Key Points: 

• ESA enrollment tops 100,000, leaving gross cost to state over $1 billion

• Growth fuels debate over public schools’ funding, enrollment levels

• Analysts dispute oversight, future growth, budget impacts

Enrollment in the Empowerment Scholarship Account program has officially surpassed 100,000 students, with the milestone reigniting conversations about program costs and oversight. 

Since allowing any student to enroll at the end of 2022, the program has grown from around 12,000 students to 100,474 as of Jan. 26, and has increased gross costs from $189 million to around $1 billion. 

Proponents of school choice herald continued growth as a signal of the program’s success. 

Matt Beienburg, director of education policy at the Goldwater Institute, said, “That’s a milestone, that’s a testament to the demand and demand for the program, the value of the program, I think that’s something that reflects the interest amongst parents and students for the opportunities the program provides.”

Meanwhile, those opposed claim a greater student count means continued funding and enrollment trouble in district and charter schools, while public school advocates cite increased school closures and inadequate funding for public education. 

“This isn’t the only factor, but it’s the straw that broke the camel’s back,” Tyler Kowch, communications director for Save Our Schools Arizona, said. 

In a departure from past years, program growth has now come in closer alignment with projections from the Joint Legislative Budget Committee. 

JLBC estimated the program would reach 101,602 in FY2026 and 113,602 in FY2027. 

Yet with more students comes rising costs, with the Department of Education needing $59.8 million above its original appropriation in FY2026 to cover an increase in ESA awards and an estimated $154.2 million more needed to cover growth in FY2027. 

Dave Wells, research director of the Grand Canyon Institute, a nonpartisan public policy research center, said ESA enrollment had grown faster than he and others had initially expected, but he still expected it to taper off. 

He noted, too, that enrollment increases are not exclusive to universal eligibility, pointing out that the program’s disability population continues to grow. 

According to the latest quarterly report, students with disabilities accounted for about 19% of the program, up from 15% at the start of 2024. Growth across the board in the ESA program naturally prompts a discussion of enrollment flux in public schools. 

As for migration between the school systems in the state, JLBC found ESA recipients increased by 16,000 in the past year while public school enrollment has declined by 25,000, with the average cost per child increasing by about 3%. 

About two dozen schools have closed in the last year, raising questions about the ESA program’s role in declining enrollment. 

Kowch claims the increased enrollment in the ESA program correlates with an uptick in school closures. And though he acknowledges it’s not the sole reason, he notes that it worsens an already financially strapped school system. 

“Arizona public schools were defunded to the bone following the 2008 financial crisis, and they have been struggling for years. And the combination of Covid funding going away, continual lack of investment from the Arizona state Legislature. And then, this,” Kowch said. “Tiny changes in enrollment have massive impacts.” 

Beidenburg claims enrollment drops are primarily driven by factors outside the ESA program, pointing to declines in birth rates, building space outpacing enrollment and competition among public schools, as students either enroll in another district or opt for a charter school. 

“All of those are vastly larger impacts than the number of kids who’ve left the district for an ESA,” Beienburg said. 

But, Beienburg said it was hard to say exactly where enrollment trends will go from here. 

“I think you will continue to see more students switching from public schools to ESA,” Beienburg said. “You’ll continue to see as families are having kids just entering the system, or perhaps even moving to Arizona from out of state, I think you are going to still see growth. Where that lands exactly is yet to be seen.” 

On the financial side, annual ESA awards range from around $4,700 to around $47,500. The vast majority of students, about 61,918, receive $7,000 to $7,999. About 9,768 students receive more than $30,000. 

As far as cost to the state, Wells urged a focus on the net cost rather than the gross cost, which he estimates at about $350 million to $400 million. 

When a student previously enrolled in a public or charter school takes an ESA, they are funded at about 90% of the charter total, meaning a student switching from a public or charter does not levy a totally new cost on the state, while those coming directly from a private school or enrolling as a homeschooling student represents a new cost to the state. 

A report from the RAND Corporation estimated that about 71% of the students in the program came directly from private schools or homeschool settings, though the number had decreased from 79%. 

The Department of Education reported that about 56.5% of the universally eligible students who enrolled in grades 1-12 since the prior fiscal year came directly from a public school. 

Beienburg acknowledged each student from a private or homeschool setting previously unfunded by public dollars ratchets the cost up, but he noted students switching from public or charter schools do not create a substantive change in education funding, given the 90% formula. 

“With awards, and hundreds of millions of dollars, it sounds scary,” Beienburg said. “But in terms of budgetary impact, it ends up essentially being a wash.” 

Still, the program remains in the crosshairs amid a tight budget year. Gov. Katie Hobbs, with support from Democrats, again called for limiting the program to families earning less than $250,000 and continued to push for additional guardrails to prevent misspending of taxpayer dollars. 

Superintendent of Public Instruction Tom Horne and ESA Director John Ward, joined by Republican lawmakers, continue to push for additional staffing to administer the program. 

Ward said the department has enough funding to cover 42 staff members, but it currently has only 35 employees. To truly run an efficient program, Ward estimated a need for three times more employees. 

“We operate on about four-tenths of 1% of the dollars that we distribute in this program. I don’t believe there’s likely any other public program in this state that operates on that slim of a margin,” Ward said.