Comparing Arizona’s education savings accounts and tax-credit scholarships
To demonstrate the relative sizes of the ESA and TCS programs, the Brookings researchers present data on their relative funding. At first glance, that is an odd choice, as the most relevant comparison would be ESA and TCS recipients. However, given that students may receive multiple scholarships, it’s not entirely clear how many scholarship recipients there are, so the programs’ relative funding might seem like a reasonable proxy.
However, it doesn’t make sense to break the scholarship programs into the separate categories Brookings employs. When a family applies for a scholarship from a scholarship organization in Arizona, they can receive funding from all four programs if they meet the eligibility criteria. Indeed, having spoken with dozens of Arizona scholarship families, I can attest that they often don’t even realize that there are technically four different programs. All they know is that the scholarship organizations ask them for certain information (e.g., household income, whether their child had previously attended a public school, and their foster care or disability status), and that, after verifying that information, they receive a scholarship. Rather than being represented by four separate bars in a chart, the TCS funds should be combined into a single, much higher bar to portray its magnitude accurately.
Moreover, the ESA funding data are heavily affected by spending on students with special needs, who account for 18% of ESA students and 41% of ESA funding. Whereas the median ESA student receives about $7,400 annually, students with special needs can receive considerably higher funding, depending on the funding weight accorded to their disability under Arizona law. According to the Arizona Department of Education’s quarter 2 ESA report for 2024, 6,261 ESA students with disabilities received more than $30,000 each. Given that they can receive so much more money from the ESA, nearly all the families of students with special needs use the ESA instead of the TCS.
Brookings failed to account for how families of students with special needs cluster in the ESA program, just as they had failed to account for how low-income families cluster in the TCS program.
If students with special needs are considered separately, and the three TCS policies that aren’t limited to students with special needs are combined, then the ESA program is spending about $434 million for students without disabilities, compared with $200 million of tax-credit scholarship funding, as shown in Figure 1. (Note that “Lexie’s Law for Disabled and Displaced Students” also serves foster students who do not have special needs, but I have separated the entire tax credit from the other three since it is impossible to tell how much money is going to students in each category, though it is likely that the vast majority goes to students without special needs.)
