GOLDWATER INSTITUTE: Arizona’s Universal ESA Program: A History of Surplus, Savings, & Media Misinformation

Recently, the Goldwater Institute’s Matt Beienburg released a critical analysis of Arizona’s universal Empowerment Scholarship Account (ESA) program, challenging the misleading narratives presented by the media and critics. The ESA program, which allows every Arizona child to access an ESA, has faced baseless accusations of being a financial drain on the state budget. However, the data shows otherwise. Beienburg writes:

“[W]hile union-aligned journalists and advocacy organizations have painted Arizona’s ESA program as excessively costly to taxpayers and responsible for triggering a budgetary shortfall, the two years of the universal ESA program’s history—and a new report from Arizona’s nonpartisan state budget analysts—suggest otherwise.”

The Nine Key Takeaways of Arizona’s ESA Program:

1. 2022-2023 Surplus: Despite the ESA expansion, Arizona saw a $2 billion surplus in 2022-2023.
2. 2023-2024 Savings: Even with ESA awards exceeding expectations, the state education funding formula generated a net savings due to public school enrollment declines.
3. Budget Deficit Context: The 2023-2024 state deficit arose from Governor Hobbs’ $2 billion spending increase, not from the ESA program.
4. Lower Per-Pupil Costs: The ESA program reduced per-pupil costs by shifting growth from higher-cost public schools to the lower-cost ESA program.
5. Long-Term Cost Control: Public charter school enrollment flattened post-ESA expansion, reflecting a long-term reduction in K-12 costs.
6. Limited ESA Spending: ESA spending is minor compared to the $600 million increase in public school funding during the ESA expansion period.
7. Small Percentage of K-12 Budget: The total ESA spending represents only 3% of the state and local K-12 budget, despite covering over 5% of students.
8. False Claims of Exponential Growth: Critics inaccurately compare speculative net costs with total ESA award values to falsely claim exponential growth.
9. Consistent Budget Projections: Contrary to alarmist claims, actual budget projections for ESA costs have been accurate and sustainable.

Debunking Misinformation:

• Claim 1: Exponential Growth Beyond Projections: Critics confuse net costs with total award values, leading to exaggerated claims about ESA expenses.
• Claim 2: ESA-Induced Budget Deficit: The 2023-2024 deficit was caused by increased state spending, not the ESA program.
• Claim 3: Higher Costs Per Student: ESA students cost the state less than public school students when considering all funding sources.
• Claim 4: Financial Crisis for Other States: The Arizona experience demonstrates sustainable costs, with no impending financial crisis for states adopting similar programs.
• Claim 5: Misallocation to Wealthy Families: Critics ignore the fact that ESA spending on wealthy students is minimal compared to public school subsidies for the same demographic.

Beienburg emphasizes the misleading nature of these criticisms and highlights the overall success and efficiency of the ESA program, urging policymakers to focus on factual data rather than partisan narratives.

Read the full story here.