A Case Study on Arizona’s Universal ESA Voucher Program
Analysis & Summary
Introduction
Save Our Schools Arizona Network is committed to ensuring that all children in Arizona have the opportunity to attain an excellent education at a free, inclusive public school in their local community. In order to realize this goal, we urge our state leaders to examine and confront the detrimental impacts of recently enacted universal Empowerment Scholarship Account (ESA) vouchers on public schools, on Arizona’s limited state budget, and on public education as a whole.
Arizona lawmakers passed the universal ESA voucher program by a slim margin in 2022, after voters overwhelmingly rejected the program in 2018. On September 30, 2022, all students in Arizona became eligible for school vouchers. While special interests sold the program under the guise of “school choice” for all, the realities of the program led to limited, and often subpar, choices for the low-income and rural families who rely most on their neighborhood public schools, exacerbating existing inequities in schooling.
Now, over three years into this education experiment, Arizona’s ESA voucher program has ballooned to over 98,000 students and is projected to cost taxpayers $1 billion this fiscal year. For three years in a row, over the course of three legislative sessions, the Arizona legislature has failed to put in place any significant guardrails. This lack of meaningful oversight has led to numerous reports of fraud, waste, and abuse within the program.
In the meantime, Arizona’s public schools are closing at an unprecedented rate due to budget constraints. The unfettered growth of Arizona’s ESA voucher program has created a crisis for the local public schools that the vast majority of Arizona families choose. With exponential growth and the dilution of the public school system, ESA vouchers threaten to do what they were designed to do: dismantle public education in our state.
Key Findings
Arizona’s rapid expansion of Empowerment Scholarship Accounts (ESA vouchers) into a universal voucher program has dramatically reshaped the state’s education landscape — with significant implications for public school budgets, equity in school admissions and funding, private school markets, and the state’s long-term fiscal sustainability. This report from Save Our Schools Arizona Network synthesizes findings from RAND’s “Case Study of Arizona’s K-12 Education Savings Account Program: What State Policymakers Can Learn” and explains implications for Arizona families, taxpayers, and policymakers.
High-level findings from the RAND report include:
- In Arizona, ESA voucher participation exploded from 12,000 students (2021–2022) to nearly 90,000 students (2024–2025).
- State ESA voucher spending ballooned from $2.2 million in 2011–2012 to $886 million in 2024–2025.
- Roughly 7% of Arizona’s K-12 students are now using ESA vouchers.
- Universal eligibility shifted ESA voucher usage away from high-need students: students with disabilities went from 60% of users pre-expansion to 18% today.
- Most ESA voucher users were already enrolled in private school or homeschool, including 71% of universal ESA voucher students as of Quarter 3 in 2025.
- ESA voucher participants are disproportionately from wealthier, higher-achieving, whiter school districts, raising concerns about equity, discrimination, and cherry-picking students.
- Private school tuition increased after the Arizona state legislature expanded vouchers universally, with a 12% increase for elementary schools and a 5% increase for high schools.
- As of the 2023–2024 school year, 28% of awarded ESA voucher funds awarded were not spent, with nearly $213 million left unspent but still counted as state obligations. Investigative reports in 2025 showed that the sum has now grown to over $440 million.
- Vendor proliferation and weak oversight risk ineffective spending and low-quality educational services.
Universal Vouchers Serve More Affluent, More Advantaged Families
The profile of those using Arizona’s ESA voucher program has changed significantly since the program was expanded universally in 2022. “Universal” means that any student in the state is eligible for the taxpayer-funded voucher subsidy, regardless of need. Before 2022, the program was specifically targeted to support students with special needs and circumstances, such as children with disabilities, children in foster care, children on Native reservation lands, and children in D- and F-rated schools. RAND emphasizes that states must align ESA voucher design with policy goals, and cautions: “States should design eligibility criteria to match ESA program goals.… If the goal is to provide alternative educational opportunities for students who do not have adequate access… a targeted program might be advisable.”
Explosive Growth in Participation: The case study explains that, “Arizona’s universal ESA policy expansion in 2022–2023 led to participation growing from almost 12,000 students … to nearly 90,000 students in 2024–2025.” That number has grown to nearly 100,000 since the publication of the report. This eight-fold increase in just three years has transformed a small, targeted voucher program into one of the largest universal voucher systems in the country.
Shift Away from High-Need Students: Before universal expansion, the voucher program was largely intended to support students requiring specialized services: “Prior to universal eligibility expansion, students with disabilities were the largest user group, making up 60 percent of ESA users. Since the expansion, students with disabilities now make up 18 percent of ESA users.” This shift signals that the ESA voucher program’s original purpose, serving students with extreme special needs, has been replaced by a broad voucher entitlement.
Most Universal ESA Voucher Students Were Already Enrolled in Private School Options: RAND’s data show that universal vouchers are not primarily serving students “fleeing” public schools. According to the report, “Students who were enrolled in private schools or homeschooled before opening an ESA made up an estimated 71 percent of universal ESA student enrollment…” and only 18% had been in public schools immediately prior to receiving a voucher.
This data indicates the ESA voucher program is now significantly subsidizing families who were already paying for private education. This new enrollment dramatically increases state education costs without reducing public school enrollment enough to offset those costs.
Equity Implications: RAND’s findings indicate that ESA vouchers are predominantly being utilized by the most affluent and advantaged communities: “ESA enrollees tend to reside in districts that have higher median incomes, higher test-score achievement, and more advantaged socioeconomic backgrounds… School districts with higher levels of poverty… have significantly fewer ESA participants.”
RAND directly connects this to concerns about inequity, explaining “the pattern … is consistent with cream skimming… in which schools enroll or appeal to the highest-performing and most advantaged students.”
This underscores a central concern: universal ESA vouchers magnify inequities by allocating scarce public funds to families with greater means and access.
Voucher Fiscal Impacts and Budget Sustainability
Arizona’s ESA voucher program has increased in cost exponentially, with serious implications for the state budget. RAND’s numbers highlight dramatic cost escalation: “Arizona’s spending on ESAs has gone from $2.2 million… to $886 million in 2024–2025,” representing nearly a 400-fold increase.
RAND warns: “States implementing universal ESA programs should budget… expecting that a significant share of first adopters will be students already enrolled in private schools … [and] could lead ESA programs to add to education budgets rather than reduce them.” This is exactly what has occurred in Arizona.
Cost Burden Driven by Private and Home-Educated Students: RAND makes clear that newly subsidizing existing private school families drives the majority of cost growth: “The majority of funding increases result from existing private school students newly utilizing ESA funds rather than students switching out of public schools.”
According to the report: “ESA program enrollees receive 90 percent of the state funding that would have been allocated had they attended public [charter] schools, meaning that the program should, in theory, reduce per-pupil expenditures. ” It is important to establish some additional context. Voucher students receive 90% of the funding they would receive if they attended a public charter school, which is a higher level of state funding than traditional district public schools. Typical students switching from a public district school to a voucher incur a new cost to the state – a minimum of $700 for elementary school students and $900 for high school students.
The total new cost to the state when a student switches from public school to a voucher depends on the proportion of funding the district the student attends receives from state versus local sources. For “non-state aid” districts that receive all of their funding from local sources, the entire value of a student’s voucher incurs a new cost to the state. According to the Arizona Department of Education’s (ADE) 2025 Q3 report, 33,942 students in the voucher program switched from public schools. Using RAND’s figure of 11,813 universal switchers, this means 35% of switchers are universally eligible.
The report also discusses the cost of students who did not previously attend public school: “universal eligibility allows students already pursuing private education options to receive [voucher] funds. Given that these privately educated students make up a large portion of the first adopters of ESAs under the universal policy, funds obligated through the ESA program could add to the state’s total education budget rather than reduce it…”
Here is how RAND calculates the total cost of the program: “The median award amount for universal eligibility enrollees is about $7,400, implying roughly $822 in savings per student that otherwise would have been allocated to a student’s public school. As discussed in Chapter 4 of the report, 10,473 of the universal ESA participants were enrolled in public school before opening an ESA. Another 8,368 were enrolling in school for the first time. Assuming, conservatively, that all of these first-time students would have enrolled in public school had the ESA not been available, the ESA program would save $15,487,302 ($822 savings × 18,841 students) in 2025. However, 45,274 students who were already in private education now receive $7,400 each through their ESAs, incurring an additional cost to the state of $335,027,600.”
To add context, according to ADE’s quarterly reports, about 42% of voucher switchers are from charter schools, and the remaining 58% are from district public schools. Using these figures, we can project that roughly 4,399 universal switchers attended a charter school, providing the state with a minor savings of $3.6 million ($822 savings x 4,399 students). The remaining 6,074 universal switchers incur a minimum new cost to the state of $700 to $900 each. Assuming, as RAND does, that all first-time voucher students would otherwise have attended public school, we find a cost to the state of $11.6 million ($800 cost x 14,442 students).
An analysis by 12News in 2024 found that the total cost of students from non-state-aid districts was between $65 million and $85 million per year. Using the $75 million cost of students switching from “non-state-aid” districts to account for the costs already captured above, we can calculate the cost of universal students at ~$26 million ($75 million x 0.35).
It is also important to note that students who join the program through universal eligibility are eligible for additional Group B weight funding that they may not have received at a district school, meaning that some universal voucher recipients are receiving more than the median $7,400. Using the mean voucher value of $10,500, the total cost could be as high as $475 million. Taking these factors into account, the table below provides an updated breakdown of the costs incurred by the universal program.
Universal ESA Voucher Costs*
- Savings gained from charter-school switchers: ~$3.6 million
- Costs incurred from public-school switchers from state-aid districts and first-time entrants: ~$11.6 million
- Costs incurred from public-school switchers from no-state aid districts: ~$26 million
- Costs incurred from private school and home-educated students (newly funded): ~$335 million to $475 million
- This results in a net additional fiscal burden of between $369 million and $509 million for the 2025 fiscal year
* Analysis conducted by Save Our Schools Arizona Network based on the Arizona Department of Education’s ESA Quarterly Reports.
What is Being Purchased with ESA Vouchers? RAND’s report provides some insight into what families purchase, noting “families spent nearly 60 percent … of ESA awards on tuition-related expenses… the remaining 40 percent was spent on nontuition categories.”
Misspending and fraud have been heavily documented in Arizona since universal expansion. A 2023 report showed how $304 million in taxpayer dollars was spent, including a $10,000 purchase at a sewing machine store, as well as trampoline park passes, golf lessons, luxury driving lessons, and much more. Reports in 2024 documented fraudulent voucher accounts and “ghost children,” both of which led to indictments. A 2025 report showed millions in fraudulent expenditures, including those on diamonds, lingerie, big screen TVs, iPhones, and Kenmore appliances.
Unspent ESA Voucher Funds Burden the State: The RAND report notes that “As program participation has increased, obligated funding for ESA voucher awards has increased rapidly. However, a significant portion of these funds goes unused; families are not required to use the funds each year, and funds roll over from one year to the next, allowing families to accumulate ESA funds for future educational-related expenses.”
As the RAND report notes, “In the 2023–2024 school year, 28 percent of awarded ESA funds—$213 million—had been awarded but not spent.” Investigative reports in 2025 showed that more than $440 million is sitting in ESA voucher accounts, with more than 10,000 accounts amassing at least $10,000 each and nearly 200 people having more than $100,000 each. The RAND report recommends that, in order “to increase predictability of state budgets, states should consider implementing a rule that requires families to spend their ESA allocations within each calendar year rather than roll funds over from one year to the next.”
Loss of Federal Funding: Voucher advocates often claim that federal dollars are left behind in public schools, even when students opt in to the ESA voucher program and leave their neighborhood school. Yet the RAND report notes this is not the case: “States might also forgo federal education dollars allocated through Title I and IDEA when implementing an ESA program. The federal government calculates funding for states to support education through such programs as Title I and IDEA based on characteristics of students enrolled in public schools. Students who are not enrolled in public school—either those already privately educated or those who choose to leave the public school system and use ESA funds—will therefore not factor into federal funding calculations.”
This means ESA voucher expansion could also shrink federal resources available for public school students with the most needs.
Marketplace Effects and Vendor Oversight Concerns
Rapid Vendor Expansion: In its report, RAND identifies exponential vendor growth in Arizona after universal voucher expansion, citing that the number of listed vendors increased from 1,339 in 2021 to 6,091 by 2024, more than quadrupling. According to RAND, the estimated number of private schools in Arizona has increased by 14 percent (from 451 to 515) since 2022. There is no publicly available data for home-educated students.
The report warns that “the expansion of providers has increased family options but has not necessarily ensured consistent quality” and recommends states explore partnerships or incentive structures to support high-quality providers, especially in rural or underserved areas where supply remains thin.
Lack of Vendor Oversight: ESA voucher expansion has dramatically changed the private education marketplace, enabling a wide spectrum of “vendors” to receive state-funded voucher dollars with little accountability or transparency. In Arizona, vendors like unaccredited private schools and microschools can operate in unregulated strip malls, living rooms, garages, and churches. Tutors can sign up as vendors through the Arizona Department of Education to receive ESA voucher funding by submitting a copy of their high school diploma; previously, regulations required a related degree or credential, but this requirement was stripped from the ESA Parent Handbook in 2023.
Lack of Safety or Quality Assurance: In Arizona, the state is now subsidizing many vendors (private schools, microschools, tutors, and home education systems), yet none of these vendors undergo any safety inspections. None need to attest that their sites are safe for children, nor are they required to meet food safety requirements, fire code, or even to secure weapons, pools, or power tools.
In Arizona, unlike many other states, private schools do not need to be accredited, post curriculum publicly, or administer standardized tests. As the report notes, “ESA participants do not face state testing requirements or standardized quality metrics.” Without accountability systems, the state cannot determine whether ESA voucher investments improve student learning. In their final recommendations, the report makes it clear that “accountability is critical to the success of any educational program. Documentation of program targets and associated outcomes allows all stakeholders—from parents to educational leaders, policymakers, and researchers—to identify areas of strength and opportunities for improvement.”
Tuition Inflation: In Arizona, reporters have documented tuition hikes post-universal expansion that price out low-income families and keep private schools out of reach. According to RAND’s research, “Private elementary school and high school tuition rates have grown 12 percent and 5 percent respectively.” RAND attributes this in part to ESA voucher-driven demand, citing similar findings in other states. However, RAND warns “existing providers [may] raise prices to capture additional funding—without facing immediate competitive pressure to improve quality.” In other words, existing private school families may be paying more without receiving better education, while new families cannot cover the “voucher gap” left in tuition after an ESA voucher is applied.
SOSAZ Network Recommendations for Policymakers
Arizona’s universal ESA voucher program represents the most sweeping and least accountable school voucher program in the nation. The data from RAND’s case study shows a program that:
- Shifts benefits away from high-need students
- Increases state education spending dramatically, with no insight into the return on investment or the academic achievements of students
- Subsidizes private and homeschooling families who already opted out of public schools
- Leads to private school tuition inflation
- Expands a loosely regulated vendor marketplace
- Reduces transparency and accountability for taxpayer funds
- Creates long-term budget liabilities that threaten funding for public education and all other state priorities
Save Our Schools Arizona Network concurs: robust transparency, accountability, targeted eligibility, and fiscal controls are essential to ensure that public dollars strengthen — not destabilize — Arizona’s education system.
Arizona now has clear evidence of the fiscal, equity, and accountability impacts of universal ESA vouchers. Policymakers must act decisively to protect public education and ensure responsible stewardship of taxpayer funds. Here are our recommendations:
1. Target Eligibility and Repeal Rollover Accounts
- Reinstate a targeted ESA voucher model focused on students with the greatest needs, or institute an income cap to ensure students with the most need are included
- Return ESA vouchers to their original mission—serving students with disabilities and specialized needs—to refocus state spending where it is most effective
- Institute annual use-it-or-lose-it rules, similar to Flexible Spending Accounts, as large rollover pools strain state budgets and decrease predictability
2. Strengthen Private School and Vendor Oversight and Accountability
- Monitor and regulate tuition inflation, adding guardrails to prevent schools from raising tuition purely to capture ESA voucher dollars
- Institute tiered vendor approval systems and regular audits to ensure accountability and student safety
- Ensure public-facing quality indicators and evidence-based performance metrics
- Implement robust safety, academic, and financial standards to prevent fraud, misuse, and low-value services
3. Improve Transparency and Data Reporting
- Provide public reports of ESA voucher spending broken down by category
- Expand reporting of vendor types and performance
- Provide consistent data on student outcomes in the ESA voucher program
4. Safeguard Public School Funding
- Assess the impact of ESA vouchers on local public school enrollment and budgets
- Assess the impact of ESA vouchers on Title I and IDEA allocations
- Ensure that public schools retain resources needed to educate the vast majority of Arizona students
5. Prioritize Educational Quality and Student Outcomes
- Institute assessments or quality metrics for ESA voucher recipients to determine whether ESA spending improves learning
- Develop comparable student outcome measures, longitudinal data systems, and independent program evaluations
- Ensure that taxpayer funds advance educational achievement—not simply subsidize private choices
- Empowerment Scholarship Accounts. Arizona Department of Education. (2025, December 15).
- Roy, S., Gable, A., & Jung Kim, M. (2025, November 13). Case Study of Arizona’s K–12 Education Savings Account Program. RAND Corporation.
- Empowerment Scholarship Accounts. Arizona Department of Education. (2025, December 15).
- Arizona Revised Statutes, Title 15, Section15-2402, Subsection C
- K-12 and ESA Formula Funding Overview. Joint Legislative Budget Committee. (2023, November 14).
- ESA Fiscal Year 2025 Quarter 3 Report. Arizona Department of Education. (2025, May 30).
- Dana, J. (2024, February 5). Impact of ESAs to state budget depends on where they are obtained. 12News.
- ESA Quarterly Reports. Arizona Department of Education. (2025, Dec 15).
- Blasius, M., & Archer, G. (2023, October 3). Arizona Empowerment Scholarships: What $304 Million Bought. ABC15.
- Wells, D. (2024, December 3). ESA Voucher Fraud Case Including Fake Children Raises Integrity Concerns About Universal Vouchers. Grand Canyon Institute.
- Harris, C. (2025, August 18). I-team: ESA Parents bought Diamond Rings, lingerie, and Kenmore Appliances with Education tax dollars. 12News.
- Arizona Revised Statutes, Title 15, Section15-2402, Subsection H, 2024
- Harris, C. (2025, July 8). Arizona ESA accounts hold $440m in unspent funds. 12News.
- Morton, N. (2023, November 27). Arizona gave families public money for private schools. Then private schools raised tuition. The Hechinger Report.