Legislation to tighten fraud controls for a rapidly expanding voucher- style program that could serve up to 200,000 more students next year is being drafted by the state Department of Education and Goldwater Institute.
Authorities say some parents of the students in the empowerment scholarship system have accidentally misspent money intended for school books, private-school tuition and other items. The Arizona Attorney General’s Office is investigating two cases of alleged fraud, although it won’t discuss the details.
Chris Kotterman, the education department’s deputy director of policy development and government relations, said incidents of misspending in the two-year-old program typically resulted from misunderstandings and were corrected with phone calls to parents.
Jonathan Butcher, Goldwater Institute’s education director, said the state is going to lose that simple solution next year. It’s anticipated that calling parents will no longer be practical when the program expands to include large numbers of students from failing schools and children of military families. Both classes of students were added in legislation signed by the governor this year.
The program initially included only disabled students. There were only 400 students enrolled this year and 170 the year before. An estimated
200,000 more students will be eligible next year, although it is not certain how many will take part.
Butcher said the state has to become conscious of fraud when a program that uses public funding grows and becomes more complex.
Under the program, parents of eligible students are allowed to remove their children from public schools and receive 90 percent of the funding the school would have received to use for private school tuition, tutors, textbooks or other educational expenses.
Kotterman said the law is very specific about some spending, but the department is constantly seeing expenditures that require a determination to be made if they are allowable.
He said the standard is whether a public school would pay for the expense. Common examples of misspending include parents buying gas for transportation to school and paying for school uniforms.
“If you’re a public school parent, you can’t get reimbursed for gas to take your kids to school,” he said.
Parents are issued a debit card from Bank of America that is loaded quarterly. The department simply makes an adjustment on the account when it discovers spending that isn’t allowed, Kotterman said.
The Goldwater Institute has drafted legislation that would call for the department to adopt policies for random, quarterly and yearly reviews of accounts, establishing a fraud reporting service online and a fraud hotline. The proposed legislation also calls for establishing a surety bond or insurance for account holders.
Amy Rezzonico, a spokeswoman for the Attorney General’s Office, said the civil and criminal divisions are conducting separate fraud investigations related to the program. Rezzonico said she couldn’t comment further on the investigations.
The Attorney General’s Office and the Goldwater Institute are also defending a lawsuit in which groups representing teachers and public school districts challenged the constitutionality of the empowerment accounts, alleging that the program violates constitutional bans on state aid for private and religious schools.
A Maricopa County Superior Court judge found the program constitutional and his decision was appealed to Arizona Court of Appeals.
Oral arguments in the case have not been scheduled.