Arizona grew the number of Education Savings Plan (or “AZ529”) accounts to nearly 47,600 over the last four years.
Arizona Treasurer Kimberly Yee reported that assets of those accounts increased nearly 50 percent to $2.4 billion within the last four years.
AZ529 accounts allow parents, grandparents, or future students to take a tax-advantaged approach to saving for their educational expenses. Those opening the accounts also don’t need to be related to the beneficiary, and they may accept gifts to these accounts from others.
The opening cost for an AZ529 account starts with investments as low as $15 monthly and no application fee, with plan providers going up to $25 and $150.
AZ529 savings may be used at most accredited public or private universities, colleges, community colleges, technical and vocational schools nationwide, or apprenticeship programs, and even certain foreign institutions.
Qualified educational expenses include tuition and fees; books, supplies, and equipment; public, private, or religious K-12 school tuition for up to $10,000 per year; and up to $10,000 in student loan repayments.
Under these accounts, distributions are exempt from Arizona income tax and federal income tax. AZ529 received Morningstar’s 2023 Silver Rating.
Not only are the distributions tax-exempt, but contributions are tax deductible. Arizona allows AZ529 contributors to receive deductions of up to $4,000 per beneficiary for married tax filers who file a joint return and $2,000 per beneficiary for individual tax filers.
AZ529 plans must be funded by December 31 of this year to be eligible for deductions on 2024 taxes.
Arizona offers two financial institutions for AZ529 plans: Fidelity Investments and Goldman Sachs 529 Plan. The former allows for personal account opening, while the latter allows for personal or financial advisors to open accounts. Both have contribution limits of $590,000.
AZ529 also offers an annual essay writing contest, with hundreds of dollars in rewards offered. This past year, 20 students won over $500 toward their AZ529 accounts out of the over 600 who participated.
This year, the state began allowing certain “leftover” AZ529 funds to be transferred to a Roth IRA free of any tax, penalty, or applicable income limits for the first time. Qualifying AZ529 accounts have been maintained for a minimum of 15 years under the same owner and same designated beneficiary, and the amount transferred must also have been contributed at least five years prior to the transfer and the aggregate lifetime limit for rolling over is $35,000.
Or, account owners have the option to change the name of the beneficiary to another. In the event that the beneficiary receives a scholarship, becomes disabled, or dies, the account owner may withdraw the assets in the account without incurring the 10 percent federal tax penalty normally issued for non-qualified withdrawals.
Congress created 529 plans in 1996, officially known as “qualified tuition programs.” AZ529 plans are the state of Arizona’s version of these programs.
Federal financial aid programs may take up to about six percent of the AZ529 account balance into consideration as a parental asset when determining eligibility for need-based aid.
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America is losing faith in its system of free public education. Test scores are down. Violence in schools is up. There’s a growing perception that things are out of control.
What’s odd about it all is how no one, seemingly, is interested in exploring why. State legislators don’t want to do it. Local school boards have other things on their minds. And the press is too busy covering real problems, like Donald Trump’s refusal to return classified documents to the National Archives, to spend any time exploring the reason kids are still being allowed to graduate from public schools without anything close to the mastery they need to get ahead in life.
Occam’s razor, named for its progenitor, 14th-century English philosopher and theologian William of Ockham, suggests the simplest answer is most likely the correct one. This would mean, one can infer, that the plight of our children is the fault of the teachers and administrators who run the schools.
Before continuing it is important to reflect on how teachers, especially, are like Members of Congress. Most voters believe, and have for decades, that while Congress as an institution is corrupt, moribund, and beholden to special interests, their representative is a fine, upstanding individual who is not part of the problem. That is also, the evidence suggests, how parents feel generally about the teachers whose responsibility it is to educate their children.
They too, it is reasonable to suggest, may fall victim to bureaucrats who, in telling them what to teach and how to teach it, end up perverting the process of education until our children’s minds are filled with mush.
Then again, perhaps not. It has been reported – but not as widely as it deserved – that some weeks back the Colorado Education Association, which claims to be the voice of 39,000 public educators in the Centennial State, adopted a resolution condemning capitalism. To wit:
The CEA believes that capitalism inherently exploits children, public schools, land, labor, and resources. Capitalism is in opposition to fully addressing systemic racism (the school-to-prison pipeline), climate change, patriarchy (gender and LGBTQ disparities), education inequality, and income inequality.
It is as alarming as it is illuminating. If most teachers in Colorado or indeed throughout the nation believe this, it becomes quite clear why the education system is failing our children. Those who teach are unable, unwilling, or unprepared to make our children see the world they are being prepared to enter as responsible adults.
Helpfully, and thanks of all things to the unnecessary pandemic-era lockdown of the nation’s schools undertaken at the apparent insistence of teachers’ unions and professional associations, parents have had enough.
There is no way to replace the learning and socialization lost to school closure. Leaders in some states like North Carolina, Oklahoma, Florida, and Arkansas are heeding the cries for help coming from parents by expanding education savings accounts and reforming the system so that education dollars follow the students rather than fund the systems.
To do this, they are showing great courage. They have taken on “Big Education” and in many places are defeating it by giving parents a role in deciding which school their child will attend.
As a practical matter, that means more and more children will be able to attend schools where Marxist doctrine is not presented as scientific fact, where a greater emphasis is placed on the “Three R’s” than the various ways to avoid pregnancy, and no one is going to be fighting over who gets to use what locker-room to shower and change after an athletic event.
Restructuring public education using free market principles like the supremacy of individual choice will break up the “Big Education” monopoly that is wrecking our children’s futures. Finally, after many years, there’s light at the end of the tunnel.
Peter Roff is a contributor to The Daily Caller News Foundation. A former UPI senior political writer and U.S. News and World Report columnist, he is a senior fellow at several public policy organizations including the Trans-Atlantic Leadership Network. Contact him at RoffColumns@gmail.com. Follow him on Twitter and TruthSocial @TheRoffDraft.
The state budget sits at $2.5 billion, an unanticipated increase, despite a leap in school choice enrollments.
Nearly 40,000 students have joined Arizona’s universal school choice program; 7,000 have joined this year alone. Prior to the Education Savings Account (ESA) Program extension to all students, there were just over 12,100 students enrolled. At present, there are over 51,800.
Yet, this addition of tens of thousands of students didn’t hurt the state budget; the surplus has only increased as ESA Program enrollment increased. The surplus hit $2.5 billion this month, where last June it was $1.1 billion.
The ESA Program has also reflected a cost-saving measure for the state. Each student in the ESA Program receives scholarship funds of about $7,000 — about half of what the average public school spends on each student. Based on current program participants, that means that these students originally cost the state $725 million on average while in public schools, whereas they cost just over $362 million within the ESA Program.
Following these latest figures, ADE opened up enrollment for the ESA Program for the 2023-24 school year.
Arizona’s first in the nation ESA program is officially open for the 2023-2024 school year! Every child deserves a quality education no matter their zip code, and ESAs allow parents from any income level to choose what is best for them! #InParentsWeTrusthttps://t.co/mEm56eKYd7
— Arizona Department of Education (@azedschools) April 17, 2023
Gov. Katie Hobbs has rejected the cost-saving argument of the ESA Program. Shortly after taking office, Hobbs proposed rolling back the ESA Program, making the argument that universal school choice would bleed the state of $1.5 billion over the next decade. Yet, the Arizona public school system takes about $15 billion annually, or $150 billion over the next decade.
The Goldwater Institute, a public policy think tank who pointed out this disparity in an analysis defending universal school choice, argued that Hobbs’ arguments of frugality weren’t intellectually honest.
“To argue that taxpayers can afford the latter, but somehow not the former, defies basic common sense,” stated the organization.
We have a constitutional responsibility to fund our public schools. If we continue down the current path, we will not be able to fulfill that responsibility. That's why my budget called for a rollback of the ESA program to ensure Arizona has a sustainable https://t.co/JnVBGtxuvl…
The state legislature also increased public school funding by $600 million for this year. Anti-school choice activists continue to claim that the schools don’t receive adequate funding.
🔥 States across the nation are rejecting ESA voucher scams 👏 AZ's catastrophic rollout of universal ESA vouchers has become a cautionary tale — and in many states, lawmakers on both sides of the aisle are waking up ⏰ #AZVouchersHurt#AZVoucherWatchpic.twitter.com/awhwjIdC21
The Common Sense Institute found that the state saved $500 million annually after about 31,000 students exited the public school system from 2019 and following the COVID-19 pandemic. They also projected an $8 million end-of-year surplus based on enrollment trends.
According to the Joint Legislative Budget Committee (JLBC) report issued last week, base revenue growth is projected at nearly nine percent – a nearly two percent increase from January’s forecast, or $750 million.
JLBC noted that this year’s fiscal growth rate reflected a 64 percent increase in corporate income tax collections, much higher than the 10 percent increase in the federal collections. Additionally, individual income tax refunds increased by 54 percent.
Corinne Murdock is a reporter for AZ Free News. Follow her latest on Twitter, or email tips to corinne@azfreenews.com.
Teachers’ unions appear to have run into a buzz saw. On October 25, American Federation of Teachers (AFT) President Randi Weingarten tweeted enthusiastic support for a Washington Post article titled “Parents claim they have the right to shape their kids’ school curriculum. They don’t.”
By November 6, her message had drastically changed. “Parents have to be involved in their kids’ education. They must have a voice. At the same time, we have to teach kids how to—not what to—think.” Sure, Randi.
In the interval, there had been a reality shock: the Virginia governor’s election, this time with an electorate that had wised up. Parents had been appalled when they remotely observed the overtly racist curriculum their children were being taught and then shocked at the blowback, including being charged with “white supremacy,” when they protested.
Moreover, they now realized the unions were responsible for the damaging school COVID shutdowns. Weingarten herself pressured legislatures and school districts into closures. Unions influenced the Biden CDC into adding new and impossible conditions for reopening. They threatened outright strikes if school districts tried to reopen for the 2020-2021 school year.
Voters were not amused. When Terry McAuliffe vowed, “I don’t think parents should be telling schools what they should teach,” the damage was done. Polls showed challenger Glenn Youngkin gaining 15-17 points among parents in the last weeks of the campaign. Education-oriented voters swung from favoring McAuliffe by 33 points to a nine-point Youngkin advantage.
Weingarten’s response was that the reports had all been a massive misunderstanding, that it was actually the teachers’ unions that had tried to reopen the schools. Her pathetic gaslighting attempts were ignored.
The longtime symbiotic relationship between the teachers’ unions and the Democrats may be fraying. They both earn the other’s loyalty. According to OpenSecrets, 99.72% of the AFT contributions in 2020 went to Democrats. Fully 97% of AFT donations have gone to Democrats since 1990.
In Virginia, McAuliffe bagged $1 million from the unions. AFT ran ads for McAuliffe, and Weingarten personally stumped for him.
Their money isn’t wasted. As governor, McAuliffe had vetoed nine school choice bills. This year, he affirmed on CNN, “I will never allow [school choice] as governor.” Nationwide, Democrats have been able to stymie the movement for universal school choice in spite of growing majorities in favor.
The Democrats are in a sticky situation now. According to RealClearOpinion research, voters’ support for school choice surged from 64% to 74% in just the last year. Another poll showed 78% approve of Education Savings Accounts, the most comprehensive method for funding parental choice directly.
Voters have expressed particular contempt for politicians (and educators) who send their own children to private schools but deny the same privilege to less fortunate children. 62% of voters said they would be less likely to vote for such a hypocrite.
Terry McAuliffe, for one, got the message. The veto king sent his five children to private schools. When asked about it on NBC this year, his verbatim quote was “Chuck, we have a great school system in Virginia. Dorothy and I have raised our five children.” You’ve gotta love it.
Democrats are stuck with a policy that is not only morally and educationally wrong but is a political loser. Advocates for children and parents should seize the opportunity to not only win some elections but to fundamentally reform the structure of education in America into a system that serves students and parents, not bureaucracies.
Teachers’ unions must be publicly held accountable. These organizations which relentlessly pound a “for the children” theme have a wretched record of not promoting their educational interests.
In the 1960s, when the unions first rose to influence, about $3,000 (inflation-adjusted) dollars were spent per student. Today, that number is over $13,000. Yet academic achievement and the ethnic gap have stubbornly failed to improve.
Not all of the spending increase has gone to teacher salaries, and not all of the fault for academic failure is theirs. But as the dominant influence in education policy for the last half-century, unions must bear major responsibility for the dismal outcomes.
Parents’ rights advocates: take heart. This is our time.
2021 marks the ten-year anniversary of education savings accounts (ESAs) in Arizona. The state’s ESA policy, formally known as Empowerment Scholarship Accounts, was established in 2011. As of this year, nearly a quarter of Arizona children are eligible for an ESA. The legislature has consistently fought to increase that rate – especially during this past legislative session.
The push for ESAs began with the Goldwater Institute. Their efforts led to the passage of SB1553, the first ESA policy in Arizona history. In a report, the Goldwater Institute highlighted three major factors that contributed to the ESA program’s success. The increasing demand for ESAs, financial benefits, and continued improvements all reportedly allowed the ESA program to grow.
Not only has the ESA program grown – supplemental resources have grown, too. The Goldwater Institute partnered with EdChoice to produce an interactive map to allow families to navigate their educational options. The map informs parents of state and local eligibility zones, the grade awarded each public school, and private school options. It also offers the location, contact information, grade range, tuition and fees for private schools.
The Goldwater Institute and EdChoice also released an informational packet discussing the track record, controversies, and details of the ESA program.
The ESA program has received significant pushback over the years. Activist groups like Save Our Schools Arizona (SOSA) view the ESA program as a drain on public school funding, which they claim is especially harmful for low-income families and in rural areas that already struggle with low funding.
However, research shows that per-pupil funding has increased by over $1,600 since the ESA program was put in place. This information was collected from reports by the Joint Legislative Budget Committee and the Arizona Department of Education (ADE).
In 2018, voters were presented with the option to expand ESAs as legislated in SB1431 with a ballot initiative, Proposition 305. It was the biggest move to expand the ESA program: if passed, all students would be eligible for ESAs. Over 64 percent of Arizonans voted against it.
Legislators attempted to pass SB1452 this year, which would’ve opened up ESAs to low-income families – but it stalled in the House after Senate passage. The House later shot down a budget provision attempting to revive the bill. Three Republican Representatives joined their Democratic colleagues to kill it: Michelle Udall (R-Mesa), Joel John (R-Buckeye), and Joanne Osborne (R-Goodyear).
This past year, the legislature passed laws enhancing the ESA program.
These laws reduced the waiting period for ESA applicants, dropped a punitive measure forcing parents to effectively pay twice for unapproved items, rescinded the ADE’s authority to prematurely enact punitive measures against parents, allowed online attendance to count toward time spent in a public school, allowed families to supplement their insurance coverage for special needs therapies, and reduced the processing time for applicants from 45 to 30 days.
Corinne Murdock is a reporter for AZ Free News. Follow her latest on Twitter, or email tips to corinne@azfreenews.com.
