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Findings estimate about 1–2% of ESA spending is unallowable and detail where unallowable spending occurs, with most ESA spending flowing through direct pay and reimbursement.",{"@graph":14,"@context":73},[15,34,56],{"@type":16,"itemListElement":17},"BreadcrumbList",[18,23,27,31],{"item":19,"name":20,"@type":21,"position":22},"https://docshare.wps.com","Home","ListItem",1,{"item":24,"name":25,"@type":21,"position":26},"https://docshare.wps.com/document/","Document",2,{"item":28,"name":29,"@type":21,"position":30},"https://docshare.wps.com/document/research-report/","Research & 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estimate unallowable ESA spending?","Question",{"text":63,"@type":64},"It uses two approaches: a random sample review of 2,700 Marketplace transactions applying Arizona Department of Education guidelines, and a separate analysis of high-dollar Amazon items purchased through Marketplace.","Answer",{"name":66,"@type":61,"acceptedAnswer":67},"What share of ESA spending does the report estimate is unallowable?",{"text":68,"@type":64},"The report estimates unallowable spending is about 1–2% of total ESA spending based on ADE guidelines.",{"name":70,"@type":61,"acceptedAnswer":71},"Where does most unallowable spending occur?",{"text":72,"@type":64},"The report indicates effectively no unallowable spending through direct pay and little through reimbursements, with the remaining unallowable spending concentrated in Marketplace 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Transaction-Level Analysis  \nJohn Kristof, Senior Research Analyst, EdChoice  \nSusan Pendergrass is the Director of Research at the Show-Me Institute  \nTABLE OF CONTENTS  \nIntroduction  01  \nKey Findings  02  \nData  03  \nThe nature and distribution of ESA transactions  03  \nReviewing a random sample of marketplace transactions  05  \nAmazon in marketplace  09  \nDiscussion: maximizing society's benefit from the ESA  13  \nConclusion  14  \nTransparency  15  \nAuthors  15  \nFigure 1  05  \nFigure 1  07  \nFigure 3  13  \nTable 1  04  \nTable 2  06  \nTable 3  08  \nTable 4  08  \nTable 5  09  \nTable 6  10  \nTable 7  11  \nTable 8  12  \nINTRODUCTION  \nFifteen years ago, Arizona policymakers made a transformational statement when they enacted the Empowerment Scholarship Accounts program. Beyond simply arguing that parents should have more sayin how their children are educated, the Arizona legislature created the architecture to allow families to fully customize their child’s education. Starting small, the program was initially limited to students with special needs. In 2022, eligibility was expanded statewide.  \nThe more than 100,000 families that participate today have a wide variety of allowable purchases that they can make when they participate in the program. On average, their ESA is funded with $9,572 that they can spend on private school tuition, books, learning materials, educational technology, tutoring, curriculum, and more. Total spending in 2025-26 will hover around $1 billion, or about 8% of Arizona’s combined program and public K-12 current expenditures ($12 . 7 billion) . That represents a lot of families making a lot of purchases.  \nED CHO ICE .ORG  \nBut, it is important to note, the Empowerment Scholarship Program (ESA) is an education savings account program. Dollars are not placed into a child’s account to be spent in any way that parents want. Expenses are limited to appropriate, educational goods and services.  \nIf other social services are a guide, we can expect a certain percentage of those purchases to be done either in honest error or with the intent to commit fraud. The Government Accountability Office’s most recent study of improper payments found 18 federal programs with error rates of at least 10%, six of them with error rates above 25% . $162 billion was lost across Medicare, Medicaid, the Earned Income Tax Credit, the Supplemental Nutrition Assistant Program, and the Restaurant Revitalization Fund.1  \nIdentifying unallowed spending is an important goal of a public program, as every dollar not spent on education is a dollar that could be better put to use achieving what the program sets out to do. However, there comes a point when taxpayer resources used to prevent errors can exceed the costs of the errors themselves. In 1975, the economist Arthur Okun published Equality and Efficiency: The Big Tradeoff, wherein he offered the metaphor of a leaky bucket in analyzing government transfer programs (like SNAP or an ESA program, though the latter did not exist yet) .2 Rooting out every instance of misspending or fraud might not be the optimal policy, because the time, effort, and manpower required can end up costing more than the misspending itself. Social programs accept some amount of misuse as the cost of doing business because it is financially self-defeating and politically inexpedient to devote many resources to catching every SNAP recipient buying vitamins or every ESA parent buying paper towels.  \nTo know where the Arizona Empowerment Scholarship Program sits in this balance between costs of errors and costs of enforcement, it is important to know the nature and scope of unallowable purchases in the program. The purpose of this paper is to estimate the rate ofunallowable expenses – considering both quantity of transactions and the value of dollars spent – and seek insights into any traits or patterns in these errors.","cbCaiop5LOesy65w","https://ap.wps.com/l/cbCaiop5LOesy65w","pdf",524843,16,"English","# Introduction\n# Key Findings\n# Data\n## The nature and distribution of ESA transactions\n## Reviewing a random sample of marketplace transactions\n## Amazon in marketplace\n# Discussion: maximizing society's benefit from the ESA\n# Conclusion\n# Transparency\n# Authors","[{\"question\":\"How does the report estimate unallowable ESA spending?\",\"answer\":\"It uses two approaches: a random sample review of 2,700 Marketplace transactions applying Arizona Department of Education guidelines, and a separate analysis of high-dollar Amazon items purchased through Marketplace.\"},{\"question\":\"What share of ESA spending does the report estimate is unallowable?\",\"answer\":\"The report estimates unallowable spending is about 1–2% of total ESA spending based on ADE guidelines.\"},{\"question\":\"Where does most unallowable spending occur?\",\"answer\":\"The report indicates effectively no unallowable spending through direct pay and little through reimbursements, with the remaining unallowable spending concentrated in Marketplace transactions.\"}]","Spending in Arizona's ESA Program - A Multi-Stage Transaction-Level Analysis | PDF",1792050459]