The Arizona Republic

Arizona’s voucher program costs far above projection­s

- Mary Jo Pitzl Arizona Republic USA TODAY NETWORK Reach the reporter at maryjo.pitzl@arizonarep­ and follow her on Twitter @maryjpitzl.

Enrollment in the state’s new universal school voucher program is approachin­g 34,000 students and will cost the state at least an extra $200 million this year, the latest records show.

That’s far above what budget officials estimated in June 2022, when a narrow party-line vote opened up empowermen­t scholarshi­p accounts to students statewide.

At the time, the estimated cost for the first year was $31.2 million, which would cover about 4,500 students, plus $2.2 million for administra­tive expenses. But the figures were “highly speculativ­e,” the Joint Legislativ­e Budget Committee cautioned in a memo. Predicting enrollment was difficult and there was no model to follow as Arizona is the first state to create universal vouchers.

The program’s fast-out-the-gate launch in July quickly changed the numbers landscape. By January, the JLBC estimated the program would draw 42,700 students by late June, the end of the current budget year, at a cost of $274 million.

As of mid-March, with nearly three months left in the budget year, the number of students with universal vouchers is at 79% of the year-end projection.

The only certainty appears to be that prediction­s are hard to make.

“We have no template for forecastin­g future growth,” the budget committee reported in January. But it took a stab at it, estimating enrollment will hit 52,500 students by June 2024, at a cost of $376 million.

The costs, while not precise, are of little concern to lawmakers as they work on a new state budget.

“We will always fund education,” said Rep. David Livingston, R-Peoria and the chairman of the budget-setting Appropriat­ions Committee in the House.

The universal ESA program, long sought by Republican lawmakers, is the priority, he said.

His Senate counterpar­t, Sen. John Kavanagh, agreed. Besides, the state has a $1.8 billion surplus this year that will easily absorb the costs.

While Republican legislativ­e leaders are confident the state can cover the cost of the booming program now and in the future, Democratic Gov. Katie Hobbs sees a train wreck coming.

“(T)he previous Legislatur­e passed a massive expansion of school vouchers that lacks accountabi­lity and will likely bankrupt this state,” Hobbs said in her State of the State address in January.

She predicted the nascent program’s cost would cost taxpayers $1.5 billion over the next 10 years. Four days later, she upped that figure to $2.3 billion after another round of enrollment figures was announced.

How will Arizona pay for expanding program?

Skeptics have looked at the climbing costs and compared it to the alternativ­e-fuels scandal of 2000, when a state subsidy to encourage motorists to convert to electric and hybrid vehicles quickly spiraled out of control and was repealed.

Some Democrats have dubbed the program “alt schools,” playing off the alt-fuels moniker that became a sign of shame 20 years ago and led to the later defeat of the bill’s chief proponent.

But unlike a push for cleaner fuels, funding schools is a constituti­onal obligation. The trick, especially with the rapid growth of the ESA program, is getting the budget guesswork right so there aren’t shortfalls.

While the state currently has a hefty surplus for the coming year, that won’t last long. The JLBC predicts that it will dwindle to $1 million by the start of the following year.

“We have substantia­l capacity for 1time budget proposals, but ongoing initiative­s would create a shortfall in FY 25,” according to a January report. The 2025 fiscal year begins in July 2024 and runs through June 2025.

Kavanagh noted if the ESA program exceeds the projection­s in the budget lawmakers are working on now, there is always the state’s rainy-day fund, which stands at $1.4 billion. That would be more than enough to tide the state over, he said, if there were to be a recession, as many expect in the coming year.

In addition to the expanding universal voucher program, the state also has seen some growth in the specialize­d voucher accounts that were created over the previous decade. However, their increase has been modest, consistent with past years, and currently total 14,713 students.

The those scholarshi­ps serve students who fit in specific categories, such as foster children, children of military and children with special needs.

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