Former superintendent says no reason for ESA delays, blasts legislature over funding

By: - July 23, 2019 4:19 pm

Diane Douglas. Photo by Gage Skidmore | Flickr/CC BY-SA 2.0

Former Superintendent of Public Instruction Diane Douglas said there’s no reason why her successor, Kathy Hoffman, shouldn’t be able to process school voucher applications within the 45-day deadline established by state law.

Douglas, a Republican, said she doesn’t recall ever having issues with the deadline during her tenure, which ran from 2015-18. Hoffman has come under fire from the school choice advocacy group American Federation for Children, which says it has been contacted by several dozen parents who have faced delays in having their applications processed and have been unable to get through to the Arizona Department of Education. 

State Rep. Mark Finchem, R-Oro Valley, has called for the Attorney General’s Office to investigate. 

Like Hoffman, Douglas said the legislature has chronically underfunded the Empowerment Scholarship Account program, which provides some parents who pull their children from public schools with a voucher for private schools, educational materials, tutoring or other educational goods and services. 

State law sets aside 4 percent of the program’s funding for the department to administer ESAs, but lawmakers consistently approve less than half of that money.

Nonetheless, Douglas said that shouldn’t hamper Hoffman’s ability to administer the program within the timeframe established by law. 

“In my administration, we put the people first. And I’m not going to say we were absolutely flawless in doing so. But to my knowledge, we met the 45-day requirement. We didn’t keep people waiting. We didn’t leave people on the phone for hours on end on hold. We responded to people,” Douglas told the Arizona Mirror

In response to Finchem’s call for an investigation and the criticism from American Federation for Children, Department of Education spokesman Stefan Swiat, who has worked under both Douglas and Hoffman, said he doesn’t believe delays have increased under Hoffman. 

Swiat told the Mirror on Tuesday that the ESA program had hundreds of applications per year that weren’t processed by the 45-day deadline during Douglas’s tenure. He also noted that the program has grown substantially, adding about 2,500 new students over the past two years.

According to a memo Douglas’s administration wrote to the legislature in December, the ESA program enrolled 5,042 students in fiscal year 2018, up from 3,360 the year before and 2,175 the year before that. The department estimated that 6,500 students would be enrolled in fiscal year 2019, which ended on July 1. 

“There’s just no way that these staffers aren’t going to be drowned in work,” Swiat said. 

Douglas also noted that Hoffman openly opposed a ballot measure that would have dramatically expanded the ESA program during her 2018 campaign. She said she supported the expansion, but that she declined to take a position, perhaps to her detriment – Douglas lost the Republican primary last year – because it was her job to impartially administer the program. 

“With all do respect to her, Ms. Hoffman was very confrontational to that program when she was on the campaign trail. Everybody can make their own decisions on what that meant,” Douglas said. 

Hoffman has directed the department’s ESA program staff to place more of a focus on rooting out fraud in the voucher program, though Swiat said he did not believe that resulted in staff spending less time processing applications.

Douglas said the department’s limited resources for the ESA program required her to make tough choices between balancing processing applications and sniffing out fraud. And even with limited resources for fraud detection, she said her administration didn’t neglect fraud issues “by any stretch of the imagination.”

The Arizona Auditor General’s Office found problems with misspent ESA money multiple times during Douglas’s tenure. In a 2016 audit, the auditor general found that ESA parents had misspent $102,000 in money from the program during the preceding year, including payments made to grocery stores and telecommunications companies. A follow-up audit in 2018 found more than $700,000 spent with vendors that weren’t approved by the Department of Education. 

Little of the money was recovered. 

In response, Douglas emphasized to the legislature that her department had never been authorized to use the entire 4 percent of the ESA program’s funding for administration – another 1 percent goes to the Treasurer’s Office, which oversees financial services contracts for the program – and that enrollment in the program had increased substantially. 

“They don’t provide the funding that is entitled in statute. And it seems like every complaint the auditor general had would have taken additional money to fix,” she said.

Douglas noted to the Mirror that the legislature allows school tuition organizations, which she described as simply a pass-through for education money, to use 10 percent of their funding for administration, while lawmakers won’t authorize the full 5 percent for the Department of Education and Treasurer’s Office to run the ESA program.

“The $64,000 question … in my opinion is, why does the legislature think STOs need 10 percent operational money, and ESAs only need 5 percent operational money, and they only allow the appropriation of half of that or less?” Douglas said.

The Department of Education alleges that Finchem’s call for an investigation and American Federation for Children’s recent spate of videos criticizing its handling of ESA applications are intended to justify transferring administration of the program to either the state Treasurer’s Office or a private entity. Two Republican proposals during the last legislative session would have given the Treasurer’s Office, which is run by Republican Kimberly Yee, authority over all or parts of the program.

Douglas said transferring the ESA program to the Treasurer’s Office wouldn’t work.

“A huge part of this system is based on student records and communications with school districts to see if kids qualify. Well, the only one who can do that is the Department of Education,” she said. 

However, Douglas suggested that the department find another vendor to handle the accounting and debit cards that parents use to spend ESA money, which is currently handled by Bank of America.

Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.

Jeremy Duda
Jeremy Duda

Jeremy Duda is a Phoenix native and began his career in journalism in 2003 after graduating from the University of Arizona. Jeremy Duda previously served as the Mirror's associate Editor. Prior to joining the Arizona Mirror, he worked at the Arizona Capitol Times, where he spent eight years covering the Governor's Office and two years as editor of the Yellow Sheet Report. Before that, he wrote for the Hobbs News-Sun of Hobbs, NM, and the Daily Herald of Provo, Utah. Jeremy is also the author of the history book “If This Be Treason: the American Rogues and Rebels Who Walked the Line Between Dissent and Betrayal.”