ESA program gets a few tweaks, but no overhaul

Change to the Empowerment Scholarship Account program remained a game of inches this session.

Though Democrats and Gov. Katie Hobbs eked through slight oversight of the program in the budget, the same changes were celebrated by Republicans as protecting school choice, effectively undercutting opponents' goal to significantly rein in spending and enrollment in the program.

“People were excited to celebrate ESA reforms that Hobbs was able to get just because they so desperately wanted to have some sort of win,” Beth Lewis, executive director of Save Our Schools, said.

“But it’s pretty obvious to anybody who follows policy that these were not large policy wins. When you have folks that are anti-public school celebrating, it brings it into clarity that Hobbs and the Dems were not able to accomplish much.”

Hobbs marked her first State of the State Address in 2023 with a call to repeal universal expansion. But the 2023 session yielded a study committee and additional reporting from the Department. of Education to the governor, Legislature and Joint Legislative Budget Committee.

At the top of the 2024 session, Hobbs tempered her requests, opting for an eight-point plan with measures aimed at improving “accountability and transparency,” instead of pushing for all-out ESA change.

Hobbs proposed requirements that private schools receiving ESA funds fingerprint and do background checks of educators, provide services to meet students’ Individualized Learning Plan or Section 504 plan, meet minimum education requirements for students and refrain from hiking tuition higher than the rate of inflation.

On the financial side, the Governor’s Office proposed empowering the Auditor General’s Office to audit private schools and requiring the Department of Education to manually approve purchases exceeding $500.

In terms of curtailing enrollment, Hobbs sought to enact a requirement that students spend at least 100 days in a public school before becoming eligible for the ESA program and require the Department of Education to issue a warning of “parent and students rights that are relinquished when leaving the public school system” and report graduation and chronic absenteeism rates.

But Republican lawmakers quickly shot down Hobbs' proposals as untenable or unnecessary and continued to stand against ESA changes throughout the session.

A bill to ensure private schools provide services to students with disabilities, made it to committee but failed along party lines. A second bill seeking additional cost reporting from the Department of Education advanced from the Senate Education Committee but failed to make it to the floor.

ESA change made a resurgence in the budget bills, but it was not entirely reflective of Hobbs’ or Democrats initial policy goals.

The provisions written into the K-12 budget require all teaching staff and personnel who have unsupervised contact with students to be fingerprinted and mandates the Department of Education to remove any tutors or teachers with disciplinary action by the State Board of Education from ESA platforms.

Lewis noted the fingerprinting provision lacks teeth in backgrounding educators through state databases.

“It leaves the onus on private institutions to collect fingerprints, not actually run them against any system to see if you have a bad actor on your hands,” Lewis said.

In terms of additional oversight by the department, lawmakers wrote in a requirement that the department verify a student is qualified when renewing their ESA contracts, ensure students do not use ESAs solely for summer programs while otherwise attending public school, provide an online database of allowable and disallowed expenses and allow parents to seek reimbursement.

The budget also directed the auditor general to develop risk-based auditing and requires the department to annually review a random sample of ESA accounts to ensure compliance with the contract, state laws and program rules.

Doug Nick, a spokesman for the department, said it is still reviewing required changes but noted the existing policy is to review all expense requests, a process he said “exceeds the risk-based standards.”

He added the ESA Parent handbook outlines allowable and disallowed expenses already.

Republicans and ESA supporters celebrated Democrats' failure to see any substantial cutback on the program through the Legislature.

House Speaker Ben Toma said in a statement he was “most proud of the fact that this budget fully protects the state’s universal Empowerment Scholarship Account program.”

“Democrats have long vowed to dismantle the program. As the sponsor of the universal expansion of ESAs, I was never going to let that happen,” Toma said. “ Eligibility for the program is unchanged and we have included several smart, commonsense reforms that improve this popular school choice program and increases accountability.”

Senate Majority Whip Sine Kerr similarly noted in a statement, “What’s not included in the $16.1 billion budget is an elimination of the historic Universal Empowerment Scholarship Accounts program.”

Looking forward, Lewis said the changes in the budget could put the state on a path toward further reform, but noted any substantial changes to the program in the way of curtailing enrollment, spending or enacting education standards, are only likely to occur under a Democratic majority.

“If the Democrats take control, I think that would be day one business,” Lewis said.

 

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