A Crisis in Arizona's Education Funding
Arizona's public schools are bleeding. In June 2025, districts faced a $200 million shortfall, forcing delayed payments and emergency budget fixes. Meanwhile, a staggering $440 million in taxpayer dollars sits untouched in private Empowerment Scholarship Accounts (ESAs), part of a program costing the state over $1 billion annually. Governor Katie Hobbs has sounded the alarm, calling for urgent reforms to stop what she describes as a reckless drain on public education.
The ESA program, designed to give parents flexibility in education spending, allows families to divert about $7,500 per student from state K-12 funds for private school tuition, homeschooling, or even future college costs. But with unused funds rolling over each year, the program has ballooned into a fiscal black hole. While public schools struggle to pay teachers and maintain classrooms, these accounts hoard resources that could transform Arizona's education system.
The debate extends beyond statistics, highlighting fundamental priorities. Arizona ranks 49th in per-pupil spending, and the gap between well-funded private options and under-resourced public schools grows wider every year. The recent revelation of idle ESA millions has reignited a fierce debate about fairness, accountability, and the future of education in the state.
The Cost of Unchecked Privatization
The ESA program's explosive growth tells a troubling story. From 11,000 participants in 2021 to over 70,000 in 2025, the program's universal eligibility, enacted in 2022 under former Governor Doug Ducey, has funneled public funds to families across income levels. A Grand Canyon Institute report found that even before 2025, $360 million had accumulated in unspent accounts, with no clear plan to ensure those dollars benefit students.
Fraud is another glaring issue. In February 2024, five individuals were indicted for siphoning $600,000 by falsifying ESA student records. The Arizona Department of Education, tasked with oversight, operates with just 30 specialists to manage a billion-dollar program. Without robust checks, taxpayer money is at risk, and public schools bear the brunt of the fallout.
Public districts, meanwhile, face relentless pressure. A June 2025 letter from the Department of Education warned of a 40 percent cut to district payments, a direct result of the state's funding formula being stretched thin. Teacher salaries, already below the national average despite raises from the 20x2020 initiative, stagnate as ESA costs soar. The program's design, which incentivizes hoarding through unlimited rollovers, only deepens the inequity.
Equity and Access Under Threat
The ESA program's impact reaches beyond budgets, striking at the heart of educational equity. Public schools, especially in rural and underserved areas, rely on stable state aid to maintain staffing and programs. As funds flow to private options, predominantly in metropolitan areas, rural districts struggle to keep classrooms open. This shift risks widening racial and economic disparities, as affluent families benefit most from subsidies that could instead uplift all students.
Transparency is another casualty. Unlike public schools, private vendors receiving ESA funds face no mandatory testing or accreditation requirements. Parents may feel satisfied, but there's little data to show whether students are thriving. The state's School Finance Transparency Portal, meant to track spending, omits critical details about private school outcomes, leaving taxpayers in the dark.
A Blueprint for Reform
Governor Hobbs, elected in 2023 on a platform of accountability, has proposed bold steps to rein in the ESA program. Her 2025 budget calls for income caps to prioritize low-income families, real-time purchase approvals to prevent fraud, and annual testing for ESA-funded schools to ensure quality. These measures aim to redirect resources to public schools, where reclaimed funds could boost teacher pay and classroom resources.
Historical precedent supports tighter oversight. A 2017 attempt to expand ESAs was struck down by voters, signaling public demand for accountability. Studies from other states show voucher programs often yield mixed academic results, underscoring the need for clear standards. By capping annual rollovers and requiring accreditation, Arizona could balance parental choice with fiscal responsibility.
Building a Fairer Future
Arizona stands at a crossroads. The $440 million languishing in ESA accounts represents lost opportunities for public school students, from updated textbooks to smaller class sizes. By prioritizing transparency and equity, policymakers can ensure taxpayer dollars serve every child, not just those in private programs. Hobbs' push for reform offers a path to restore balance.
Compromise is possible. Capping rollovers at 150 percent of annual awards, paired with risk-based audits, could preserve flexibility while curbing waste. Linking Prop 123 renewal to guaranteed public school funding growth would protect districts from future shortfalls. These steps require courage and bipartisan cooperation, but the stakes are too high to ignore.
Education shapes Arizona's future. Every dollar hoarded in private accounts is a missed chance to invest in teachers, students, and communities. By acting now, the state can honor its constitutional promise of a uniform public school system, ensuring no child is left behind.