Home School Choice Arizona’s First Audit of Education Savings Accounts is Instructive

Arizona’s First Audit of Education Savings Accounts is Instructive

Financial audits can be painful. No taxpayer welcomes correspondence with the IRS, and, likewise, schools submit to audits really should be propriety, not for sport. The investigator’s job is find out if something adjusted wrong-if someone has misspent taxpayer money, for example-and disclose the breadth on the problem.


Some investigations are definitely more colorful than the others: In March 2014, Detroit school’s Inspector General found $17,000 in stolen janitorial supplies. Earlier this year, Miami investigators charged a contractor nicknamed “French Fries” with collecting some $2.7 million in fraudulent medical claims involving employees at Felix Varela High. The Soledad School District Board in California voted unanimously to fireside their superintendent after an audit uncovered “pervasive misuse of plastic cards,”including a suspicious acquisition of a 50-inch TV and a lot of iPads.

Arizona’s auditor general has documented similar activities among school districts inside the state in recent times, though the agency recently conducted the first financial audit of Empowerment Scholarship Accounts-the nation’s first education account program. With the account, the state deposits a part of an child’s funds on the state school funding formula into private accounts that folks use to obtain educational services and products with regard to their children.

The accounts have gained popularity among supporters of parental choices in education, and lawmakers in four other states have enacted laws just like Arizona’s since 2011. The fact is, Nevada’s Supreme Court just heard arguments last month inside of a case involving that state’s new law, which could allow every child attending a public school from the state entitled to apply for a college checking account.

Arizona’s audit, then, needs to be instructive for lawmakers in states where the accounts are around for families (Florida, Mississippi, Nevada, and Tennessee) and for those considering adopting the idea, like Missouri, Delaware, Oklahoma, and Texas, among other things.

The findings include some praise to your state department of education, which oversees Arizona’s accounts. The auditor explains the department has “prevented and identified misspending of account monies” and brought on a state treasurer to “automatically deny” attempts at fraud.

Parents have broad discretion with the accounts and use prepaid VISA cards to spend classes on the web, textbooks, private school tuition, and other educational materials like science kits and educational iPad applications. For all those intent on downloading copyrighted movies and misusing children’s funds, these accounts can be at risk from widespread misuse without the preventative measures the department has established.

Yet an auditor’s job is to report not so good news when required and suggest improvements. Staff at Arizona’s department of education reviews many families’ account expenditures physically, together with some 3,000 students having an account, the duty is becoming too big. The auditor says the company should use more online tools, similar to the digital account registers offered by your budget managing the funds and expand the agency’s use of its IT system to consistently monitor misuse.

In designing education savings accounts enacted after Arizona’s, some lawmakers saw the necessity of robust online accounting tools. Nevada’s pending education account program includes a contract which has a financial services provider which will managing payments online. Florida pre-approves account expenses for participating families and, in most cases, distributes funds right to private providers. They aid to eliminate the opportunity of misuse and tend to be more efficient approaches than managing receipts manually.

Arizona’s department of education should heed the auditor’s recommendations and workout this opportunity to automate account oversight. On their credit, the company acknowledged the requirement for improvement in a very letter addressing the audit, but now the true work begins. As increasing numbers of states give families use of education savings accounts, policymakers need to have effective, efficient models from states already utilizing the accounts to assist children succeed.

– Jonathan Butcher

Jonathan Butcher is Education Director within the Goldwater Institute.