Could school vouchers save money?
Sen. Lesko says expansion would add accountability
“ESAs allow parents to choose the best education for their children, save the state $, and have added accountability to the current program.” ARIZONA STATE SEN. DEBBIE LESKO IN A COMMENT ON A NEWS ARTICLE
THE MEDIA: The Internet. WHO SAID IT: Debbie Lesko. TITLE: Arizona state senator. OFFICE: State Senate, District 21. PARTY: Republican. THE COMMENT: “ESAs allow parents to choose the best education for their children, save the state $, and have added accountability to the current program.”
THE FORUM:Comment on a news article.
WHAT WE’RE LOOKING AT: Would the expanded Empowerment Scholarship Account program save money for Arizona and does it include significant accountability measures?
ANALYSIS: Since 2011, disabled students in public schools have had the ability to apply for an Empowerment Scholarship Account to receive financial aid for attending private school. Since then, it has expanded to include different groups of students, such as ones at poorperforming schools, Native Americans and students whose parents are in the military.
In April, the Legislature passed a bill to open the program to all Arizona students, capped at an enrollment of 30,000 by 2022.
The nonpartisan Joint Legislative Budget Committee produced a financial report on the bill that projects a savings to the state’s general fund of$1.6 million next year and $3.4 million in 2021.
However, the report states “this estimate is highly speculative, and actual costs could vary substantially” based on participation rates among students, and the number of kindergartners enrolled in the ESA program who would have gone to private school regardless of the program’s existence.
The JLBC also warned of possible wide variations in a previous report before the bill was amended and passed. That report estimated no savings and instead a cost of $24 million by 2022.
To turn that deficit into a savings, legislators altered the formula used to calculate ESAs.
On average, a non-disabled student from a public district will receive $4,400 and one from a charter will get around $5,500, instead of both receiving the higher amount.
Under the expansion, if a family that receives an ESA has an income below 250 percent of the poverty level — $61,500 for a family of four — the student would receive 100 percent of the formula funding. Above that, they receive 90 percent.
The JLBC estimates that 70 percent of newly eligible public school students will have family incomes below 250 percent of the FPL.
The state would not lose money with ESAs for students at most public or charter schools. For students above the poverty line threshold, it could save money.
The JLBC noted the state will incur losses when awarding ESAs to students who wouldn’t attend public schools, including military dependents and disabled preschoolers.
Chris Kotterman, a lobbyist for the Arizona School Boards Association, is concerned about another cost: students from non-state aid districts.
These school districts don’t receive money from the state’s general fund because local property taxes generate enough revenue to cover expenses. About 7.3 percent of total ESA money went to kids from these districts, according to a database created by The Arizona Republic. The JLBC reports that 7 percent of students statewide attend school in non-state aid districts.
The JLBC estimates students from non-state aid districts will cost the state $2.2 million in 2021. However, in a memo to lawmakers, the committee warned that this might “overstate” the cost and noted that “given the small number of students, we believe this micro-analysis to be even less reliable than the statewide one.”
Kotterman thinks the proportion of students from both wealthy and nonstate aid districts will grow once all students are allowed to enroll. “Our prediction is that students in those areas are better equipped to take advantage of the ESA program,” he said. “You’ll see more students switching in from there.”
More than 75 percent of ESA money came from districts with an “A” or “B” rating, which are frequently located in more-affluent areas. Only 4 percent came from districts with a rating of “D” or lower, according to an Arizona Republic report published in March.
Lesko’s statement also notes concerns about gaps in accountability of the program, and the new bill adds several requirements.
Those include making private schools administer standardized tests for students from third through 12th grades and requiring the schools give the results to parents. Schools with 50 or more ESA students need to make “student achievement results” publicly available upon request.
It’s unclear how many private schools will have that many students receiving an ESA.
The state Senate also is working on an test “menu” to give private and public schools a list of assessment options for students.
Kotterman thinks “there’s no way to fix” one area: It’s unconstitutional for the state to give ESA money directly to an educational institution. Instead, it goes to parents, whom the state must trust to spend it responsibly.
A state audit found that $102,000 was misspent by parents from August 2015 to January 2016.
Instances ranged from enrolling children in public schools and pocketing the ESA money, to purchasing items such as “snow globes and sock monkeys.” ESA money may also have been used to pay for an abortion, a top state education official has said.
“(They’re) handing a human being a debit card with money that’s not theirs and asking them to spend it responsibly,” Kotterman said. “And when you do it that way, you’re always going to be at greater risk of malfeasance.”
Lesko believes changes in the law address this sufficiently. One requires the state treasurer to hire a private company to manage ESAs. In an email, she said this is in response to “misuse and mismanagement of resources” from past years, when the Arizona Department of Education and the Treasurer’s Office oversaw the finances.
Auditing efforts have been consistently underfunded. Initially, the Legislature gave the Department of Education no money to oversee the program, but that has increased over time. The department currently is entitled to 5 percent of ESA funds — approximately $2.5 million of the $49 million total.
This year, the department had a budget of $800,000 before the Legislature appropriated another $400,000. However, this is less than half of what the department should receive under the funding formula. Lawmakers also have helped prevent the department from hiring staff to conduct audits and do other oversight.
The Treasurer’s Office confirmed it is looking into private financial firms but declined to provide specifics. It’s not clear what kind of funding a private firm would receive for such work.
The new bill also creates an oversight committee. Additionally, families will receive monthly payments instead of larger quarterly ones.
BOTTOM LINE: The JLBC estimates the bill will save $3.4 million in 2021 but acknowledges that this projection is “highly speculative” and “could vary substantially.”
The Arizona School Boards Association believes students from wealthier areas will receive a disproportionate amount of ESAs and that the report underestimates the number of students who will transfer from non-state aid districts, which costs the state money.
We can’t be certain the bill will save money — projections aren’t always accurate, as Lesko herself acknowledged.
The new bill adds layers of accountability. Kotterman worries they don’t go far enough, but Lesko is confident that private monetary investigators and requirements for test reporting can address the largest concerns.
Critics of the program have other concerns about who will use ESAs and how they will affect students in poorer-performing districts. Those arguments about equity and fairness have generated significant debate, but are not germane to whether Lesko’s bill will save money and make the program more accountable.
THE FINDING: While AZ Fact Check typically awards one finding, the two parts of Lesko’s comment have significant differences in evidence to judge their accuracy. Thus, we are awarding two findings: 1. The expanded ESA program includes added accountability measures: 3 stars, mostly true. 2. The expanded ESA program will save money for Arizona: No stars, inconclusive.
SOURCES: Phone call and email correspondence with Sen. Debbie Lesko, RPeoria; phone call with Chris Kotterman, lobbyist for Arizona School Boards Association; Lesko’s Facebook; “Database: Search Arizona ESA awards in your district,” The Arizona Republic, www.az central.com/story/news/politics/arizonaeducation/2017/03/30/database-arizonaempowerment-scholarship-accountsawards-school-district/99801118/; “Arizona taxpayer-funded vouchers benefiting students in more-affluent areas,” The Arizona Republic, www.azcentral.com/story/news/politics/arizona-education/2017/ 03/30/arizona-taxpayer-funded-vouch ers-benefiting-students-more-affluentareas/99707518/; “Why voucher expansion now makes sense,” The Arizona Republic, www.azcentral.com/story/opin ion/op-ed/2017/04/10/vouchers-wor sley/100261752/; Text of Senate Bill 1431, https://apps.azleg.gov/BillStatus/Get DocumentPdf/452775; most recent JLBC report, https://apps.azleg.gov/BillStatus/ GetDocumentPdf/454300; earlier version of JLBC report, https://apps.azleg.gov/ BillStatus/GetDocumentPdf/448680; JLBC fiscal memo; “Oversight of Arizona ESA school-voucher program ‘almost a sham,’ “The Arizona Republic, www.az central.com/story/news/local/arizonaeducation/2017/06/22/oversight-arizonaesa-school-voucher-program-almostsham/407961001/; “Voucher bill is fantastic for NE Valley kids, taxpayers,” The Arizona Republic, www.azcentral.com/ story/opinion/op-ed/laurieroberts/2017/ 02/20/roberts-you-ready-pay-more-edu cate-scottsdales-kids/98176688/.