Proposition 305 Delayed the Modernization of the Arizona Empowerment Scholarship Program

October 30, 2018

(Guest Post by Matthew Ladner)

The Arizona Auditor General has performed an update on their review of the Arizona Department of Education’s administration of the Empowerment Scholarship Account program. Back in 2016, the Auditor General found a number of deficiencies in the Department’s oversight of the program. Two years later, they find…many of the same shortcomings. Given the proximity of a public vote on ESA eligibility and administrative modernization, this is basically like pouring a bucket of chum in shark infested waters. Overreaction is guaranteed, despite the fact that the funds discussed represent less than 1% of the total. The greatest irony here is that the bill that the Save Our Schools group placed on the ballot (thus either delaying or killing depending upon the will of the voters) took robust steps to improve the administration of the program.

ESAs are complex programs to administer, and bless their hearts the Arizona Department of Education volunteered to be the first to try. The Arizona Republic’s story on the Auditor General update includes push-back from the outgoing Superintendent of Public Instruction Diane Douglas on the Auditor General update:

State schools Superintendent, Diane Douglas said the misspending of the voucher money is the result of decisions by the Republican-controlled Legislature to deny her department money needed to properly administer the program. Douglas said lawmakers resist properly funding oversight because they want a private entity to oversee it.

“If you’re not willing to put the resources into the oversight, then it doesn’t happen appropriately,” Douglas told The Arizona Republic on Monday. 

She said her staff has “done a phenomenal job with the lack of resources.”

She criticized the audit for glossing over the Legislature’s failure to properly fund oversight.

That’s a story but not a credible one. From the outset, the Arizona Empowerment Scholarship Program has included fees for management companies as an allowable expense for accounts. While the Arizona Department of Education had no experience in managing multi-vendor accounts, there are in fact multiple private firms which have gone up and down the learning curve of managing (for instance) health savings accounts. Other states with ESA programs have contracted with these firms in order to build digital platforms so that both administrators and parents can view accounts and account transactions in real-time. They’ve also developed methodologies to prevent misspending of account funds from occurring. They do this for a very modest fee. These platforms also collect user reviews to help inform the decisions of other parents- which is the only plausible way to hold, for instance, an occupational therapist or online education provider accountable for performance.

What was requested of the department repeatedly and I know this because I myself personally all but begged them to do this on multiple occasions- was to have them hire one of these firms so as to radically improve the administration of the program. The parents would have received superior program that was easier to use, misuse of funds could be dramatically curtailed, and transparency improved. Everyone wins, and you can see this underway in Florida, where the main Gardiner Scholarship administrator (Step Up for Students) has contracted with SAP Ariba to create such a platform.

I interpreted the feedback I received as “Nah man- hold my beer! We’ve GOT THIS!” No wait I think what I was actually told was “the Superintendent is suspicious of outside vendors” which translated in practice to approximately the same outcome. In any case since then the Department’s administration of the program has looked something like:

Notice that this is not a bureaucratic turf issue. The avenue allowed left the Department of Education in charge of the program. Any outside vendor would have reported directly to them, and they could tell them what to do and hire/fire them at will within the normal confines of state contracting. The great advantage here is that these firms have decades of experience in navigating these waters and there are multiple players in the space that could compete if the state created an RFP.

The complaint about under funding of administration also rings hollow because as previous reporting from the Republic established the Department failed to spend the resources allocated for program administration by leaving funded FTE spots open. If you don’t spend the funds appropriated for you, then you don’t get to complain that you needed more funds. And by the way, the private firms with plentiful experience in managing account based program could have been funded for a very modest fee by the account holders, and would have not needed to subtract from the funds the department didn’t in any case fully spend.

Oh but it gets better.

Arizona SB 1431 from the 2017 session included a large number of items to improve the administration of the program and to increase transparency. You can read a list of these items here. In evident despair of the Department modernizing the program administration, the legislature (wisely imo) included these provisions:

Directs ADE to post on its website information and data that are updated monthly regarding ESAs that includes the following:

a)info on all purchases and expenditures made with ESA monies that does not violate the personal privacy of any student or family and that includes only aggregate date;

b)the number of enrolled students disaggregated by eligibility; and

c)any other information or data that may be pertinent to promoting transparency and accountability of the ESA program.

and…

Requires, rather than allows, the Treasurer to contract with private financial management firms to manage ESAs and directs ADE to cooperate with the Treasurer and the contracted firm.

The collection of signatures against SB 1431 by the Save Our Schools group at minimum delayed the modernization of the program in the form of Prop. 305. If the yes vote prevails, SB 1431 will take effect, whereas if no prevails it’s back to the drawing board. The polls on this provision have been mixed, and at the time of this writing it seems the proposition could go either way. Regardless of what happens at the ballot, it remains abundantly clear that program administration must be modernized.

Just as a reminder, this is the same Arizona Department of Education which mis-allocated $85,000,000 in federal title I and IDEA funds, giving some schools too much while short-changing other schools. The “blame the legislature” trick also doesn’t work here as the positions that allocate funding are funded by Uncle Sam (like every other state) but one doesn’t read stories about Montana, Oregon or (fill in the blank here) managing to make a mess of these sorts of things.

Note that the response to this has never been nor should it be “If the Department can’t administer Title I we should just get rid of it!!!!” but I’m fairly confident that I could go on to twitter right now to find this argument being made with hypocritical gusto. In fact I fear I could find this double standard being applied by the very people who delayed the modernization of the program. It’s a neat trick to prevent the implementation of solutions while continuing to complain about the problems. Let’s see what happens next.

 

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The Republic is shocked SHOCKED to learn that there is PLURALISM in this democracy!

December 8, 2017

(Guest Post by Matthew Ladner)

The Arizona Republic requested a FOIA for emails between the Arizona Department of Education and the Goldwater Institute concerning the ESA program. In those emails they found…a giant nothing-burger. I am a Goldwater alumnus and participated fully in the creation of the original ESA program. This opens me to charges of bias, but it certainly makes me familiar with the subject at hand. I don’t believe there is any bias in the case I will lay out below. That case is as follows: it is utterly routine for agencies to interact with stakeholder groups from all sides on all issues-including (dun! Dun! DUN!!!!!) the Goldwater Institute. Requesting the emails of a single group hardly begins to paint a remotely full picture of what goes on, and this article fails to make a case even within the confines of a narrow perspective provided by the emails of the single group.

You’ll have to read the article and navigate a great many assurances that there is something coming in the nothing-burger before you get to the end and are left with basically nothing. But along the way you get treated to gems like:

Special interests often write concepts for legislation or offer drafted bills and then lobby lawmakers to pass them. But Goldwater’s attempts to exert control over the Empowerment Scholarship Account program, from idea to implementation, was highly unusual if not unprecedented, experts say.

“This is almost an iron grip-level of influence from the beginning of the process on,” said Thomas Holyoke, an associate professor of political science at California State University-Fresno, who studies interest groups and lobbying.

Dr. Holyoke might need to go outside a bit more often. Let’s start with some basic facts. Arizona is a pluralistic democracy. Anyone and everyone in Arizona is completely free at any time to write emails to elected officials or agency officials. This happens non-stop and will continue to do so (God willing) for as long as Arizona exists. It is in fact one of the reasons agencies have email systems, but they also receive letters, phone calls, and various other forms of communication. They often meet with people in person. It is the gambling that goes on in the casino of American democracy, and everyone is invited to play.

I can assure you that ESA opponents have also been in frequent communication with the Arizona Department of Education officials as well, as have lots of other groups and people on this and lots of other issues. If one is inclined to create conspiracy stories, you don’t need to request emails.

Here I’ll do it now just for fun and to show how easy it is to do: one of the officials who helped oversee the administration of the ESA program was the son of a former President of the Arizona Education Association and currently lobbies for the Arizona School Boards Association. Another left the Arizona Department of Education to lobby for the Arizona Education Association. Perhaps all of those administrative problems that the Republic has documented over the years are like on purpose man! Maybe the Goldwater Institute was emailing the department because THE MAN doesn’t like kids having the ability to control their own education!!!

It’s like a CONSPIRACY!!!!

Just to be clear I don’t have a problem with either of these individuals- happy to have a drink with one or both of them on occasion when they are tolerant enough to hang out with Dr. Evil at a social event. And for the record, I don’t think that the Arizona Empowerment Scholarship Program has been the victim of conspiratorial administrative sand-bagging. The administration of the program has challenges to be sure. This however is true of many things in a Department that, for instance, sends Title I and IDEA funds to the wrong schools, and has had the state’s student data system in years past crash for months at a time. It’s true that there have been issues with ESA program administration, deeply infuriating ones in fact, but this is basically true of a great many things and is unfortunately par for the course.

Previous reporting from the Republic has shown that the Arizona Department of Education has not spent even close to the full amount appropriated for program administration in prior years. The Republic has documented administrative shortcomings, and recounts some of this in the current article. If the Goldwater Institute wielded all-powerful “iron grip” influence, do we imagine that the Department would leave resources lying around and serious problems with program administration unaddressed? After all, what they want is for the program to work smoothly. Parents who sign an agreement with the state only to find the state fails to fund their accounts on time for instance tend to get angry. Bully for Jonathan Butcher for trying to go to bat for them.

In short I’m having a hard time spotting a conspiracy in this, either in motive, methods or outcomes.