Universal Voucher Cost Equals HALF of AZ’s Budget Deficit

Universal Voucher Cost Equals HALF of AZ’s Budget Deficit

A shocking new report confirms that universal ESA voucher costs are driving the state’s massive budget deficit — responsible for half of this year’s deficit and two-thirds of next year’s.

The nonpartisan Grand Canyon Institute (GCI) recently released a shocking new report showing that the projected net cost of Arizona’s universal ESA voucher program is equal to at least half of the state’s budget deficit this year — and about two-thirds of next year’s projected deficit. Arizona faces an estimated $1.3 billion budget deficit in both those years combined, with an additional $500 million shortfall that must be covered by this year’s budget (which must be passed by June 30). 

In a statement published with the report, GCI sounded the alarm: “Failure to rein in these costs means critical areas of state government expenditures will be cut to balance the budget.”

“Republican legislative leaders want to protect a wealthy family’s ability to obtain taxpayer-funded vouchers while they are simultaneously threatening to hamper public school districts from spending money already allocated to them, said Arizona State Senate Minority Leader Mitzi Epstein (D) on Monday.”

GCI estimated that the net cost of the universal portion of Arizona’s school voucher program is $332 million this year and $429 million next year. This data does not account for the cost of universal students previously attending non-state aid districts or receiving any kind of additional weighted funding, which would only drive costs up. An analysis from 12 News places the total cost for this year at $430 million and identified universal vouchers as “the single largest cause of the financial shortfall.” 

The massive price tag of universal vouchers puts tremendous pressure on Democratic Gov. Katie Hobbs and Republican state legislative leaders to rein in the state’s universal voucher program.  Lawmakers budgeted $624 million to cover the ESA voucher program for this fiscal year — but the state has already blown past these numbers by over $100 million. Superintendent Horne’s Education Department (ADE) estimates that enrollment will increase to around 99,000 total participants next year, according to a May 31 letter from the ADE to the Joint Legislative Budget Committee.

“The net cost is the greatest for students that never attended a district or charter school, as there is no offsetting amount. GCI estimates that 82% of universal ESA recipients never attended a district or charter school.

The ESA vouchers are set at 90% of the charter funding amounts. Both charter school funding and ESA funding comes fully from the state general fund. Consequently, if a student leaves a district school and uses an ESA, there is a net cost to the state general fund.” — Grand Canyon Institute

GCI found that the gross cost of the ESA program in 2024 — including universal students and those who qualified under the pre-universal targeted program — was around $700 million, with the universal portion making up a minimum of $385 million in mostly new costs. 

According to the report, the cost of universal vouchers was calculated by determining how many of these recipients wouldn’t have been eligible before universal expansion. The researchers found that 54,028 students enrolled in the program in December 2023 were newly eligible. The net cost of only the universal voucher students was then calculated  using state education data to determine approximately how many of those students never attended a public school and how many moved from a charter school to a private voucher: “GCI estimates that 82% of universal ESA recipients never attended a district or charter school.”

No, Vouchers Don’t Save the State Money

The private school voucher program siphons money away from the public schools that educate 90% of Arizona’s K-12 students, and universal vouchers have become a subsidy for wealthy parents who were already sending their children to private schools before vouchers were available to them — making the voucher an entirely new cost to the state

The net cost to the state for each voucher student depends on whether and to what extent the state previously paid for that student’s education. Students who never attended public or charter schools are an entirely new cost to the state, while a student who moves from a charter school to a voucher saves the state a modest amount. Students who switch from districts such as Scottsdale Unified, which receives no state aid funding, also represent entirely new costs to the state. The report shows that while Republicans who back the program, including Arizona’s Superintendent of Public Instruction Tom Horne, say it saves the state money, that isn’t actually the case.

12 News: ESA supporters falsely claim vouchers save the state money

“Instead of speaking candidly about the financial straits posed by the ESA program, Toma has instead made the false claim that ESA [voucher]s ‘actually save the state money.’ Other ESA supporters make similar claims, focusing on a broad statistical comparison of the overall average per-pupil funding amounts for district students ($13,400) versus ESAs ($9,800).

The comparison does not reflect actual year-to-year expenditures by the state for the purpose of public education.

As 12News has reported, school funding is based on complex formulas that involve federal, state and local funds. Many of those costs are fixed – not directly tied to annual enrollment. Other costs are variable. The $13,400 per pupil amount includes many fixed costs for the system as a whole. The comparison is further complicated because public school students are also funded differently, depending on which school district they live in.

As the JLBC has calculated, ESA [vouchers] represent an added cost to the state budget in all scenarios except for one– when a child leaves a charter school to take an ESA.

Another common falsehood is the ESA amount is 90 percent of the state’s ‘base’ amount for a district student (thus ESA supporters claim the voucher is less than the base funding total for a district student.) In actuality, the ESA amount is 90 percent of the per-pupil charter school allotment (which is significantly higher than the per-pupil district school allotment.”

Arizona Needs ESA Voucher Reform

Arizona’s universal ESA voucher program is both the most expansive and least accountable nationwide, lacking any financial oversight, academic requirements, or student safety. Arizona’s state legislature forced through universal ESA voucher expansion in 2022 by the slimmest margin — one vote in the House and one in the Senate. Despite numerous efforts by Democrats to ensure academic oversight, child safety regulations, anti-discrimination safeguards, and more, the far-right Arizona legislature has consistently rejected any oversight whatsoever. 

Arizona’s ESA voucher program stands out as a stark example of what happens when basic accountability measures are completely disregarded in favor of pushing an ideological agenda. Despite continual attempts to address these deficiencies via legislation, Arizona’s Republican-majority legislature has consistently rejected common-sense efforts to implement urgently needed safeguards. As a result, the program has ballooned in cost and lacks the basic protections afforded by similar voucher programs in other states.

This lack of accountability gouges taxpayers’ pockets with zero insight into whether students are even learning. With reform urgently needed, the coming budget presents a critical opportunity for Arizona lawmakers to prioritize the well-being and educational success of all Arizona students over ideological agendas.

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