Arizona schools chief Tom Horne says an independent analysis of how much the Empowerment Scholarship Account (ESA) program will cost shows the dire predictions made by Governor Hobbs and other opponents of the program are incorrect.
After studying a detailed review by education analyst Dr. Matthew Ladner, Ph.D, regarding the various sources of school funding and how ESA funding impacts the state budget, Horne said he agreed with Dr. Ladner that “the cost of the ESA program will never be $943 million for reasons which I will explain. But even if it were, that would be only about one percent of the fiscal 2022 state budget of $80.5 billion.”
Horne offered several reasons he believes the cost will never be anything like $943 million.
“Taxpayers pay both state and local taxes,” explained Horne. “Combined they contribute about $13,000 per student for every student in public school. If a student leaves a public school for a private school, and obtains a payment from ESA of $7200, that is a savings of about $6000 per student to the taxpayers.”
If the student was never in a public school but was already in a private school when the ESA program was adopted, there is still a benefit to the state for the following reasons: many students in private schools are beneficiaries of the tax credit available for contributors to the student’s tuition. If they choose to take the $7200 from the ESA program, they have to give up that tax credit,” argued Horne. “This increases revenues to the state, because the tax liability that previously was erased by the tax credit now has to be paid to the state.”
“Dr. Ladner has studied the issue thoroughly and without political bias. His analysis should be read to reassure taxpayers the ESA program saves tax dollars and is sustainable,” concluded Horne.
Ladner responded to a memo released by Governor Hobbs, in which she claimed the ESA program represents “increased costs to taxpayers.” He said her claims “are based on highly questionable assumptions. They also sidestep the role of local revenue in funding public schools, and thus omit the net savings that scholarships programs can yield for taxpayers. And they ignore the interaction between ESAs and other state policies that subsidize school choice.”
Most notably, Ladner points out that “the Hobbs memo assumes that almost 100,000 students will sign up for ESAs, generating a frightening estimate of a $943.8 million cost. This number may seem daunting until placed into context: Arizona spent over $80.5 billion in fiscal year 2022. This means even the exaggerated ESA cost estimate represents approximately 1% of state expenditure.”