Refuting false claims of fraud in Arizona’s school choice program

OPINION:

Arizona’s Empowerment Scholarship Account (ESA) program enables families to customize their children’s education. But critics like reporter Craig Harris at KPNX 12News in Phoenix have been pushing a misleading narrative about widespread fraud.

Their stories falsely claim that 20% of spending in the program involves fraud or unallowable purchases. 

This figure stems directly from a misinterpretation of data from a risk-based audit conducted by the Arizona Department of Education (ADE).

By definition, a risk-based audit targets accounts flagged for potential issues, making it nonrepresentative of the overall population of ESA participants. Using that 20% to generalize about the entire program distorts the truth and could harm families who rely on these scholarships.

To understand the flaw in Mr. Harris’s approach, consider this analogy. Suppose 20% of people accused of a crime were found guilty of a felony. Under Mr. Harris’s flawed logic, that would mean 20% of all Americans are felons.

The risk-based audit focuses on a subset of accounts selected for higher scrutiny, much like how law enforcement investigates suspects rather than the general public. Extrapolating from that skewed sample to the whole population creates a false picture, yet that’s exactly what 12News has done with their reporting on the ESA program.

The Arizona Department of Education has now released an official study based on a random sample of 3,000 orders, providing a far more accurate view. This analysis, conducted with input from a Stanford PhD statistician, revealed that unallowable spending amounted to only 1.9% of total spending, with just 0.3% deemed egregious or fraudulent.

Mr. Harris attempted to undermine these results by asserting that the sample was not random, but he provided no evidence to support this claim. Interestingly, he accepted the results from the risk-based audit without applying the same level of scrutiny. He treated those skewed findings as gospel, apparently because they aligned with a narrative critical of school choice. This selective skepticism raises questions about journalistic integrity – why challenge the representative data while embracing the non-representative figures?

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Mr. Harris went further, alleging that ADE hid an analysis of a smaller sample of 2,000 orders because it “does not back up its claims.” However, the overall results between the two samples were essentially the same. In fact, the smaller random sample of 2,000 orders showed even better outcomes: only 1.51% of spending was unallowable, and a mere 0.13% was deemed egregious or fraudulent.

Additional evidence supports ADE’s assertion that the 3,000-order sample was truly random. In that sample, Marketplace transactions accounted for 13.2% of all spending. Compare that to the latest ESA quarterly report from ADE, which shows Marketplace transactions making up 12.9% of total spending across the entire program. The near-identical proportions indicate that the sample accurately reflects the broader population, allowing for reliable generalizations – unlike the risk-based audit, which intentionally overrepresents problematic cases.

On March 12, ADE issued a press release to correct the false claims about 20% misspending. The release described the reports as “outrageous and reckless news reports of widespread purchasing fraud in Arizona’s Empowerment Scholarship Account program” and explained about the skewed samples.

The press release further stated, “Continued use of the 20% fraud allegation is an outrageous misrepresentation to the public that must stop.”

Tom Horne, the Arizona superintendent of public instruction, reinforced this point in an interview, noting that the misinformation “stems from a misinterpretation that Channel 12 did of data we gave them.”

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Beyond debunking the 20% myth, the ADE’s random sample data places the ESA program’s misspending in context with other government initiatives. The rate of unallowable spending at 1.9% – and fraud at 0.3% – falls far below benchmarks for programs like Medicaid, which has a 7.4% improper payment rate, food stamps at 9.3%, and unemployment insurance at 14.4%.

If critics applied the same standards to these entitlement programs, they would demand their immediate shutdown. Yet, when it comes to empowering parents with educational options, suddenly a fraction of that misuse becomes grounds for sensational headlines and calls to restrict choice.

KPNX owes the public a retraction. Their stories have spread misinformation that could jeopardize the ESA program’s future, limiting educational freedom for Arizona’s children. Journalists have a duty to report facts accurately, not to advance ideological narratives.

By clinging to the debunked 20% figure despite clear evidence from random samples, 12News engages in journalistic malpractice. It’s time for it to correct the record and stop undermining school choice.

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Corey DeAngelis is a research fellow at The Heritage Foundation.