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Arizona education savings accounts receive first audit

June 30, 2016

Yesterday, the Arizona Auditor General released a performance audit on the nation’s first education savings accounts. The auditor’s main finding was that the department established methods for awarding these accounts (a procedure the Arizona Department of Education had to design from scratch) and even found a way to prevent and resolve fraud.

Yet any good doctor is going to give you things improve after a physical exam. The auditor also says the Arizona Department of Education “should further strengthen oversight of program spending.” The auditor also recommends the legislature create a working group to find better ways to prevent fraud.

Some of the auditor’s recommendations are already available to the department in Arizona law. The auditor recommended that the department implement a fraud reporting hotline and web-based fraud reporting systems—all procedures within the department’s purview according to statute.

Other recommendations are going to require adjustment. The department of education needs to find ways to more accurately determine students’ eligibility for the accounts, manage monies returned to the agency after resolving misspending, and take steps to “notify parents of any changes to policies or procedures that are relevant to their participation.”

The audit also describes the methods that four other states are using to make education savings accounts available to state families (Florida, Mississippi, Tennessee, and Nevada). These states are using more current technology to monitor expenditures, for example. In Nevada, educational vendors must notify the state that they intend to provide services to savings account families, and parents will not be able to make purchases unless the school or educator are participating in the program. Such practices could help to resolve the challenges that Arizona’s Auditor identified.

Nothing in the report eclipses the remarkable successes that children using the accounts are experiencing. Every state agency using taxpayer money needs a watchdog, especially those responsible for our children. Arizona’s auditor should look for problems and suggest solutions—like when the auditor found a school bookstore manager in Tolleson stole $120,000 in school funds and went to a casino; or when a Roosevelt school district bookkeeper stole a retired employee’s insurance subsidy check; or when a Yucca district employee used a school purchasing card 69 times for personal use.

Last year, the state deposited nearly $26 million in families’ education savings accounts. The auditor uncovered misspending that totaled less than 0.8 percent of the distributed funds—an unacceptable amount, because any fraud involving taxpayer money and children is unacceptable. But it’s a manageable amount. The department of education should follow through on the auditor’s recommendations, as the agency stated it would in its response letter, and continue to improve the ways parents and students find quality learning opportunities with education savings accounts. 



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