Bills to expand Empowerment Scholarship Accounts working their way through the Arizona Legislature would substantially increase costs to the state’s general fund, not save the state money as one of the bills’ sponsors has claimed, according to two recent financial reports.
Empowerment Scholarship Accounts provide taxpayer money from the state’s general fund to parents who opt to take their child out of a public school – a district or charter school – and send them to a private school or use other education services. Currently, 4,102 Arizona students use ESAs at a cost to the state of $37 million in 2017 and $99.7 million since the program was introduced in 2011.
Senate Bill 1431, sponsored by Arizona Senate President Pro Tempore Debbie Lesko, R-Dist. 21 of Peoria, and House Bill 2394 with identical language sponsored by Arizona House Majority Leader John Allen, R-Dist. 15, would allow any Arizona kindergartner to use an ESA in fiscal year 2018 and phase in eligibility for all 1.1 million Arizona public school students over four years from fiscal 2018 to 2021. Both bills await hearing in the committee of the whole.
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ESA’s were initially designed for children with special needs. Lawmakers expanded the program to include children of an active duty military parent or guardian; children placed in foster care who have been adopted; children who attend a public school with a state grade of D or F; siblings of students who are participating or have participated in ESAs; children who reside on Native American lands; and children of military personnel killed in the line of duty.
The state general fund provides a student with no disability $5,600 in an ESA. That is $800 more than the state would pay for a student at a public district school and $600 less than the state would pay for a student at a charter school, according to a fiscal impact report on the bill by the state’s independent budget research office – the Joint Legislative Budget Committee.
Lesko has said ESAs save the state money and that they are just another choice for parents. In fact, in some higher-property value districts – like Scottsdale Unified School District and Cave Creek Unified School District – the entire cost of an ESA would be paid by the state.
ESA expansion would cost the state general fund an estimated total of $45.3 million over four years if participation rates rise to 2.6 percent of all eligible public-school students and 40 percent of all eligible private-school incoming kindergarteners by 2021, according to the JLBC report prepared by Matt Beienburg. This is in addition to the $37 million spent this year on ESAs for 4,102 students.
If 5 percent of parents of public school students choose ESAs, the impact to the state treasury would be $26.8 million, according to a Capitol Media Services story.
This is the first time the JLBC has estimated that ESA expansion will cost taxpayers more money, said Chris Kotterman, director of government relations for Arizona School Boards Association in an Arizona Republic article.
The JLBC report was developed after the Arizona Association of School Business Officials and Arizona School Boards Association created a fiscal impact analysis on ESA costs to the state and legislators were provided with the average cost of ESAs to the state for every school district in their legislative district.