ADE Corrects False Claim regarding alleged 20% inappropriate ESA expenditures

About 2% of purchases are unallowable expenses and only 0.3% represent fraud or egregious purchases

PHOENIX – Following some outrageous and reckless news reports of widespread purchasing fraud in Arizona’s Empowerment Scholarship Account program, ADE is releasing results of a statistical analysis, recently conducted by a Stanford PhD, to set the record straight. 

Superintendent Horne said: 

About 2.0% of dollars spent by ESA account holders is for items that are unallowable under program rules, according to a precise study completed by a Stanford PhD. 

In addition, actual fraud or egregious purchases are at 0.3%, according to the same study.

This is far below the rate of misuse at a variety of programs such as Medicaid (7.4%), food stamps (9.3%), and unemployment insurance (14.4%).

The submission of a purchase that is deemed unallowable does not constitute fraud.  Most are innocent mistakes, such as an error in a form that must be resubmitted, or educational items that are not on the allowable list but that the user could have in good faith believed were permitted. Some examples would be backpacks, lunch boxes and water bottles. 

A ridiculous figure of 20% fraud has been circulating concerning ESA purchases which resulted from a total misinterpretation of data that we provided to Channel 12. The 20% figure represented program participants that ADE had selected for risk-based auditing.  It had nothing to do with fraud.

Action is taken to recover or collect funds or refer to law enforcement, if necessary. To date, more than $1.2 million has been recovered in this process. 

Continued use of the 20% fraud allegation is an outrageous misrepresentation to the public that must stop.”

A summary of information released from ADE’s internal analysis is attached. For more details, go to  https://www.azed.gov/esa-study