school or homeschool and are eager to claim a $7,000 taxpayer-funded subsidy.  With 85,000 Arizona students in private schools and homeschools, it is likely that the whole ESA voucher program will cost the state well over $500 million total this school year and could reach $1 billion a year in a few short years.  

“80% of universal ESA applicants are not in public schools. That means one of two things must happen. Either the state must come up with additional funding … or school districts will send funding to “follow” those students, even though the reduction in costs for the district will be $0.”

In other words: Universal vouchers are bankrupting our state.

 

Here’s the rub: None of the private school or homeschool students claiming a voucher have any state funds budgeted to them because they have never attended or already exited public schools. Current data from the AZ Dept of Education shows that 80% of universal ESA voucher applications are from families looking to subsidize their current private school tuition or homeschool costs – NOT from students leaving public schools. In other words, every one of these vouchers is a subtraction from another child’s education.  

No Voucher Cap, More Damage to Local Schools

Arizona lawmakers refused to add a cap to the universal voucher expansion (HB2853), so there is zero limit to how much funding can be stripped from Arizona’s public schools and siphoned to unaccountable, unregulated private schools. Even worse, the legislature failed to account for these hundreds of millions by appropriating additional funding for the program, meaning the funds must be stripped from the education general fund. This blows a crater hundreds of millions of dollars deep in state coffers, threatening to drive the state into debt for dollars spent that have not been budgeted for. No family or business would allocate their funds this way, yet the Republican-led legislature deems it acceptable to squander our tax dollars like Monopoly money. 

With the Arizona Legislature set to begin their next session on January 9, Governor-elect Hobbs and state lawmakers will have to decide whether to continue to fund universal ESA vouchers without guardrails or limits  of any kind, where the funds will come from — and ultimately whose budgets will be cut to sustain it.

Vouchers Hurt Blog Cover Image

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