ADE says work being done on ESA program as ClassWallet continues as vendor

With ClassWallet in the process of continuing its contract with the state as the Empowerment Scholarship Account financial vendor, the Arizona Department of Education confirmed work on long-term changes to the program, most notably the revival of debit cards using automation and artificial intelligence.  

John Ward, ESA director, said the department had plans to work with the company to develop functionality to automate purchase reviews and approvals, a change that would allow the program to continue offering debit cards to any family who wanted one.  

But Ward noted changes are in very nascent stages, and they have no set timeline.  

Ward said the “ESA program is committed to providing ESA families with debit cards in the future,” in a written statement.   

He said the department and ClassWallet are exploring different options to automate “purchase approval and review processes across the entire CW platform, including CW’s Marketplace, direct pay (invoices to schools and service providers), and debit card purchases.” All of which will “very likely involve AI.”  

Arizona Superintendent of Public Instruction Tom Horne and former ESA director Christine Accurso announced the ESA department would stop issuing debit cards in February, citing a backlog of unapproved purchases from the past administration as well as the “administrative burden” attached to reviewing each purchase.  

There were about 112,000 outstanding debit card transactions when Horne and Accurso first took office, according to the department, compared to 343,808 outstanding currently. 

Since announcing the change, the department only issued a new debit card to two account holders at the request of Accurso.  

The change drew criticism from ESA parents and members of the State Board of Education given the debit card’s longstanding availability for parents in the program.  

At a State Board of Education meeting in February, board member Jenny Clark said, “It doesn’t seem like a government program should be determining that some families get access…but then new families, including new special needs families…don’t have access as prior families had.” 

Word of debit cards’ eventual return to ESA first surfaced in a meeting of the ESA Parent Advisory Committee on Aug. 10. Unofficial meeting notes circulated in ESA Facebook groups shortly afterwards.  

According to the meeting notes, Ward said debit cards were on the department’s radar but noted “turning the debit cards back on for everyone is contingent upon other automation working.”  

ClassWallet has yet to sign the contract with the state, according to a spokesperson for the Treasurer’s Office. And Henry Feintuch, spokesperson for ClassWallet, said because the contract is still in the works, the company is still not at liberty to speak about the agreement or what has been included or excluded.  

But in the proposal submitted by ClassWallet to the Treasurer’s Office, they include a rate for system development set at $185 an hour.  

ClassWallet also altered its financial agreement with the state and proposed to lower its transaction fee to the state from 2.5% to 2%, citing the growth of the program.  

The department and ClassWallet are also looking at nailing down a more “specific” allowable and disallowed list of purchases, according to Ward.  

“We understand that ESA families want as much clarity as possible about what they can and cannot buy, and we want to assist in that way,” Ward said.  

The PAC meeting notes cite a focus on crafting the lists “in such a way that it doesn’t increase our vulnerabilities with those that disagree with school choice.” 

The PAC meeting notes added that official communication to parents on upcoming changes is somewhere on the horizon. But it hasn’t materialized yet.  

Kathy Boltz, an ESA parent and member of ESA group Arizona Coalition of Parents for Equal Student Access, raised concerns about the fact that significant changes were not announced in a transparent manner. 

Boltz noted the PAC meeting was not announced nor open to the public, despite the department previously allowing parents to listen in during much of the past administration.  

Ward recently sent out an introduction email and previewed some changes but did not get into specific promises pertaining to the debit card.  

“We are working with ClassWallet, our financial solutions vendor, to automate the purchasing and purchase review process to the greatest extent possible to keep pace with the very high volume of purchases made by ESA families,” Ward wrote to ESA families. 

Stacey Brown, board member and co-founder of Education for All AZ, an ESA parent advocate group, said changes in administration and therefore changes in the program would take time and referenced the recent departure of Accurso.  

“Ward, I’m sure he’s going to want to adjust the things that Christine Accurso was doing. And that all takes time, right? You can’t just pull the switch overnight,” Brown said. “I think that a lot of families are very patient, with the understanding that things take time.”  

She said the main thing for parents was communication, echoing Boltz’s concerns.  

“Parents just want to know what’s going on,” Brown said.