While any misuse of taxpayer funds is concerning, the isolated cases involving Education Savings Accounts highlighted in recent reporting must be viewed in the proper context. Arizona’s Empowerment Scholarship Account (ESA) program serves over 90,000 students, for instance, and the anecdotal examples represent a fraction of program participants. Previous program audits have found improper payments, including honest mistakes, which accounted for one percent or less of total program expenditures.
For context, consider that established federal programs face far more substantial challenges. In 2023, according to the Government Accountability Office, Medicare had a six percent improper payment rate, while Medicaid had a nine percent rate. Unemployment Insurance and the Earned Income Tax Credit had improper payment rates of 32 percent and 33 percent, respectively. Looking specifically at Arizona, the US Centers for Medicare & Medicaid Services projected an improper payment rate of just over six percent for Medicaid and the Children’s Health Insurance Program (CHIP) in 2024.
The much lower rate in the Arizona ESA program may be due to the robust safeguards in place. The Department of Education monitors transactions and has implemented risk-based auditing procedures—much like the IRS uses to “encourage” taxpayers to file accurate tax returns—that help it assess if improper purchases were due to honest mistakes or fraud. In cases of honest mistakes, parents have the chance to rectify the matter. When true fraud is detected, state law empowers the department to refer cases to the attorney general for collection or criminal investigation.
Most importantly, isolated incidents of inappropriate spending should not overshadow the program’s fundamental purpose: empowering parents to choose educational options that best serve their children’s unique needs. Educational freedom allows families to access specialized tutoring, therapeutic services, curriculum materials, and alternative learning environments that conventional public schools may not provide.
Rather than restricting parental choice due to a small minority’s misconduct, Arizona should continue using a light approach on the front end, paired with proportionate penalties for abuse. This will help preserve this vital program that is helping thousands of families seek the best possible outcomes for their children.
