Douglas: Legislature shortchanges school voucher program

Outgoing Superintendent of Public Instruction Diane Douglas accused Arizona lawmakers of routinely underfunding the Department of Education’s effort to oversee the state’s voucher program, leaving millions of dollars earmarked for administrative costs untouched.

State law dictates how much money is set aside to cover the costs of administering Arizona’s Empowerment Scholarship Accounts, a taxpayer funded program that pays for private and religious school tuition, tutoring and home schooling for certain students.

But it’s the Legislature that has the authority over whether that money is actually spent.

In all but two years since the voucher program was launched in 2011, lawmakers have allowed the Department of Education to spend less than half of what’s prescribed by law, according to a memo sent by Douglas to legislative leaders and Gov. Doug Ducey.

Douglas, a Republican who lost her bid for re-election, has presided over ESAs amid news reports of rampant mismanagement and misuse of the now $75 million-plus voucher program.

In one of her final acts as superintendent, Douglas called out the Republican-controlled Legislature for handcuffing her staff’s ability to properly manage the voucher program and hold parents accountable for how scholarships are spent — efforts that could stamp out the very fraud that’s been reported.

“As the duly elected official responsible for the oversight of this program, I refuse to let this disparity be ignored as the efforts of my ESA staff to improve both service to parents and oversight of taxpayer dollars are scrutinized,” Douglas wrote to top Republican lawmakers on December 13.

Sen. Kate Brophy McGee, R-Phoenix, said she’s perplexed that the department consistently gets shortchanged amid budget negotiations. Year after year, education officials have told lawmakers they’re understaffed, she said.

“Given what we’ve heard, it has concerned me greatly that there wasn’t more oversight, particularly when you turn around and criticize the department for a lack of oversight,” Brophy McGee said. “I’ve always understood it to be a staffing shortage issue. We already know there are problems with the database. So it has always seemed to me that is something we must shore up so that this relatively new program can show that it’s accountable to the taxpayers who fund it.”

The issue predates Douglas’ time in office. Even under John Huppenthal, a Republican who served as superintendent when lawmakers approved ESAs, the Legislature held back funding from the department.

Meanwhile, dollars earmarked for administrative costs go unspent, and are left to accumulate.

“I would just hate to think in any way, shape or form that it was politics or special interest groups,” Douglas told Arizona Capitol Times on December 20. “But it’s almost hard to not think they’re not playing a role. And to what end?”

Douglas suspects the endgame is the privatization of ESA administration, removing the program from the department’s oversight entirely. Associate Superintendent Charles Tack, who oversees the ESA program at the department, added that ESA advocates don’t trust the department to manage the program according to their vision.

Those advocates had the ear of like-minded legislators, he said.

“They were not convinced that giving our department more money would be beneficial to the program,” he said. “To me, that’s extraordinarily counter-intuitive.”

Even when legislators voted to pass a bill expanding the program in 2017 – an effort that ultimately died with the failure of Proposition 305 in November – Douglas alleges they have been unwilling to ensure the Department of Education can keep up with growth.

State law dictates that 5 percent of the total funding for empowerment scholarship accounts are earmarked for the Department of Education and the state Treasurer’s Office to cover the costs of administering the program.

Of that, 1 percent is earmarked for the treasury, while the remaining 4 percent is dedicated for the Department of Education.

But state law also states those dollars are subject to legislative appropriation. And since the inception of empowerment scholarship accounts in 2011, the Legislature has authorized only a fraction of what’s earmarked for administrative costs.

For example, roughly $3.8 million is earmarked for ESA administrative costs in fiscal year 2019. That’s 5 percent of the estimated $75.9 million in funding for ESAs.

State law requires 1 percent of those funds to be transferred to the Treasurer’s Office. The remaining 4 percent, roughly $3 million, is set aside for the Department of Education.

The budget approved by lawmakers in May only authorized the Education Department to spend $1.25 million on administrative costs.

Even the Treasurer’s Office got shortchanged. Instead of the $760,000 prescribed by state law, the Legislature only authorized $304,400 for the treasury to spend on administering ESAs.

Douglas previously called attention to the lack of administrative funds made available to her department after an auditor general’s report excoriated her office for its handling of the ESA program.

Her latest memo to top legislative Republicans and Ducey blasted the audit for failing to mention that her office is woefully underfunded. If the audit is meant to help lawmakers understand how administration of ESAs can be improved, “it is, in my opinion, completely injudicious to minimize the fact that the department has not been given spending authority for anywhere near the full 4 percent of administrative funding,” she wrote on December 13.

The Legislature has continued to provide inadequate funding even as enrollment in the ESA program grew year over year, she said.

“I have struggled with this the whole time because clearly it is, for lack of a better term, a pet project of the Republican side of the Legislature, for school choice fans,” Douglas told the Capitol Times. “You would think, as a pet project, they would want it to be absolutely as successful as possible, yet to underfund the administration of it, undermines it.”

In January, the ESA program will no longer be Douglas’ responsibility. She lost her re-election bid in the August primary to Republican challenger Frank Riggs, and Riggs went on to lose to the incoming superintendent, Democrat Kathy Hoffman.