Editorial Note: This article and its series are part of a collaborative project with 13 Arizona newsrooms covering two important topics in education. Funded by the Arizona Local News Foundation and Report for America, all stories in the project can be found here.
School choice is popular in Arizona. A national leader in education choice policy, Arizona offers families numerous ways to decide how their children will be educated — from open enrollment in public school districts to publicly funded charter schools.
But one facet of Arizona school choice policy has become a contentious one: Empowerment Scholarship Accounts (ESAs), also commonly known as school vouchers.
A Brief History of ESAs
Arizona established the nation’s first ESA program in 2011. Initially, it was designed to provide students with disabilities the means to pursue educational options outside of the public school system that may better suit their needs.
Over time, ESAs were expanded to include more groups of students, such as those from military families and foster homes as well as students living on tribal lands or attending a school that received a D or F letter grade from the state. Most also had to meet an additional eligibility requirement, such as having previously attended a public school full time.
Arizona would again make history in 2022 when it became the first state in the U.S. to universalize ESA eligibility. At that time, the program had been steadily growing from 144 participants in 2012 to roughly 12,000 in 2022.
The following year, participation skyrocketed to about 53,300.
The Arizona Department of Education’s fiscal year 2026 third-quarter report — its most recent — places that figure now at nearly 103,000 participants.
“The program has exploded because so many people are interested in it, because they think it's fantastic,” said state Rep. Nick Kupper, R-25, at a Yuma legislative town hall in September.
In the same response, Kupper addressed one of the biggest concerns surrounding the ESA program today: accountability and oversight.
“I think all of us, regardless of the aisle here, we agree that there is some [waste, fraud and abuse], and it's something that we need to get on top of,” he said. “ESA’s not going to go away. It's just not going to go away. But we can be better about what we do.”
ESA Fraud Allegations
As Kupper noted, the program has experienced some abuse.
Reporting from 12News in February found that 20% of ESA account holders had made at least one unallowable purchase. Their sample — obtained via public records request — consisted of transactions made from December 2024 to October 2025.
From that sample, they found nearly 84,000 banned purchases made by at least 18,000 ESA accounts. The 20% figure was calculated by dividing these accounts by the number of total ESA participants at the time.
ADE reached a different estimate using a random sample of ESA orders and focusing on the percentage of dollars spent on unallowable purchases, however. ADE’s analysis estimated that 1.9% of ESA spending was for unallowable expenses, while 0.3% was classified by the department as fraudulent or egregious.
As 12News investigative reporter Craig Harris told KTAR, both numbers could be true at the same time.
While the sample they last examined isn’t publicly available, 12News previously shared another sample of purchases they investigated. This list includes purchases for $1,000+ Lego sets, Kenmore appliances and diamond rings.
Although not representative of the entire range of purchases, these items, among others, have prompted heavy scrutiny of the program’s oversight.
But in order to understand how these purchases might’ve been made in the first place, one needs to understand how ESAs work.
How ESAs Work
Arizona families must first apply to the program under the eligibility category that best corresponds to their child. Per ADE, these applications should be processed within 30 days.
Once approved, the student’s account is funded based on the program’s quarterly schedule. Those funds are disbursed through ClassWallet, a digital wallet platform. Most purchases are made directly through ClassWallet.
At that point, what parents do with the funds depends on their children’s needs and what type of education they wish to pursue. Some parents will spend the funds on tuition at a private school. Others may spend it on tutoring services or curricula to use at home.
The opportunities are many, but they’re subject to conditions. The ESA parent handbook outlines purchase and program requirements.
For example, the book states that a portion of each student’s ESA funds must be spent on at least each of the following subjects: reading, grammar, mathematics, social studies, and science.
“Every single purchase made by an ESA family has to be documented,” said Matt Beienburg, director of education policy at the Goldwater Institute. “They have to document not only the item but also the amount. So that means every time that they are making a purchase online or submitting a reimbursement, they have to submit receipts.”
The ESA parents who spoke with KAWC also attested to this.
“You only have a certain amount of money to spend, so it's not like you can spend frivolously,” said Brittani Ibarra, a parent who uses ESAs for private school. “Like I pay my tuition and it covers all the money. I have nothing left. So it's not like I could just spend on whatever I want — really just school supplies.”
The handbook also notes that all expenses are subject to auditing and random review.
“Even if they approved something, they could take it back at any point and you would owe them money, and they will shut your account down until you pay it back,” Ibarra said.
Alexis Liggett shared one example of this for her son, who she described as having profound disabilities. In her situation, she had submitted a receipt for physical therapy, but it got kicked back.
“It said, your child doesn't qualify or something to that effect, and I thought, ‘Oh man, I screwed up, I submitted it for my daughter!’” she said.
Turns out, she hadn’t made a mistake; the department just didn’t have her son’s Individualized Education Plan (IEP) in the system. After she sent it to them, he went from having about $1,800 a quarter to about $30,000 when properly funded.
Liggett said she did not know whether the rejected transaction had ever been classified as fraud or included in reports of improper spending, but she wonders.
One concern shared by both proponents and opponents of the program, however, is the number of auditors assigned to the program.
“Currently we have to process over 2 million orders annually with a staff of eight employees to review purchases,” said Horne in a June ADE communication.
For that reason, Horne said ADE relies on risk-based auditing for purchases of $2,000 or less, rather than reviewing every purchase before payment. He’s also calling for more ESA staff in the state budget.
Officials from both parties have supported adding review staff, but the disagreement arises over what policy changes might accompany that. In the past, Gov. Katie Hobbs’ office has argued that additional staffing should be paired with stronger accountability measures, including review of purchases under $2,000.
What Remains Contested
While many Arizonans across the education spectrum support school choice as a principle, there are many ESA opponents who take issue with the ESA program’s universal eligibility.
"At the end of the day, this is an entitlement program,” Hobbs told KAWC during a July visit to Yuma. “There is no other entitlement program that we don't have any kind of eligibility requirements for, and we need to make sure that every student across the state is having an opportunity for a good education. And that is not happening with the way the program is working right now."
Some critics have also characterized the program as “welfare for the wealthy,” noting that universal eligibility made the state responsible for funding students who were never in the public school system to begin with.
Additionally, critics are arguing for academic accountability.
“We can't figure out if kids are learning if we don't have any requirements for testing or reporting on what they're learning,” said state Rep. Mariana Sandoval, D-23, at Yuma’s 2025 legislative town hall.
And more broadly, critics are concerned that the program’s additional costs are at the expense of the state’s public school system, which has faced documented funding inequities and shortfalls.
“Until we treat public schools and these private schools as well as homeschooling the same, this will never be a fair system,” said state Sen. Brian Fernandez, D-23. “And who pays the price? We do as taxpayers.”
In the coming installments of this series, KAWC will explore various angles of the ESA program in pursuit of answers to the following questions: What is it costing? Whom is it serving? What should come next?
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This reporting is supported by a grant from the Arizona Local News Foundation.
