Mayes Compounds Growing ESA Vendor Problem

Arizona’s Empowerment Scholarship Account (ESA) program, established in 2011, enables Arizona parents to utilize public funds via vouchers to cover the costs of alternative schooling, including private school tuition, specialized educational materials, therapies, and other educational expenses. However, as the program has expanded and greater oversight has been needed, parents have increasingly been thrust into the roles of program evaluators to determine whether schools and vendors are legitimate, safe, and meeting promised standards.

Having to vet ESA vendors themselves is raising alarms, as parents have limited access to the means for vetting. Despite legislators touting increasingly rigid oversight, the ESA program has seen documented cases of misuse and fraud. For example, several former Arizona Department of Education (DOE) employees were indicted for approving applications using fraudulent documentation (in some cases, “ghost” students, or fake disability evaluations) and misusing funds. Another report found $124 million in ESA funds spent on “improper purchases,” including luxury items and furniture, as there were essentially no reviews for purchases under $2,000.

Concerns have also emerged regarding the purchase of “supplementary educational materials” that do not clearly align with student curricula. When purchases are approved without verifying curriculum relevance, the door is open to misuse.

Attorney General Kris Mayes has warned parents who choose ESAs that they may give up certain federal protections, such as the right to a Free and Appropriate Public Education (FAPE) and other legal safeguards under laws like FERPA. When dealing with private schools or ESA vendors, those protections may not apply. Parents need to be especially careful about what promises schools/vendors make.

Part of the vetting issue is the lack of a fully comprehensive, uniformly enforced list of approved vendors or schools that are pre-vetted for academic performance, financial stability, curriculum alignment, or other measures. Parents often need to verify credentials themselves by checking if the vendor is registered with ClassWallet or the ESA system, and verifying accreditation or providing credentialing (e.g., tutors requiring a high school diploma or higher).

Many parents express concerns about purchases being approved or whether vendors will be paid, particularly for “direct pay” vendors as opposed to those made via the ClassWallet marketplace. Some items get stuck waiting for approvals, often with little feedback or resolution. Low-income families are particularly vulnerable, as they usually need to cover the costs upfront, while delays in reimbursement can create significant financial strain.

Given the stakes, many parents are taking active roles in assessing vendors. Some practical steps that will help streamline the process include:

• Check Vendor Credentials:
  • Is the vendor registered with the Arizona Department of Education (ADE) via ClassWallet?
  • Do they have the required certifications or degrees? Do they meet vendor/provider registration rules?
• Review Contracts / Promises Carefully:
  • What did the vendor promise in terms of curriculum, support, and services?
  • Are there written guarantees?
  • The AG is advising parents to demand clarity on what is provided.
• Understand Potential Loss of Rights:
  • As noted, private schools & vendors accepting ESA funds are not bound by the same federal requirements (FAPE, certain privacy protections, etc.) as public schools.
  • Parents need to stay informed.
• Use the ESA Handbook and Guidance Material:
  • The DOE publishes an ESA Parent Handbook and guidance materials that outline the requirements for vendors, the structure of invoices, acceptable purchases, and documentation, among other details.
  • The handbook is a critical reference.
• Audit Purchases / Receipts:
  • Keep accurate records, ensuring that invoices are detailed and match the service provider names to the services promised.
  • In some cases, parents have had to defend purchases or provide proof of curriculum alignment.

As the program currently stands, parents with more time, resources, or sophistication may be better equipped to vet vendors. Others may struggle, leading to uneven outcomes. The only outlet currently available for redress of vendor misrepresentation, overcharging, or providing lower quality than promised is for parents to file complaints through the AG’s office, consumer protection agencies, or file lawsuits. These complaints are slow to be resolved, further impacting families with fewer resources.

The state has begun implementing changes, including new auditing rules, risk-based oversight, and amendments to the handbook. Although the ESA program was designed to be flexible by allowing parents to use funds as they see fit, that flexibility comes with risks. Unfortunately, Arizona has failed to provide sufficient guardrails and transparency, resulting in parents being forced to shoulder the burden.

The growing expectation that Arizona parents must vet ESA vendors reflects a challenge that the program did not foresee. While such programs can provide needed educational alternatives, the risks of vendor misrepresentation, misuse, and lack of oversight mean that parental diligence isn’t just helpful, it’s critical. Some would say it is unfair.

Placing too much burden on parents without clear support or structural protections can lead to fraud, abuse, and inequity. As the state continues to update handbooks, tighten auditing, and refine vendor rules, meaningful reforms could shift more responsibility to the system — reducing the load on families. For now, parents using ESAs in Arizona should proceed carefully.