A Fraudulent Attack On Education Choice

Arizona Attorney General Kris Mayes has indicted former government employees hired by a fellow Democrat, then-Superintendent of Public Instruction Kathy Hoffman, for defrauding the government. Now she’s desperately trying to use the story as a cudgel against families benefitting from the state’s popular Empowerment Scholarship Account policy.

On Thursday, Mayes’ office announced the indictment of five people, including three former Arizona Department of Education employees, for “allegedly engaging in fraud, conspiracy, computer tampering, illegally conducting an enterprise, money laundering and forgery” related to the ESA.

“My overarching concern here is this is a program that is easy to target for fraud,” Mayes claimed.

But these were no ordinary scammers. This was an inside job.

According to the grand jury indictment, the three former ADE employees, “admitted minor students, real and fictitious into the ESA Program by using false, forged, or fraudulent documentation,” including falsified special-education evaluations from public schools, and “awarded said student funds from the ESA Program, and approved expenses for reimbursement or funds for distribution of behalf of said students for their own benefit.”

Had the scammers not been working at the Department of Education, this would not have been possible. As ESA director John Ward explained to the Arizona Capitol Times, the ESA program already has proper guardrails in place: “ADE employees are trained to review birth certificates and look for anything ‘strange’ or ‘unusual’ in assessing authenticity of disability evaluations.”

Unlike the Arizona’s Health Care Cost Containment System scandal—which has seen dozens of scammers indicted for stealing more than a billion dollars from the state’s Medicaid system—ordinary scammers could not have gotten away with this without help from inside.

Moreover, the scammers were caught. Contrary to Mayes’s telling, the Arizona Education Department was investigating its own employees before the AG’s office got involved. “The Attorney General is not telling the truth when she states that the alleged criminal activities of former ADE employees did not raise flags in the department,” Superintendent of Public Instruction Tom Horne clarified in a press release. “In fact, the opposite is true. Our office did alert the Attorney General’s Office to concerns we discovered regarding” the former employees.

Mayes’s attempt to smear the ESA program as having a “lack of controls and regulations” is belied by the facts. The most recent review by the ESA by the Arizona Auditor General found an improper payment rate of nearly zero. During their “review of all 168,020 approved transactions identified in the Department’s Program account transaction data” over the prior fiscal year, they “found only 1 successful transaction at an unapproved merchant totaling $30.”

In other words, the rate of improper payments to unapproved merchants was only 0.001 percent.

That’s far better than other government programs. According to a 2021 analysis by the federal Office of Management and Budget, the improper payment rate across federal agencies is 7.2 percent. Some of the worst offenders are the federal school meals programs. According to the U.S. Government Accountability Office, “the school meals programs have reported high improper payment error rates, as high as almost 16 percent for the National School Lunch Program and almost 23 percent for the School Breakfast Program over the past 4 years.”

Opponents of school choice like Mayes and Save Our Schools Arizona are predictably using the indictments to attack the popular ESA program. But anyone who is really concerned about waste, fraud, and abuse should start in the district school system.

As the Goldwater Institute documented, “just 10 percent of Arizona’s school districts have managed to accumulate almost $26 million in documented fraud” over two decades. If the attorney general is really concerned about fraud, perhaps she should investigate the 13 school districts that the Arizona Auditor General has reprimanded for failing to comply with the state’s financial reporting requirements.

The district schools aren’t immune from hiring people who commit fraud either. In just the last two years, employees at school districts in Glendale, Hyder, and Wilson have been indicted for theft, fraud, forgery, and misuse of public funds, while an Eloy School District employee pled guilty to theft and forgery.

Any fraud or theft should be prosecuted to the fullest extent of the law. But no one has proposed eliminating AHCCCS or the district schools over the financial misconduct of external or internal swindlers.

Politicians and special interests are exploiting the ESA indictments to push an agenda that would cheat children out of a quality education and punish parents for the misdeeds of bamboozling bureaucrats. The public should recognize their fraudulent smears for what they are.

Jason Bedrick is a Research Fellow at The Heritage Foundation’s Center for Education Policy.