Here’s what you should know about ESAs

Arizona is again grappling with the issue of Empowerment Scholarship Accounts and whether voters should decide for themselves if taxpayer money can fund private and home schools for all K-12 students.

Empowerment Scholarship Accounts, or ESAs, refer to public monies used by families to pay for private education or homeschooling for their children. This year, the Legislature passed House Bill 2853, which expanded ESA eligibility to all Arizona students in grades K-12. Gov. Doug Ducey signed the bill into law on July 7.

Now, opponents of the law are attempting to get a referendum on the law that would let voters choose if they want ESA expansion. Following is a comprehensive look at the facts surrounding ESAs.

Why do supporters want ESA expansion?

Supporters of ESA expansion say they allow school choice for families who want to take their kids out of public schools and send them to a different school that better suits their children’s needs. Supporters also say that the new law will increase the quality of all schools through competition because in an environment where parents have more options, schools will have to make themselves more attractive to maintain enrollment. They argue that Arizona parents are taxpayers and by applying for ESAs, they are regaining control of a portion of their own tax dollars.

A recent poll by Morning Consult found that 65% of Arizona adults strongly support or somewhat support ESAs, and when it comes to school parents that number jumps to 75%. Another ESA expansion proposition was voted down four years ago by voters, but supporters say this new program is more popular and inclusive. Around 12,000 eligible students received ESAs before the new law passed, which is about 1% of Arizona K-12 students.

“It would allow us to add even more things to [my children’s] curriculum, create an even better education for them,” Arizona parent Grant Botma said of the ESAs. He is homeschooling his children and intends to apply for an ESA. “The truth is finances are a part of educating children.”

Why does the opposition want to block ESA expansion?

Opponents of ESA expansion say they believe that ESAs will hurt public schools by diverting students and funds out of the public system. They say that public money should be spent on public institutions governed by elected officials in the Legislature and school boards. Private schools are not subject to the rules of school boards or the Legislature and do not need to publicly disclose the way that they spend their money. Arizona students struggle with low test scores, and schools have difficulty retaining skilled educators.

Opponents worry that ESA expansion will further harm public schools. They say that private schools are not required to accept all students and can hand-pick the best students. This means, according to opposition, that students who require extra support will be rejected from private schools and remain in public schools while an elite student population moves away from public schools into private schools. Finally, opposition says that low-income families won’t receive enough through ESAs to switch their kids from public schools to expensive private schools. Instead, wealthier families who can already afford private school tuition will get a discount through taxpayer money.

In terms of taxpayer money being returned to families, Save Our Schools Director Beth Lewis said that she thinks the average ESA allotment is giving far more back to parents than it is spending on education through taxes.

Who is the opposition?

Democrats in the Legislature voted against the ESA bill, and it is broadly opposed by many liberals and school organizations. The bill was opposed by the Arizona Department of Education, the Arizona Education Association, Children’s Action Alliance, Save Our Schools Arizona, the Arizona School Boards Association and more. Currently, Save Our Schools is working to gather enough signatures to refer the law to voters. The group has until September 23 to collect 118,823 valid signatures of registered voters. ESA expansion went to the ballot in 2018, but was rejected handily by voters. Save Our Schools pushed that referendum and Lewis said she believes the group will again collect more than enough signatures to put it on the ballot.

Who are the proponents?

This year’s ESA bill was sponsored by Rep. Ben Toma, R-Peoria, and supported by all the House and Senate Republicans. Private schools, Republicans and right-leaning groups generally support the expansion of ESAs. The ESA expansion bill was supported by the conservative Arizona Free Enterprise Club, the Barry Goldwater Institute for Public Policy Research and the Center for Arizona Policy. If education groups get enough signatures to refer the ESA law to the ballot, they will likely face a challenge from opposing groups.

What is the difference between an ESA and a voucher?

The two terms are often used interchangeably, although ESA supporters are more likely to use the term ESAs and opponents are more likely to use the term vouchers. The Arizona Supreme Court ruled against vouchers in the 2009 Cain v. Horne decision, ruling it unconstitutional to use taxpayer money on religious institutions. In that case, a voucher referred to sending money from the state general fund into a private school directly. ESA proponents then began referring to the idea as a “scholarship” account in which the money moves from the general fund into another group before going into a private school. The extra step between the general fund and the private school keeps ESAs legal.

Who can receive ESAs?

Every student in Arizona between kindergarten and 12^th grade is eligible for ESAs under the newest law. 

Are the ESAs per household or per student?

Each student gets their own ESA. So, if a family has two children eligible for ESAs and applies for both, it will receive funding for each.

Is there any government oversight on ESAs? 

There is no government oversight on private schools and homeschooling, but the Arizona Department of Education only allows ESA funds to go to certain items such as tuition or school uniforms. A family could not apply for an ESA, receive a debit card loaded with ESA money and use it to buy something like bolo ties – unless the ties somehow served an important educational purpose.

How many families are asking for ESAs? How many of their children were in public schools?

According to the Arizona Department of Education; 6,773 ESA applications have been filed since August 29. Of those, 6,494 applications were filed under the new universal eligibility law. Around 75% of the new applicants have no record of enrollment in public schools. This means that students who were already in private schools and home schools are using ESAs. It also accounts for kindergartners who were too young to qualify for ESAs in the past school year.

How much will ESAs cost?

No one knows how much universal ESAs will cost. It depends on how many students apply and how much they are awarded. The Joint Legislative Budget Committee estimated that the new ESA program will become more popular over time and cost the state $33.4 million in 2023, $64.5 million in 2024 and $125.4 million in 2025. “We assume that participation among newly eligible current public-school students would be 4.2%, or 36,078 students,” they stated in their analysis. The estimates are “highly speculative” however, as the JLBC can only guess how many students will take advantage of the program. Save Our Schools predicts that the new law will cost around $1 billion.

There is no cap on how much a student can be awarded through ESAs, but the Arizona Department of Education Communications Director Richie Taylor said that the most any one student has been awarded is $39,700. An average ESA is between $6,000 and $7,000. The ESA expansion law also allocates $2.2 million to the Arizona Department of Education to administer the ESA program.

How much does Arizona spend per pupil?

According to data released by the Arizona Auditor General’s Office, in 2021, schools spent an average of $9,976 per pupil. According to the most recent data from the United States Census Bureau, Arizona was one of the lowest in per pupil spending ranked 48 out of all 50 states. US Census data states that in 2020, Arizona spent around $8,366 per pupil compared to the national average of $13,494. Arizona spends about half of its entire yearly budget on education.

Do ESAs “defund” public schools?

Public schools are funded with money from the general fund and some of that money will be diverted to ESAs. The amount of funding Arizona public schools and charter schools receive for education is calculated in large part by the number of students in public schools. Presuming that ESAs result in lower rates of enrollment in public schools and charter schools, Arizona will see a decrease in “Basic State Aid” payments to public schools and charter schools.

Can the Arizona Department of Education reject a family’s ESA application?

All K-12 Arizona students are eligible for ESAs and cannot be denied. However, an application can be rejected if it is not properly completed.

Can private schools reject students?

Yes. Private schools cannot discriminate on the basis of race, but they can turn away students for a variety of reasons including gender and religion.

Do I have to use an ESA on a private school?

No, it can also go to homeschooling. ESAs cannot be used on public or charter schools.

Where does the ESA money come from? How is it spent?

ESA money comes from the state general fund, which devotes about half of its dollars to education. When a family applies for an ESA and signs a contract, its ESA monies go into an account in the third-party company ClassWallet. Then the family can spend the ESA money on a variety of different things for their child’s education. Families can pay it directly to a private school their children attend as part of a tuition payment, or in some cases use it to buy required school materials for a private school class.

Do families have to apply for an ESA every year? What if the students go back to public school? 

Families apply for ESAs once through the Department of Education but must sign a contract every year to keep receiving the money. If the children go back to public school and the family closes its account, any money remaining in the account is reverted back to the state general fund. If the family sends their child back to public school without closing out of the program; any remaining funds would remain in their ESA account “for up to three years in case they decided to return,” Taylor said.

What if a student ages out with money leftover in their account?

If a student with an ESA graduates from the 12^th grade and still has money in their account, they can use the leftover funds to pay for college.

Is an ESA enough for a family to send their children to private school if they couldn’t afford it before?

It depends on the family. The cost of private school varies greatly in Arizona, and it’s generally more expensive for middle school, high school and boarding school. Sites Private School Review and EducationData.org both put the average cost of private elementary school in Arizona under $10,000 and the average cost for private high school between $15,000 and $20,000.  Some private school tuitions cost less than the average ESA. Saints Peter and Paul Catholic School in Tucson charges $6,030 per student per year. However, Sedona Sky Academy in Sedona charges $83,000 in tuition.