Policy Update

The Department is currently writing an ESA handbook to offer guidance and put forth programmatic rules based on two years of best practices. While it has been a long time coming, the Department in the interim has created a policy site to address parents’ most frequent questions and policy changes adopted by The Department moving forward.

12th Grade ESA Eligibility

Previous Policy

To be eligible for an ESA scholarship beyond 12th grade a special needs student is required to have a current IEP that shows a transition service plan funded by their last attended district or charter school.

Current Policy

To be considered a qualified student and eligible for the ESA scholarship, the applicant student may not be a student in the 12th grade during the applicant year.

Policy Rationale

By signing an ESA agreement the applicant parent or qualified student has: “release[d] the school district from all obligations to educate the qualified student.” (A.R.S. 15-2402(2)(B)). Essentially, assuming the responsibilities to educate their child/children under ESA contract allowing The Arizona Department of Education (ADE) the authority to “…adopt rules and policies necessary for the administration of empowerment scholarship accounts.” (A.R.S. 15-2403(G)). With the qualified child/children out of the public school system, ADE no longer has current IEP records to assure the ESA students’  continuance beyond 12th grade.

Late Expense Reports

Previous Policy

ADE allowed late expense reports within the contract year and did not terminate contracts for non-compliance.

Current Policy

An ESA contract may be terminated by ADE if:

  1. The applicant parent or qualified student fails to submit two or more complete and timely expense reports in a contract year.
  2. The applicant parent or qualified student fails to submit one complete and accurate expense report beyond thirty days of its required submission date.

The Department shall attempt to contact the applicant parent or qualified student twice, either in writing or by phone before considering termination.

Policy Rationale

Pursuant to A.R.S. 15-2402(B)(1) the applicant parent or qualified student is required to, “Provide an education for the qualified student in at least the subjects of reading, grammar, mathematics, social studies and science.” By not submitting timely expense reports ESA funding is withheld; halting the education of the qualified student and violates the terms of the ESA agreement.

Insurance & other Co-Pays

Previous Policy

Because some co-pays could be used for the approved expense of Education Therapy ESA staff

1.  Did not require itemized records and

2.  Allowed parents to use co-pays to offset cost.

Current Policy

1.   Insurance and other co-pays are NOT an approved expense of the program and ESA funds may not be used for their purpose.

2.   Itemized invoices or records must be submitted.

Policy Rationale

Therapies provided to students must be “Educational Therapies” under the law. The vast majority of insurance co-pays goes to cover basic medical costs (i.e. eye exams, sports physicals, psychological therapy etc.) and are associated with private medical care, not education.

Misspending Policy


Previous Policy

The Department dealt with small ESA misspending on a strike system and deducted the amount of misspent funds from the holder’s next disbursement. The Department held a tiered system for misspending with higher amounts being tracked more closely.

Current Policy

The Department is assuming a zero tolerance policy on misspending. Any amount not spent in the allowable categories pursuant to the ESA contract will:

1)      Cause the ESA card to be temporarily frozen and the holder contacted through the mail detailing the violation and;

2)      Requesting the holder contact The Department to:

A) Repay the misspent amount within the requested time frame (10 business days) or;

B) Provide additional documentation for the expenditure that will unfreeze the card and reinstate the account.

3)      If the parent cannot provide additional documentation or refuses to repay the amount, The Department will begin the removal process pursuant to statute and shall seek administrative measures to recover the misspent funds which may include referral to collections, seeking a civil judgment or referral to the Attorney General’s Office.

4)      If the holder repays the amount within the requested time frame then “one strike” will be recorded and held in the holder’s file. Depending on the type and amount of misspending a cardholder may be removed on the first offense.  A card holder may have no more than “two strikes” before The Department begins the removal process.

Policy Rationale

In the first year of the program, basic rules were established to verify spending and, due to a lack of funding, administrative time was spent following up on larger amounts of misspending. Today, The Department has fully staffed the ESA program and, to safeguard taxpayer money, is now fully enforcing and pursing any and all misspending with equal attention.

Additionally, parents, in good faith misspent ESA monies because of a lack of understanding of the program rules. The ESA program will, in January, have clarifying rules posted to supplement the ESA contract. Parents are still responsible to review their contract, read the available literature on the website and, if in doubt, contact their case manager with questions.