(The Center Square) – Arizona Superintendent of Public Instruction Tom Horne told The Center Square that the Empowerment Scholarship Account’s error rate is lower than that of other Arizona government programs.
Katie Ratlief, executive director for Common Sense Institute Arizona, said the school choice program’s error rate is around 1%.
The rate is the same as in 2018, before it became universal in the state, Ratlief said.
She told The Center Square that nearly 2 million transactions occur each year.
Matt Beienburg, director of education policy at Phoenix-based Goldwater Institute, said people can use ESA funds for anything from private school tuition to special education therapy curriculum and supplemental materials.
He said the Arizona Department of Education uses risk-based auditing, the same method the Internal Revenue Service uses to audit taxpayers.
DOE will “audit purchases based upon the risk profile of those purchases,” Beienburg said.
Before the risk-based auditing policy, Arizona families who used ESA funds did not get “their reimbursements” because of the high volume of orders DOE had to process, he told The Center Square.
Horne said in cases of fraudulent purchases, DOE suspends those accounts.
In extreme cases of fraud, Horne said he sends names to Attorney General Kris Mayes, requesting that they be prosecuted.
The superintendent noted only a small percentage of ESA purchases “are actually fraud.”
Compared to other government programs, Arizona’s ESA error rate is much lower.
As an example, in 2024, Arizona’s unemployment insurance program error rate for improper payments was 22%, Ratlief noted.
And the Supplemental Nutrition Assistance Program’s payment error rate in Arizona is around 10%, according to Glenn Farley, CSI’s director of policy and research.
The ESA’s payment rate is also lower than the national Medicaid improper payment rate of 6.55%.
According to Beienburg, if Arizona doesn’t get its SNAP payment error rate under control, it could cost the state up to $200 million. Under H.R. 1, also known as Congress’ Big Beautiful Bill Act, states will face penalties beginning in fiscal year 2028 if their chosen SNAP payment error rate in fiscal year 2025 or fiscal year 2026 exceeds 6%.
Gov. Katie Hobbs, a Democrat, vetoed House Bill 2206 in February, which would have required Arizona to bring its SNAP payment error rate below 3% by 2030.
The bill was designed to help Arizona avoid potential financial penalties for having a high SNAP payment error rate.
Hobbs said in her veto letter that the bill “contains yet more unfunded mandates and not a dollar to help our state agencies implement these changes now, or to modernize our systems in the future.”
