Earlier this month, Gov. Katie Hobbs sent a letter to Superintendent of Public Instruction Tom Horne, rebuking him for the implementation of a risk-based auditing approach to approving Empowerment Scholarship Account (ESA) program reimbursements. A few days later, Horne responded by suggesting that Hobbs “should start reading what she signs.”
In a statement, Horne reminded the Democrat governor that the process the Arizona Department of Education (ADE) is now employing is explicitly called for under a bill she signed into law herself. He notes further that Hobbs is also directly responsible for creating the situation that necessitated the change when she signed a bill permitting private school tuition to be paid under reimbursement rather than the previous third-party vendor.
The move has come as a backlog of reimbursement requests for the ESA program has exceeded 85,000. The Department of Education, unable to utilize third party provider Class Wallet, which was previously the procedure, will now automatically approve the requests up to $2,000 and then audit them after the fact.
12.9.2024
All ESA payments under $2,000 will be automatically processed and undergo risk-based auditing. Just announced at the AZ state board meeting by Supt. Horne.
In the initial letter to Horne, Hobbs pointed to recent indictments and allegations of fraud and abuse of the ESA program and claimed that the implementation of the risk-based auditing approach “is a complete dereliction of the ADE’s responsibility to ensure the appropriate use of public funds.”
Horne replied in a statement saying:
“The method we are instituting, known as risk-based auditing, is specifically provided for in the budget statute that the Governor signed last session. Maybe she should start reading what she signs.
Equally startling, is that she herself created the problem we are trying to solve by signing a bill to permit private school tuition to be paid under the reimbursement method, rather than going through our vendor, Class Wallet, which was previously required. This played a major role in increasing the delays and reimbursements from 30 days a year ago to over 100 days now.
The Governor played a major role in creating a problem that we now must solve by using a method provided for in a Bill that she signed.
Part of the problem appears to be that staff in the Governor’s office are slow learners.”
In a press release, Horne referred to Arizona Law under A.R.S. 15-2403 (B), which explicitly permits this method stating, “The department, in consultation with the office of the auditor general, shall develop risk-based auditing procedures for audits conducted pursuant to this subsection.”
The Superintendent also stressed the accountability of the program saying, “The ESA program is among the most accountable programs in the State. It’s responsible for demonstrating accountability through reporting that is required by statute, rules, and ad hoc requests from seven government agencies and bodies, including: Governor’s Office; Legislative Leadership; Joint Legislative Budget Committee; Attorney General’s Office (multiple units); Auditor General’s Office (multiple divisions); State Board of Education and the State Ombudsman.”
As previously reported by AZ Free News, Hobbs was recently fact-checked by Citizens For Free Enterprise, who publicly criticized her for attacking the ESA program. The group stated, “FACT CHECK: Arizona’s universal school choice program is a model of accountability, transparency, and security, according to CSI Institute Arizona. The over 83,000 Arizona families using ESAs just want the best for their children – and Katie Hobbs should stop attacking them.”
FACT CHECK: Arizona’s universal school choice program is a model of accountability, transparency, and security, according to @CSInstituteAZ. The over 83,000 Arizona families using ESAs just want the best for their children — and Katie Hobbs should stop attacking them. https://t.co/Law8wrNwSEpic.twitter.com/ZA1KiLdFYl
An influential Arizona Republican lawmaker is combating arguments from an anti-school choice organization.
This week, Senate President Warren Petersen responded to a post from Save Our Schools AZ, which highlighted a local media report about school closures in town. Save Our Schools AZ wrote, “Last night, the Roosevelt school board voted to shutter 5 neighborhood public schools due to major budget deficits caused by chronic lack of funding from the state legislature and universal ESA vouchers.”
Petersen retorted, “First of all it is mostly a declining student population not ESAs or the funding which has doubled over the last 12 years (now 15k/student). Second if someone who receives half your funding is putting you out of business you might want to make some changes.”
First of all it is mostly a declining student population not ESAs or the funding which has doubled over the last 12 years(now 15k/student). Second if someone who receives half your funding is putting you out of business you might want to make some changes. https://t.co/zssk7u6rlZ
The east valley lawmaker then reposted one of his earlier communications about ESA funding to help bolster his point. He stated, “District vs. Charter vs. ESA Funding from all sources. District = $14,857 per student. Charter = $12,510 per student. ESA = $7,700 per student.”
District vs. Charter vs. ESA Funding from all sources
District = $14,857 per student Charter = $12,510 per student ESA = $7,700 per student
Continuing with this education theme, Petersen stated, “The Republican-led Legislature has always supported K-12 public education. We have dramatically increased funding over the last decade and are now at $14,857 total funding per student. We support empowering parents to make the best educational choices for their kids, whether sending them to public, charter, or private schools.”
The Republican-led Legislature has always supported K-12 public education. We have dramatically increased funding over the last decade and are now at $14,857 total funding per student. We support empowering parents to make the best educational choices for their kids, whether…
Petersen added, “The statement being pushed that ESAs are taking money from district schools is false. The reason some districts are closing a handful of public schools represents a decline in the number of students attending these schools and a decline in enrollment. Public schools thrive based on how they’re administering programs and curriculum. Failure in this area results in families seeking schools that are excelling in these areas to meet their families’ needs.”
Save Our Schools also shared a report of more potential school closures – this time in the Cave Creek Unified School District. The account wrote, “The Cave Creek district is considering shuttering schools. ‘Cave Creek officials are blaming the expansion of AZ’s voucher program, which allows all school-aged kids across AZ to use public money for private school tuition or homeschool expenses, for part of their hardships.’”
The Cave Creek district is considering shuttering schools. "Cave Creek officials are blaming the expansion of AZ’s voucher program, which allows all school-aged kids across AZ to use public money for private school tuition or homeschool expenses, for part of their hardships." pic.twitter.com/u5IaEzXWy7
The escalating debate between the Republican leader and the anti-school choice organization comes just weeks before the start of the new legislative session, where the issue will surely be discussed increasingly between the opposing sides. In the two years of Arizona’s divided government, Republicans have held the line when it comes to safeguarding school choice, while Democrats, led by Governor Katie Hobbs, have unsuccessfully tried to whittle away at the state’s historic opportunities for families. Petersen has managed to force Hobbs to back off of her repeated promises to reduce Arizona school choice freedoms on a number of occasions, including in both of the past budgets negotiated between the Governor’s Office and Republican legislative leadership. He will continue to engage in this role over the next two years as he returns as his chamber’s leader.
Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.
Two Utah residents have been indicted for defrauding Arizona’s school choice program.
The alleged culprits, Johnny Lee Bowers and Ashley Meredith Hewitt (aka “Ashley Hopkins”), were indicted for the theft of about $110,000 from December 2022 through this May, Attorney General Mayes announced on Monday.
Bowers and Hewitt allegedly used the Empowerment Scholarship Account (ESA) program funds for their personal living expenses in Colorado. The pair are now believed to be living in Utah, per Mayes’ office.
Bowers and Hewitt allegedly submitted applications to the Arizona Department of Education (ADE) for seven real and 43 fictitious children using false, forged, or fraudulent documents such as birth certificates, utility bills, and lease agreements. Bowers and Hewitt applied under their own names as well as under fake identities, called “ghost parents.”
The pair put the false identities under fictitious “families” with the surnames Gil, Cole, Diaz, and Dobbs, as well as another “family” going by Hewitt’s surname.
Bowers and Hewitt were indicted on counts of the class two felonies of conspiracy (one count) and fraudulent schemes and artifices $100,000 or more (one count), as well as the class four felony of forgery (58 counts).
In a statement on the indictments, Arizona Superintendent Tom Horne said that the fraud was found out thanks to the auditor he hired to oversee the ESA Program, a position he noted was not previously established under his predecessor, Kathy Hoffman. Horne clarified that it was his office who referred the findings of fraud to Mayes’ team.
“As a former Arizona Attorney General, I am determined as Superintendent to eliminate any fraud within the ESA program. Upon taking office, I hired an auditor who had been in the Auditor General’s office for 15 years, and who is now in charge of the ESA program as well as an investigator. Those two positions had not existed under my predecessor,” said Horne. “I am pleased that prosecutions are following in the cases we sent to The Attorney General’s office.”
Earlier this year, five others were indicted in a similar $600,000 “ghost children” scheme to defraud the ESA program. 17 children were used in those applications — five of whom were discovered to be fake — associated with false birth certificates and false disability documents to obtain more funding. Those indicted were Dolores Sweet, Dorrian Jones, Jennifer Lopez, Jadakah Johnson, and Raymond Johnson, Jr.
Sweet allegedly approved applications for three fictitious children she claimed as her own while working as an ESA account specialist from 2019 to 2023. Both Johnsons are Sweet’s real adult children.
Lopez allegedly approved applications for two fictitious children she also claimed as her own while working as an ESA program lead specialist from 2019 to 2023.
Jones worked with the ADE as an administrative services officer.
As with these most recent indictments, the five indicted earlier this year were hired by Horne’s predecessor and later caught by Horne’s auditor.
In an October meeting, Horne announced that ESA reimbursements have proved to be “an overwhelming problem” for ADE due to low staffing, resulting in long wait times and a growing backlog.
Prior to last year, the ESA program paid through ClassWallet. The legislature approved tuition payments through reimbursement last year, something Horne says is the root of the problem.
Horne explained that efforts to combat the backlog have allowed for fraud to enter, citing an attempt to streamline reimbursements earlier this year by automatically reimbursing purchases at $75 or less leading to an instance of seven account holders discovered to have bought $13,000 of Amazon gift cards.
The ESA program has over 83,000 students enrolled as of mid-November.
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Since the results of the 2024 election came in, much of the focus has been on President-elect Donald Trump’s historic win—and rightfully so. Trump won every single swing state in a massive victory over Vice President Kamala Harris, and he beat her in the popular vote too.
But Kamala Harris wasn’t the only significant loser to come out of November’s election.
Here in Arizona, teachers’ unions and other anti-school choice groups, like Save Our Schools Arizona (SOSAZ), made the 2024 election a referendum on school choice. And they lost big!
Much of their work began earlier this year, when Arizona Governor Katie Hobbs came into legislative session (just like she did in 2023) with her top priority being to regulate the wildly popular Empowerment Scholarship Account (ESA) program out of existence. But it didn’t work. Despite the noise from Hobbs, legislative Democrats, the legacy media, the teachers’ unions, and other anti-school choice groups, only minor changes were made to the ESA program through the budget, with most of it remaining untouched.
This failure fell on the heels of other similar failures…
Arizona Attorney General Kris Mayes is facing serious criticism after legal threats issued to families using the Empowerment Scholarship Account (ESA) program. The threats slammed the brakes on purchasing “supplementary materials” considered self-evident in need by the State Board of Education.
As reported by the AZ Mirror, a July notice from Democrat Attorney General Kris Mayes’ office told the director of the ESA program that they may be in violation of Arizona law by issuing reimbursements to families for supplementary education materials, (i.e. flash-cards, periodic tables of the elements, early books for new readers) without requiring that parents provide documentation that it is required under a curriculum.
In the six-page letter, Assistant Attorney General Kathryn Boughton wrote, “Approving ESA funds for materials that have no nexus to the student’s actual curricular needs contradicts the intent of the program and constitutes a payment of funds made without authorization of law.” She went on to claim that doing so, “may enable account holders or vendors to engage in fraudulent behavior, such as purchasing items with ESA funds solely for the purpose of resale.”
She advised that director, John Ward stop authorizing the reimbursements immediately.
Faced with a potentially damaging legal battle, Superintendent of Public Instruction Tom Horne told parents in a statement that he would have to concede the point for now. “When I received the attorney general’s message, I sent it to the most knowledgeable people in my department,” Horne wrote.
“I asked them to look at it, not as an advocate, because we all disagree with the Attorney General, but in a neutral way, as though they were judges to determine if they could give me a reasonable assurance of success. They analyzed the statutes on which the attorney general relied, and indicated to me that as a neutral judge, they would rule against me if I made a fight out of it and refused to comply. Getting into a fight and losing, would be much more damaging.”
However, the tune from Mayes’ office changed sharply just one day after the Goldwater Institute filed lawsuit challenging the blatantly partisan determination. Attorneys from Goldwater representing two Arizona mothers wrote, “Following …unsuccessful legislative attempts, the office of Arizona Attorney General Kris Mayes initiated a new effort in July 2024 to dramatically limit the use of ESA funds, calling for a prohibition on the purchase of basic educational materials, including books, workbooks, and other ‘supplementary materials’ unless parents could provide an explicit ‘curricular’ document justifying the use of each specific book title or material for their child.”
“Arizona law expressly allows the purchase of such materials with ESA funds, however. In fact, state lawmakers added clarifying language in 2020 with the explicit purpose of ensuring that such purchases would not be denied, following the actions by former State Superintendent Kathy Hoffman that had restricted the purchase of many such items. The State Board of Education has likewise approved rules for the program explicitly permitting the purchase of these materials without additional documentation.”
The AG’s Office then began a campaign of feverishly walking back their determination with a statement responding to the suit. “The Attorney General has simply stated what is required by law,” adding, “The law doesn’t prevent parents from purchasing paper and pencils, but it does require that materials purchased with ESA funds be used for a child’s education.”
But this isn’t what Mayes’ office said in July when they demanded Superintendent Tom Horne’s department “promptly cease approving supplementary material expenses without the requisite documentation of a curriculum nexus,” no matter how self-evidently educational the materials are, as Matt Beienburg,the Director of Education Policy at the Goldwater Institute pointed out in an Arizona Daily Independent op-ed.
As Beienburg notes, Mayes’ office, far from simply targeting extravagant spending, threatened ESA administrators with legal liability unless they applied the same requirements on the list of obviously educational materials approved in the State Board of Education’s ESA Handbook: things like “books,” “workbooks,” “writing utensils,” “atlases/maps/globes,” “calculators,” “flash cards”, etc.
“Thesematerials are what Attorney General Mayes’ intervention is now blocking en masse—unless parents can cite a specific pre-established curriculum calling for the individual book title or resource,” Beienburg explained.
“In other words, the Attorney General’s office still demands that flashcards and other self-evidently educational materials be allowed only if a parent can produce an arbitrary piece of paper calling for their specific use.
The Attorney General’s attempted public deflection away from this fact demonstrates the absurdity of her summer demands. Perhaps she really does believe that families should have to justify their purchases of books like ‘Brown Bear Brown Bear, What do You See?’ and ‘Little People Who Became Great’ to wiser government bureaucrats. But for the rest of us, such restrictions are clearly nonsensical and—under state law, illegal.
The Attorney General is supposed to uphold state law, not torture it to impose her policy preferences. We encourage the Attorney General to withdraw her summer demand letter, or else acknowledge flatly that her position is that families should have to justify why they picked ‘Brown Bear Brown Bear, What Do You See?’ to read to their own children.”
