In a recent report, the Common Sense Institute of Arizona (CSI) addressed the gradual slowing of enrollment in Arizona’s Empowerment Scholarship Account (ESA) program and traditional public school classrooms. The report shows that despite narratives for one or the other, the decline in both can be explained quite directly as a matter of demographics and parental choice.
In a press release issued Monday, CSI explained, “Headlines about declining enrollment and the subsequent financial struggles this creates in Arizona’s public schools have caught the state’s attention. However, CSI’s data shows this shift was inevitable, driven by dramatic demographic changes and a shift in enrollment preferences during the pandemic.”
Among CSI’s findings, it found that the school-age population of Arizona peaked in 2021 and is projected to decrease by 40,000 by 2028, heavily impacting an educational system which was structurally predicated on the assumption of a continually growing population.
CSI added, “The 2012 kindergarten cohort—the state’s largest ever—is now preparing to graduate. Future K-12 enrollment is not expected to grow in the foreseeable future.”
Arizona’s Public School Enrollment Decline: No Surprise
CSI research shows Arizona’s K-12 demographic shift has been years in the making: 📉 School-aged population peaked in 2021 🎓 The largest kindergarten class (2012) is now preparing to graduate 👶 By 2028, the school-aged… pic.twitter.com/u5rbGnVLFp
— Common Sense Institute Arizona (@CSInstituteAZ) January 28, 2025
CSI observed further that during the COVID-19 lockdowns, Arizona’s public schools lost 50,000 enrolled students from 2020-2021. Only 18,000 of those students re-enrolled in charter schools with the remaining approximate 32,000 otherwise unaccounted for. It is likely that this number presents a combination of expanded home schooling, relocation out of Arizona, and even enrollment in private schools. Indeed, the report indicates that private school enrollment spiked by 33% over that period with homeschooling experiencing a surge from 2% of the total student population to 11%, and settling back to 6% as of today.
Glenn Farley, CSI Arizona’s Director of Policy and Research summarized, “Arizona’s classrooms are entering a new era. The numbers have been clear for years: the system built for growth has reached its peak. Moving forward, policymakers must adapt to a smaller, more diverse student population and rethink how we allocate resources.”
Arizona’s Public School Enrollment Decline is No Surprise According to the Common Sense Institute Arizona–
— Common Sense Institute Arizona (@CSInstituteAZ) January 28, 2025
The CSI report noted the effect on budgetary considerations has been extreme. “Declining public school enrollments since 2020 reduced public K-12 funding formula costs by an estimated $450 million/year, and growing, compared to pre-pandemic trends. Since last year, the universal ESA program has returned these ‘missing kids’ to the public K-12 rolls – reinvesting prior ‘savings’ into education.”
The ESA, a subject of controversy in the state legislature, has reached a “steady state” according to CSI, with the recent period of rapid growth unlikely to be repeated and future increases owing almost exclusively to parental and student choice.
CSI concluded, “Demographic changes likely mean fewer school-aged children and lower overall enrollment across Arizona’s publicly funded K-12 options over the next ten years. And ultimately it is this demographic change, and pandemic-era changes in parental behavior that are changing K-12 in Arizona – and not-so-much universal ESA itself.”
As previously reported by AZ Free News, Governor Katie Hobbs’ repeated attacks on ESAs have centered primarily on the narrative of the program alternately being “rife with waste, fraud and abuse,” being costly to the state budget, and calling for a repeal of the popular program.
With the new year here and the 2025 legislative session officially underway, Democrats are already proving they can’t learn a lesson. Led by Governor Katie Hobbs, one of their primary targets is once again…you guessed it…Arizona’s Empowerment Scholarship Account (ESA) program. Stop us if you’ve heard this before.
You would think that Democrats would find a different target after getting trounced in an election where teachers’ unions and other anti-school choice groups made it a referendum on school choice. But no. After 2 ½ years and multiplefailures trying to overturn school choice, they’d rather double down on their same tired and out-of-touch policies.
This time, Hobbs and the Dems say they want to roll back ESAs because of all the supposed “fraud” in the program. Never mind the fact that the rate of waste, fraud, and abuse in the ESA program is extremely low. Never mind the fact that ESAs have proven to be far more financially accountable than other government programs. Democrats don’t care about facts. Instead, they want to regulate this popular program while Arizona’s Democrat Attorney General Kris Mayes asks for more funding to investigate ESA fraud.
But here’s a message for Hobbs, Mayes, and the rest of the Democrats:
If you care so much about fraud, why not investigate Arizona’s public school districts?
They could start with Isaac Elementary School District (IESD)…
As another legislative session begins in Arizona, Republicans and Democrats are again bringing the all-important issue of school choice to the forefront of the public debate.
On Monday, Governor Katie Hobbs ushered in the start of the 57th Regular Session of the Arizona Legislature with her State of the State address, where she took time to criticize the Empowerment Scholarship Accounts (ESA) program. In her speech, Hobbs said, “The current program is unchecked, flawed, and rife with exploitation. Three years ago, it went far beyond its original purpose, which was to support kids with special needs and military families. Today, it has ballooned into a billion-dollar boondoggle increasingly scamming Arizonans. Other entitlements funded by taxpayers have strict oversight and income requirements. Yet the ESA program has the privilege of virtually no safeguards.”
Other entitlements funded by taxpayers have strict oversight and income requirements. Yet the ESA program has the privilege of virtually no safeguards. My executive budget offers a balanced solution that supports families and finally brings real and effective guardrails to ESAs.
Hobbs proposed changes to the ESA program for a “balanced solution that supports families and finally brings real and effective guardrails to ESAs.” Her solution was to “institute responsible income caps, ensure taxpayers know where their money is going, and create real accountability for taxpayer dollars.”
The governor’s remarks were met with immediate criticism from Republicans and others who support the expanded ESA program. Superintendent of Public Instruction Tom Horne said, “Under my leadership, the department has done a full-court press against waste and fraud. I hired both a program auditor and an investigator, which had not been done before. I require that every expenditure be for a valid educational purpose and have been attacked for doing that. The Governor needs to pay more attention to what is going on. She gets an ‘F’.”
Senate President Pro Tempore T.J. Shope added, “We will also protect parental choice, so that every child in the state has the ability to succeed in the classroom, no matter their zip code or financial status.”
Common Sense Institute Arizona wrote, “In her State of the State address, Governor Hobbs asked lawmakers to compare Arizona’s ESA program to other government entitlement programs with respect to accountability and transparency. Luckily, we already did! And it turns out that improper payment rates in the Arizona ESA program are a fraction of those in other government programs like Medicaid, Unemployment Insurance, and SNAP.”
In her State of the State address, @GovernorHobbs asked lawmakers to compare Arizona's ESA program to other government entitlement programs with respect to accountability and transparency.
Luckily, we already did! And it turns out that improper payment rates in the Arizona ESA… pic.twitter.com/XAfMKzaPmS
— Common Sense Institute Arizona (@CSInstituteAZ) January 13, 2025
Jason Bedrick said, “The voters made their will clear by re-electing those who supported ESAs and expanding their legislative majority. The legislature should reject Gov. Hobbs’ attempts to undermine ESA families.”
Once again, AZ Gov. @KatieHobbs is attacking families who use Empowerment Scholarship Accounts.
In her State of the State address, she called for income caps that would kick thousands of families out. Is she going to impose income caps on district schools too?
On the flip side, Governor Hobbs’ comments received support from her allies, who have long attempted to shrink, regulate, or eliminate the historic ESA expansion program in Arizona. Save Our Schools Arizona Executive Director Beth Lewis responded, “It is time to end the rampant waste, fraud, and abuse in the universal ESA voucher program. We commend Governor Hobbs for championing public education and pushing for much-needed voucher reform. We sincerely hope legislators like Senate President Petersen who name ‘fiscal responsibility’ their top priority will bring long-overdue guardrails to this irresponsible program, which now costs taxpayers nearly $1 billion annually.”
Hobbs and legislative Republicans will continue to bicker about the future of school choice in Arizona, but not much – if anything – will be done this year (and likely the next) to regulate ESAs per the governor’s insatiable desire. Over the past two years, Arizona Senate President Warren Petersen successfully fended off ferocious political attacks that targeted ESAs and other school choice opportunities for Arizonans. He will again be counted upon, along with his Republican colleagues in the Arizona House and Senate, to protect one of the top states in the country for school choice.
Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.
The 2025 Free Enterprise Report from the Common Sense Institute Arizona (CSI) was released Monday and ranked the state of Arizona amongst the states in education as well as the new indexes of economic performance and economic momentum.
According to Katie Ratlief, Executive Director of CSI Arizona, “Arizona continues to lead the way in key areas like tax policy, state budgeting, and educational choice, proving the impact of data-driven, common-sense policies.”
“However,” she added, “challenges in housing, public safety, and homelessness are beginning to slow our momentum. While Arizona remains a top destination for growth, addressing critical issues like crime and the housing crisis will be essential to sustaining our competitiveness. Fortunately, the policies that fueled much of Arizona’s success are still in place, and with a renewed focus on data-driven solutions to address issues like crime and housing, Arizona can solidify its position as one of the most competitive states in the nation for years to come.”
The report details Arizona’s positioning in the emerging recovery of 2025, particularly highlighting the success of the state and its persistent momentum. In an overall measure, the state ranked 27th in “free enterprise competitiveness,” with CSI emphasizing advances in taxes, state budgeting, energy and education, but noting the heavy limitations imposed by housing shortages and rising costs.
In education, Arizona ranked second in the nation in share of students enrolled in school choice options, seemingly ratifying the state’s first-in-the-nation universal Empowerment Savings Account (ESA) program which now provides financial support to over 83,000 families.
Arizona is leading the charge in school choice. Arizona ranks 2nd in school choice enrollment and 1st in education spending efficiency, according to CSI's 2025 Free Enterprise Report. While there's still room to improve graduation rates and test scores, the future of education in… pic.twitter.com/JNK1pbEOwC
— Common Sense Institute Arizona (@CSInstituteAZ) January 13, 2025
The report noted, “Arizona today has the most open K-12 educational market in the country, and hosts a diverse network of District, Charter, and private school options. Since the pandemic, its home- and microschool space has expanded rapidly. Today, about a third of Arizona’s K-12 students are not enrolled in the traditional District school system.”
The report also highlighted Arizona’s Energy situation, noting in a post to X, “Arizona remains a top 20 state for energy competitiveness, boasting one of the most reliable electricity grids in the nation.”
Arizona remains a top 20 state for energy competitiveness, boasting one of the most reliable electricity grids in the nation. Learn more about the state's energy competitiveness in CSI's 2025 Free Enterprise Report.
— Common Sense Institute Arizona (@CSInstituteAZ) January 14, 2025
CSI explains, “Thanks to maintaining the nation’s largest nuclear power plant and the moderate and deliberate pace of adoption of wind and solar energy sources (supplemented by robust investment in natural gas), the state’s electrical grid remains reliable and affordable.”
Finally, Arizona’s advantageous tax system was highlighted with the 2.5% flat income tax and property tax instant depreciation of business investments cited in particular for contributing to an extremely competitive tax and regulatory system. Arizona ranked 7th in the nation on the Taxes & Fees Competitiveness Index.
The report observed, “Arizona has significantly reduced its tax burden in recent years, most notably by adopting a 2.5% flat personal income tax rate. This reform cut the top marginal tax rate from 4.5% to 2.5%, simplifying the tax code and making Arizona one of the most competitive states for income taxation.”
Looking to the future, CSI pointed to the steps Arizona legislators have taken to insulate the state against capricious tax hikes, explaining “this tax structure is well protected. Rules requiring supermajorities for statewide tax increases by the State Legislature were extended in 2022 to initiatives and referendums that would have voters approve the tax increases.” The report continues, “Arizona’s competitive ranking for its tax structure is not only unlikely to get worse but may improve (even if further reform is more incremental) due simply to the relative erosion of the position of other states that lack these structural protections.”
Shortly before his death in 2006, I had the privilege of interviewing Milton Friedman over dinner in San Francisco. The last question I asked him was: What are the three things we had to do to make America more prosperous?
His answer I have never forgotten: “First, allow universal school choice; second, expand free trade; third and most importantly, cut government spending.” That was long before Presidents Barack Obama and Joe Biden came along.
There are not too many problems in America that cannot be traced back to the growth of big and incompetent government.
It is notable that the two big bursts of inflation during modern times both occurred when government spending exploded. The first was the gigantic expansion of the LBJ “war on poverty” welfare state in the 1970s with prices nearly doubling, and then the post-COVID era spending blitz in the last year of Trump and then the Biden $6 trillion spending spree with the CPI sprinting from 1.5% to 9.1%.
Coincidence? Maybe. But I doubt it.
The connection between government flab and the decline in the purchasing power of the dollar is obvious. In both cases the Washington spending blitz was funded by Federal Reserve money printing. The helicopter money caused prices to surge. (I still find it laughable that 11 Nobel prize-winning economists wrote in the New York Times in 2021: Don’t worry, the Biden multi-trillion-dollar spending spree won’t cause inflation.)
The avalanche of federal spending hasn’t stopped even though COVID ended more than three years ago. We are three months into the 2025 fiscal year and on pace to spend an all-time high $7 trillion and borrow $2 trillion. If we stay on this course, the federal budget could reach $10 trillion over the next decade.
This road to financial perdition cannot stand. It risks blowing up the Trump presidency.
Upon entering office, Trump should on day one call for a package of up to $500 billion of rescissions — money that the last Congress appropriated but has not been spent yet. Cancelling the green energy subsidies alone could save nearly $100 billion. Why are we still spending money on COVID?
We could save tens of billions by ending corporate welfare programs — such as the wheel barrels full of tax dollars thrown at companies like Intel in the CHIPS Act. The Elon Musk Department of Government Efficiency is already identifying low hanging fruit that needs to be cut from the tree.
Along with extending the Trump tax cut of 2017, this erasure of bloated federal spending is critical for economic revival and for reversing the income losses to the middle class under Biden.
This is especially urgent because the curse of inflation is NOT over. Since the Fed started cutting interest rates in October, commodity prices are up nearly 5% and the mortgage rates have again hit 7% — in part because the combination of cheap money and government expansion is a toxic economic brew — as history teaches us.
Nothing could suck the oxygen and excitement out of the new Trump presidency more than a resumption of inflation at the grocery store and the gas pump. Trump’s record-high approval rating will sink overnight if the cost of everything starts rising again.
Cutting spending won’t be easy. The resistance won’t just come from Bernie Sanders Democrats. Trump will have to convince lawmakers in his own party — many of whom are already defending green-new-deal pork projects in their districts.
This is why Trump should make the case in his inaugural address that downsizing government is the moral equivalent of war. Borrow a line from Nancy Reagan: just say no — to runaway government spending. Say yes to what Friedman titled his famous book: “Capitalism and Freedom.”
Stephen Moore is a contributor to The Daily Caller News Foundation and a visiting fellow at the Heritage Foundation. His new book, coauthored with Arthur Laffer, is “The Trump Economic Miracle.”
