PHOENIX — Arizona's auditor general is telling the Empowerment Scholarship Account Program to clean up its transaction review process.
More than 100,000 Arizona students receive money from the state to pay for homeschooling or to attend private schools. The program costs more than $1 billion a year.
A recently released report from the Arizona Auditor General's Office concluded the ESA program put fewer transactions through its auditing process than the program managers claimed to be reviewing.
To expedite approval for families purchasing educational materials, officials had been automatically processing ESA transactions under $2,000, but the purchases were subject to subsequent auditing and approval.
The Arizona Department of Education, which runs the ESA program, said the 30 percent audit rate was a goal, not a mandate.
The report also said ESA managers were not timely in reviewing and taking action on transactions flagged for issues. The State Auditor's Office looked at a sample of 63 transactions and found 25 (34%) had issues, which the ESA program did not identify.
Those issues included missing documentation, indicators of possible misuse, overpayments, and unallowable expenses.
Examples included:
- $8,906 for tuition for an account holder that was sent to a PayPal account with the same name as the account holder.
- $8,625 for three months of tutoring where the invoice did not include required details such as a breakdown of the dates of services and the services provided.
- $1,981 for unallowable items such as food and drinks, curtain rod brackets, a dashboard camera, home security cameras, and bathroom accessories. The Program did not manually review these expenditures because they were under the $2,000 automatic processing threshold.
For unallowed or fraudulent expenses, delays in further required action, such as issuing a suspension notice or termination letter, may have resulted in $86,599 being misused, in transactions reviewed by the Auditor General.
The ESA program said accounts with unallowed or unsupported purchases are put into a queue to receive suspension letters to start the due process to which account holders are entitled. Nothing in state law or administrative code states that
ADE must send suspension notices to account holders within a specific time period, according to the ESA Program's director.
