The holiday season didn’t bring holly and jolly to the ongoing feud between Arizona’s Democrat Governor and Republican Superintendent of Public Instruction.
In the days leading up to Christmas, Governor Katie Hobbs and Superintendent Tom Horne exchanged press releases over their dueling perceptions of the due date of the quarterly Empowerment Scholarship Account (ESA) report.
On December 21, the Director of the Governor’s Office of Strategic Planning & Budgeting, Sarah Brown, transmitted a letter to Horne, asking him to send the FY 2024 Quarter 1 Report for the ESA Program to statutory recipients by the following day. Brown opined that this “late report comes after a number of stories showing a concerning lack of accountability and transparency in the ESA program.”
Governor Hobbs posted a short statement to her “X” account, asserting that “Arizonans deserve to know how their taxpayer dollars are being spent. We need true accountability and transparency in the ESA voucher program.”
Arizonans deserve to know how their taxpayer dollars are being spent. We need true accountability and transparency in the ESA voucher program. https://t.co/n6SXNb9VnV
Horne wasted no time in responding to the latest attack on the program he guides and stewards, saying, “The Department of Education has been in contact with the Governor’s Office for nearly three weeks regarding this issue. They are fully aware that we are preparing the report she has requested. Nothing is being withheld.”
Brown also accused Horne of essentially mismanaging dollars in his budget, highlighting the Department of Education’s spending of “millions of dollars advertising the program even with the escalating costs that threaten to crowd out critical spending from the State budget.”
The superintendent’s marketing efforts for the ESA program were practically mandated and empowered earlier this year with the passage of the State’s budget between Governor Katie Hobbs and Legislative Republicans, when freshman Senator Janae Shamp reportedly earmarked $10 million for school choice advertising at the Arizona Department of Education. On August 24, Shamp responded to a critical piece about the targeted funds, writing, “Families are not getting the REAL facts. So called ‘reporting’ by the left and their media henchmen fails to acknowledge the true winners of this money well spent…THE KIDS! Now they will receive education that meets their personal needs.”
Families are not getting the REAL facts. So called "reporting" by the left and their media henchmen fails to acknowledge the true winners of this money well spent…THE KIDS! Now they will receive education that meets their personal needs! https://t.co/o6I5uDgpEK
Before Shamp’s allocation, Horne had executed marketing campaigns for the ESA program, though at far less expense than the levels he obtained after the latest State budget.
The Governor’s Office also pointed out the revelations of ESA dollars being used to fund “ski passes and luxury car driving lessons.” In his response to this criticism, Horne retorted that those “frivolous ESA spending approvals occurred under the administration of the Governor’s friend, Kathy Hoffman.” He added that his department had “reviewed more than 15,000 ESA applications, rejecting thousands that were incomplete in the first quarter of Fiscal Year 2024 alone.”
As he closed his statement, the Republican schools chief wished his readers a “Merry Christmas!”
Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.
On Tuesday, House lawmakers convened to discuss the impact of universal school choice in the state.
The House Ad Hoc Study Committee on Empowerment Scholarship Accounts (ESA) Governance and Oversight heard public comments and expert testimony from Alan Maguire, a consultant with the Maguire Company; Patrick Moran, a Joint Legislative Budget Committee (JLBC) staffer; and John Ward, executive director of the ESA Program at the Arizona Department of Education (ADE).
Maguire said that ESA recipient growth has slowed as the school year has gone on, which he said was typical. He expressed the expectation that almost no matter what happens, the ESA Program’s implications for the state budget would be significant but manageable.
“I don’t think [the changes] we’re facing as a result of changes in the ESA recipients will be that challenging; challenging, but not scary challenging,” said Maguire.
Moran, the JLBC staffer, addressed the K-12 financing issues related to student movement between district and charter schools and the ESA Program. The Arizona Department of Education has $11.8 billion, but public schools receive funds from the Basic State Aid (BSA) Formula, which has $9.7 billion.
The BSA Formula factors funding based on average daily membership (ADM) student counts: enrollment of full-time/fractional students for the first 100 days, minus withdrawals, wherein students must meet the minimum requirements for total instructional hours/courses to be counted. The unweighted student count for the 2024 fiscal year was about 1.1 million.
Then, the ADM is weighted based on several grouped statutory factors: Group A weights adjust for school size, location (whether urban or rural), and type (K-8 or high school); Group B weights adjust for specific student populations, such as special education, English learners, or K-3 reading programs. With these group weightings, the 2024 fiscal year count reached about 1.56 million.
The BSA Formula components within the enacted budget established a base funding level of $7.8 billion, additional assistance at $1.04 billion, and transportation at $213 million. Property taxes fund nearly $2.6 billion of the public school formula, which the state partially offsets with a homeowner’s rebate (50 percent in the 2024 fiscal year with a cap of $600).
The enacted budget projected that the ESA Program would cost $625 million for 68,000 enrollees. However, actual enrollment is currently at about 70,000, and the ADE reported that awards have reached $665 million — $40 million over what was assumed in the budget. Moran said that this didn’t necessarily qualify as a shortfall for the ADE because they lack the data on where those new ESA students hailed from.
“We can’t determine the impact of ‘switchers’ in real time, because we don’t know of those 70,000 how many were in public school in FY 2024 and FY 2023,” said Moran. “We also need to know how much formula funding those students were generating in the district or charter school they were previously attending to calculate that net impact.”
Moran said that the average student award was lower from the ESA Program than for public district schools.
“Based on the data that ADE has shared with us, we think the average ESA [award] across all populations original and universal would be about $9,700 [per student], so it would be lower than the $12,200 [for charter schools] and lower than the $14,000 figure [for districts],” said Moran.
State Rep. Judy Schweibert (D-LD02) stated that Arizona ranked 48th in the nation for public school funding, based on federal data. House Speaker Ben Toma (R-LD22), the committee chairman, rebutted that the federal rank may not be entirely accurate, arguing each state’s funding formula for schools was unique and therefore not an apples to apples comparison.
Ward with the ADE offered management and administration updates concerning the ESA Program. Ward reported that the program has grown to nearly 70,200 students from over 13,400 students last September just prior to universalization. He projected that the ESA Program may reach anywhere from 90,000 to 100,000 students by the beginning of the next school year.
Ward projected that ESA awards may reach about $780 million by the end of the 2024 fiscal year. He dismissed concerns that the awards would bankrupt the state, reporting that even at that total the program would have a $57 million surplus in BSA.
Ward touched back on Moran’s assessment that public school student allocations were higher than ESA student allocations: $13,400 for public school students in the 2022 fiscal year versus $9,800 for ESA students in the 2024 fiscal year.
He reported that of the over 15,000 applications reviewed, several thousand were dismissed as incomplete. Additionally, almost 2,200 ESA accounts were suspended because of records indicating they were still enrolled in public school; their annual awards totaled over $21 million.
The ADE will be automating some of its processes going forward concerning purchase approvals and enrollment. ADE has partnered with ClassWallet to curate the catalogs of vendors on the marketplace and establish a rules engine, as well as to deploy directpay, reimbursement, and debit card auto approval through scanning technology and another rules engine.
Additionally, the ADE plans to improve data transparency by publishing a data dashboard. Types of data will include the number of ESA participants by eligibility type, grade level, gender, age, zip code, and county; number of students previously in a public school; number of applications coming in weekly and monthly; and average and median award amounts.
State Rep. Nancy Gutierrez (D-LD18) asked whether the surge in ESA Program popularity had to do with private school families. Moran said that 40 percent of ESA students came from public schools this fiscal year (2024), an increase from the last fiscal year (2023) prior to universalization.
Corinne Murdock is a reporter for AZ Free News. Follow her latest on Twitter, or email tips to corinne@azfreenews.com.
As Arizona’s largest public school district, Mesa Unified School District is a critical case study for the future of K-12 funding, particularly in a state that champions competition and choice for its families. Despite headlines boasting of population growth across the state, the nationwide decline in childbirths and cost-of-living increases will weigh heavily on district enrollment and balance sheets for years to come.
While solving these policy issues is admittedly outside the scope of superintendents and governing boards, how districts adjust to these changes remains within their control. In the case of Mesa USD, the district faces an existential crisis in enrollment that will almost certainly require consolidation and closure among its 78 schools over the next 10-20 years. Furthermore, the district’s statewide assessment performance leaves much to be desired, with just 38% and 31% of Mesa USD students achieving proficiency in English Language Arts and Math, respectively.
Next month, Mesa taxpayers will have an opportunity to make their voices heard and rein in the district’s spendthrift ways by rejecting a $500 million bond and an override continuation that, if passed, would allow the already overstretched district to exceed its revenue control limit by 15% for another seven years.
When voters last approved a bond for Mesa USD in 2018, they did so with a margin of <1% and at a cost of $300 million to taxpayers. A year later, the district was beset with allegations of financial impropriety and steep administrative costs, leading to the resignation of the district’s superintendent. The poor transparency on the part of the school board in communicating the issue to the public further underscores the lack of taxpayer accountability. Furthermore, over the last three years, Mesa USD received over $245 million in federal pandemic relief funds, with hundreds of millions still unspent.
Nevertheless, Mesa USD’s pitch to taxpayers remains unchanged, and approval of the bond and continuation of the override will result in little more than throwing away hundreds of millions of dollars in costly capital projects for underutilized campuses and unsustainable personnel costs.
Demography Is Destiny
In the early 2000s, Mesa boasted a population of over 400,000 residents. During the same period, Mesa USD reached its peak enrollment at over 87,000 students during the 2002-2003 school year. Today, the city is home to nearly 510,000 people, yet the city’s population growth over the last 20 years never trickled down to Mesa USD’s enrollment. Today, the district serves fewer students than it did in 1990 when Mesa had just 290,000 residents.
An additional cause for alarm comes from the pronounced decline in Mesa USD’s Kindergarten-6th grade enrollment. For large, comprehensive school districts like Mesa, enrollment in feeder schools is an important signal of a district’s future headcount. Over the last 20 years, 16 of Mesa USD’s elementary schools have lost over 40% of their students. In the same period, the district’s junior high schools saw an average decline of 50% of their enrollment.
Source: Mesa Public Schools – Demographics Report 2021-2022
As another signal of its unpopularity, Mesa USD is one of the state’s largest sources of ESA students, which has its most substantial adoption rates in the elementary grade levels. Given the expansion of ESAs and charter schools, Mesa USD will continue competing for a depleting student pool. In turn, a decline in enrollment necessitates a reduction in operational expenses, which Mesa USD has rebuffed in favor of taxpayer-funded bailouts.
Around 77% of school districts in Maricopa County have one or more overrides in effect. While East Valley voters have typically displayed enthusiasm for K-12 bonds and overrides in the past, the powerful impact of free market principles via ESAs makes the decision different today. With nearly 70,000 Arizona families using ESAs today, enthusiasm for the program has made it larger than any school district in the state, with the additional benefit of not requiring bonds or overrides.
To realize the substantial cost savings from ESAs, a corresponding change is required from public schools in rightsizing their districts by adjusting their property and personnel costs. In preparing for the inevitable, Mesa USD must take steps now to address under-capacity and explore the sale of its real estate before requesting additional funds from taxpayers. In rejecting this bond and override, Mesa voters sidestep a lousy deal and send a clear message about taxpayer accountability.
Arman Sidhu is a lifelong Arizona resident and previously worked in K-12 education as a principal and teacher. He currently leads a nonprofit microschool.
On Wednesday, October 11, Arizonans learned the budget Katie Hobbs signed into law will possibly have a $400 million shortfall. This means the state won’t have enough money to fund the budget because it’s too big and is spending too much money.
The left wants to blame the budget shortfall on the implementation of former Governor Ducey’s state income flat tax a couple years ago. They also demonize the families participating in the state school choice ESA program. However, if it weren’t for Hobbs’ spending increase of $2 billion and vetoing a $2 billion smaller budget, the state would still have an outlook with a budget surplus.
Let’s review the short history.
In June of 2022, Arizona Governor Ducey signed into law the Fiscal Year 2023 Arizona Budget. The Radical Left and then-Secretary of State Katie Hobbs praised that budget for being bipartisan.
Moving ahead to the most recent 2023 legislative session, Arizona Senate President Warren Petersen and Speaker of the House Ben Toma wanted the new legislature to prioritize their most important responsibility — the state budget. Accordingly, in February, the state legislature passed a continuation of the same $15.8 billion budget from 2022.
Hobbs vetoed it. The budget Hobbs vetoed is the same as the one she applauded after Ducey signed it into law. This year, Hobbs called the budget partisan and extreme. The budget Hobbs decided was good enough to sign into law was $17.8 billion, exactly $2 billion larger than the budget she vetoed.
Hobbs insisted on a budget that is $2 billion larger even while many economists predicted Arizona and the nation are at risk for an economic slowdown due to rising interest rates. Forbes reported, “At the end of 2022, the National Association of Realtors predicted a 15.8% drop in combined sales and prices for the Phoenix-Mesa-Scottsdale [housing] market in 2023.”
The Federal Reserve, the nation’s central bank, currently shows the median home price in the United States is collapsing faster than any other point in recorded history.
If a recession occurs, Arizona will see less tax revenue. This would also have a negative impact on the budget’s revenue because people are spending less money; therefore, the state is collecting less in taxes.
While the Radical Left wants to blame the budgetary shortfall on the flat tax that benefits everyone, one thing is clear. The state of Arizona is spending too much money, and Hobbs’ extra $2 billion budget is destroying Arizona. It is her fault.
Jeff Caldwell currently helps with operations at EZAZ.org. He is also a Precinct Captain, State Committeeman, and Precinct Committeeman in Legislative District 2. Jeff is a huge baseball fan who enjoys camping and exploring new, tasty restaurants! You can follow him on X here.
Amid the passage of historic school choice legislation in Arizona, the educational opportunities available to students and families today are unparalleled with the state’s universal ESA program. In addition to providing Arizona families with voice, choice, and agency in their child’s education, the ESA program has the potential to save Arizona taxpayers considerable funds from future school district bond and override measures.
However, to realize these savings, a long overdue conversation about rightsizing Arizona’s public schools is necessary. Despite significant population growth within Arizona, the enrollment forecasts for most school districts anticipate a period of long-term decline due to lower childbirths, affordability, and alternative options. This demonstrates a pressing need to review the budgets and assets of public school districts and align them with future enrollment projections.
Given the significant competition from the rise in homeschooling, as well as charter and private schools, public schools are no longer the only game in town. As a result, greater scrutiny from local taxpayers is needed in holding school districts fiscally accountable by questioning their need for additional funds through bonds and overrides.
What Are School Bonds & Overrides?
School bonds are loans that school districts sell to investors, who are repaid through the district’s future property taxes. These bond funds have specific limitations on their use and cannot be used to increase staff salaries. In most instances, these funds are leveraged for infrastructure projects involving the construction of new facilities or upgrades to existing ones. In contrast, overrides go directly to school districts and can be used for staff salaries and various programs outlined by the district requesting the override.
This November, a total of 23 school districts in Maricopa County will have bond and/or override measures on the ballot. Among these 23 districts, at least 4—Kyrene Elementary School District, Mesa Unified School District, Gilbert Unified School District, Scottsdale Unified School District—are in dire need of rightsizing before requesting additional funds from taxpayers based on their pronounced decline in enrollment.
In particular, Mesa USD, the state’s largest school district, enrolls fewer students today than it did in the fall of 1990. Yet, the district’s real estate portfolio somehow contains 78 schools, in addition to various non-instructional facilities and offices throughout the city. Mesa USD, as well as surrounding districts in similar positions, need to do right by taxpayers in exploring the sale of underutilized real estate before passing the buck to taxpayers.
As seen in the table below, only Gilbert USD has shown an increase in enrollment since the fall of 2000, and none of the districts can report an increase in enrollment in the last 10 years. Given the growth in ESA adoption and charter school enrollment, the pragmatic move is to respond to these declines now by rightsizing these districts, pursuing the sale of district assets, and removing administrative bloat.
Among the clearest signs of waste and inefficiency can be found in the amount of unspent federal pandemic relief funds provided to schools around the country. In the case of the 4 school districts requesting additional funds from taxpayers, they collectively still have access to tens of millions in unspent, flexible funds that are set to expire in a year.
What this experiment in “helicopter money” confirms is that the problem ailing local school districts is not a lack of funds, but rather their inability to direct funds efficiently. In the absence of a public monopoly, this decline in public school enrollment will continue to eat into taxpayers’ wallets with the additional forces of demographic shifts, affordability, and competition from the growing number of viable and efficient alternatives in the form of charter schools, private schools, microschools, and homeschool co-ops.
In adjusting to this historic era of school choice, the need for fiscal accountability remains essential on behalf of public school districts that have been reluctant to change and control their costs. To avoid perpetually funding buildings and bureaucracy, local taxpayers and residents must ensure their voices are heard.
Arman Sidhu is a lifelong Arizona resident and previously worked in K-12 education as a principal and teacher. He currently leads a nonprofit microschool.
