What are Empowerment Scholarship Accounts?
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What are Arizona’s Empowerment Scholarship Accounts?

Hand Holding A Debit Card. Photo Courtesy Of Pixabay

Editor’s note: The expansion of Arizona’s voucher-like Empowerment Scholarship Account program is expected to be one of the most high profile and contentious education issues of the 2017 legislative session, which begins next Monday, Jan. 9. The recent appointment of Betsy DeVos, a longtime voucher activist, as U.S. Secretary of Education by President-Elect Donald Trump is also expected to intensify state and national efforts to expand programs that provide public dollars to families for private schools. This is the first in a multi-part series by AZEdNews exploring Arizona’s program.

Some Arizona parents have been sending their children to private school, including those run by religious organizations, for the past seven schools years with Arizona taxpayers footing the bill.

The voucher-type Empowerment Scholarship Account program, passed by the Arizona Legislature in 2011 and the first such program in the nation, was initially introduced to cover students with special needs.

State Payouts Climbing as Eligibility Expands

Of the eligible 115,000 special needs students, 115 took part in the program in the 2011-2012 school year at a cost of $1.4 million. Today, through continual expansion of eligibility by the Legislature and high-profile promotion by Arizona-based and national advocacy groups, 4,102 Arizona students now receive these funds.

This school year, $37 million is being paid from the state’s general fund to families who have chosen to opt out of public schools – an increase of 2,543 percent since the ESA program’s start. A total of $99.7 million has been paid out over the past seven years, according to the Arizona Department of Education and Arizona Senate research staff.

Lawmakers have expanded the ESA pool to now include children of an active duty military parent or guardian, children placed in foster care who have been adopted, children who attend public schools rated “D” or “F” by the Arizona Department of Education, siblings of students who are participating or have participated in ESAs, preschoolers with special needs, and children of military personnel killed in the line of duty.

What are Arizona's Empowerment Scholarship Accounts? AZEdNewsWhatAreESAsInfographicUpdated

AZEdNews infographic: What are ESAs? by Lisa Irish/AZEdNews

What are Arizona's Empowerment Scholarship Accounts? AZEdNewsWhatAreESAsInfographicUpdated
Infographic by Lisa Irish/AZEdNews
Click here for a larger version of this infographic

In 2016, Sen. Debbie Lesko, R-Peoria, introduced a bill to expand vouchers to any Arizona student attending a school with a least 40 percent of students considered low-income by Federal Title I standards, which includes approximately 600,000 of Arizona’s more than 1 million public school students. This effort failed, as did an expansion of ESAs to grandchildren being raised by their grandparents, a bill introduced by Rep. Mark Finchem, a District 11 Republican who represents largely rural portions Pima and Pinal counties. An expansion of ESAs to students who live on Native American lands, introduced by District 7 Republican Sen. Carlyle Begay passed. District 7 includes significant tribal lands. (Coming up – What to expect in 2017)

Using ADE figures, the Joint Legislative Budget Committee this year tracked the growth of the program since its inception. In fiscal year 2012, 144 students were enrolled at a cost of $1.5 million. In FY2013, enrollment more than doubled to 302, with the cost reaching $5.2 million. In FY 2014, enrollment more than doubled again to 761 and the cost jumped to $10.2 million. Enrollment rose to 1,311 in FY2015, and the cost hit $17.3 million. JLBC estimates for FY2016 were an enrollment of 2,175 at a cost of $27.1 million. (Coming up – Can Arizona afford ESAs?)

How ESAs Work, Who’s Using Them and How Much They’re Getting

ESA backers consider the program a parental school choice option, like charter schools or district open enrollment. Public school advocates see ESAs as a means to remove students from public district and charter schools while siphoning much needed dollars for education from the state general fund.

Related stories:

Part 2: Academic accountability: How do ESAs measure up?

Part 3: After six years, ESA program still vexed by financial accountability

An Empowerment Scholarship Account functions like a personal checking account or debit card. A family’s annual deposit from the state is equal to 90 percent of the state funding that would have been received by the school the child previously attended. Parents spend the money at their discretion on items, allowable in the law, that include tuition and fees at a private school or an eligible post-secondary institution, an online learning program, educational therapies or services, tutoring, curriculum, testing fees, and bank fees charged for the management of an ESA. ESAs must be renewed by families annually. The parents or guardians of students who receive ESAs must waive the child’s right to attend public school for the one-year period funded by the ESA. (Coming up – Accountability for spending and student learning?)

Latest figures from ADE for FY2017 are broken down by each eligible student group. A total of 2,024 new contracts have been issued, including 1,255 for special needs students. In addition, ADE renewed 2,078 ESAs, including 1,226 for special needs children.

Participating students this school year by eligibility category are foster care/adopted, 319; military, 541; sibling, 289; attending D-F school, 512; residing on Native American reservation, 281; foster care/planned adoption, 45; other, 2; and legally blind, deaf/hard of hearing, 0. ADE also reported denying 774 applications for various reasons.

The average student account value is $12,764, which would cover tuition costs at some private schools but falls far short of others. For example, Phoenix Country Day School tuition ranges from $19,300 for pre-kindergarten to $24,200 for 12th grade. Brophy College Preparatory tuition is $14,200. El Dorado Private School tuitions range from $10,936 for kindergarten to $12,697 for middle school.

ADE says the minimum amount awarded for a student depending on various factors is about $3,000. The highest would be about $32,000, for a student with significant special needs, but very few students receive that amount, ADE says.

A National Movement?

Since Arizona launched its program, Nevada, Florida, Mississippi and Tennessee entered the ESA arena with their own versions, one vastly more inclusive and others more restrictive.

Nevada’s Education Savings Account program was authorized by the state Legislature last spring for all students who have attended a public or charter school for at least 100 days immediately prior to submitting an application. Within months 8,000 students enrolled.

But it didn’t take long for a legal challenge to surface. The Nevada Supreme Court heard two constitutional challenges to the program. In the first case, opponents argued that the law was unconstitutional because the money for the program comes from the same account set aside for public K-12 education. In the second case, the American Civil Liberties Union argued that the state would be directly supporting religious educational institutions since the money would be transferred directly from the state to the schools.

In late September, the Nevada Supreme Court ruled that the ESA’s funding mechanism was indeed unconstitutional. The 4-2 ruling called for a permanent injunction. It says the program did not have its own dedicated funding source and was unlawfully diverting money meant exclusively for public education into education savings accounts that parents could use to pay for private school tuition and other educational services.

Opponents of the program expressed hope that the ruling would send a message to lawmakers in other states. Under the Nevada law, which the court struck down, disabled children and students from low-income families could receive up to $5,700 per year, and all other students, regardless of their household income, were eligible for up to $5,100 per year.

Arizona’s constitution differs from Nevada’s. The precursor to Arizona’s ESA program, which dispersed student funds directly to private schools, was challenged in court 10 years ago, found unconstitutional and ended. Arizona’s ESAs are legal because the money each student receives for their education is given to their parent, who chooses whether to use that money to enroll the student in a private school or use other educational options allowed by state law.

Florida, the second state to enact an ESA program, enrolled 5,844 students in its Gardiner Scholarship Program this fall. It allows students with special needs to receive an education savings account funded by the state and administered by an approved scholarship funding organization. Much like Arizona, parents can use the funds to pay for a variety of educational services, including private school tuition, tutoring, online education, home education, curriculum, therapy, post-secondary educational institutions in Florida and other defined educational services.  The Florida Legislature appropriated $71.2 million to the ESA program for 2016-17.

Under Mississippi’s ESA – Equal Opportunity for Students with Special Needs Program – each student’s account is funded at $6,500 annually, with no money coming from any school district, as is the case in Arizona. Enacted in 2015, the program is limited to 500 students, with a maximum of 500 additional students in each year of a five-year pilot period.

Tennessee’s ESA-type Individualized Education Account program, which begins next year, gives parents of students with special needs access to an IEA. The money can be used for a variety of educational expenses, including private school tuition, private tutoring, learning therapies and more. The average account value will be $6,200.

Meanwhile, in Arizona many in the education community believe that Republican legislators and policymakers hope to eventually open ESAs to all students, chipping away at public school funding year after year.