Vouchers By Any Other Name Are Still Vouchers—And Let’s Talk About Fraud

Hello and Happy New Year!

By the time you’re reading this, most state legislatures will already be in session, a new Congress will be gaveling in, and the second Trump presidency is about to make landfall.

I want to use this first newsletter of 2025 to flag two items that will come up a lot in states and in Congress as the school voucher push keeps rolling. The first concerns all the various names for school vouchers: education savings accounts, freedom accounts, scholarships (usually branded with the word “hope” or “opportunity”), tax credits, and the rest. The second is a warning about waste and good old-fashioned fraud.

Let’s get into it.

All ESAs Are Vouchers, But Not All Vouchers Are ESAs

The fanciest voucher out there these days is the “education savings account” (or “education freedom account” in places like Arkansas or New Hampshire). There’s an almost frantic effort by the voucher lobby to avoid the “V” word, and some of that includes genuine self-delusion that these ESAs/EFAs are actually something other than vouchers with extra allowable expenses beyond private school tuition. But that’s all an ESA is: tuition plus.

Some states like Iowa and Arkansas still have fairly limited packages in that “plus” bucket: mostly add-on costs associated with attending private school itself, such as textbooks, uniforms, school fees and so on, with limited homeschool expenses thrown in as well. In other states like Arizona and Florida, these add-ons are far more permissive, from educational materials on Amazon to Disney World field trip passes.

One side argument that research-aware voucher lobby folks make is that the horrific academic outcomes suffered by lower- and middle-income voucher users will go away because these new laws aren’t creating vouchers, just “ESAs.” But there’s no educational theory of action—and no brand of common sense—that says students will make up academic losses just because their parents can now use vouchers on backyard trampolines and SeaWorld tickets on top of tuition at private schools that don’t deliver academically.

All of this also applies to the voucher schemes structured as tax credits. The only difference between the typical tax credit voucher —including what’s on tap for a federal voucher push—and older “conventional” voucher programs, like those in places like Ohio and Wisconsin, is that private tuition is paid out by a “scholarship granting organization.” That’s basically a middle-man—technically a non-profit—funded by wealthy taxpayers and corporations who pay what they owe in state (or, if it passes, federal) taxes into these voucher-distribution funds instead. But it has the same effect on state revenue as when states just cut the voucher check directly.

One last thing. Sometimes you hear voucher advocates say these new voucher designs—especially ESA/EFA vouchers—aren’t really “vouchers” because the parents get the dollars instead of the private schools. I have news for them: this is no innovation. Parents have long been directly compensated by states for tuition. In fact, the earliest modern voucher system, in Wisconsin, did so precisely to avoid potential church-state walls before the Supreme Court’s Zelman v. Simmons-Harris decision ruled that such concerns weren’t necessary.

The point of all this is that whether states pay private tuition to schools directly, cut checks to parents to reimburse private tuition, create savings or “freedom” accounts to pay private tuition and other private educational costs, or allow wealthy taxpayers to pay what they owe in state/federal taxes into funds that disburse private tuition funds, publicly funded private tuition is the through-line. And that through-line’s called a voucher. Don’t be fooled by semantics.

What About Waste and Fraud?

One problem with this new array of school voucher designs is that some programs do make it even easier for fraud, misuse, or simple errors to occur involving large sums of public dollars. When a state education or revenue agency is administering the voucher system and directly reimbursing private schools or parents for demonstrable tuition expenses, it’s a bit easier to keep track of spending, especially when routine audits accompany that activity. But in the ESA/tax credit voucher versions, new opportunities for waste and even fraud can and do occur.

In Arizona, Attorney General Kris Mayes has filed charges against people who created what Mayes called “ghost children” to claim voucher dollars, while spending on non-permitted items also has been and continues to be a problem there. In Utah, the state’s voucher middle-man vendor spent more than state law allowed on administrative fees and expenses, while the vendor in Idaho and Missouri has struggled to make payments on time. In Florida, investigative reporting has found voucher payments to schools that faked fire safety and facilities inspections, while in North Carolina, watchdog organizations found the state was sending voucher dollars to private schools for more students than were enrolled in those schools—and even to a school that didn’t exist!

Wisconsin at least has something resembling best practices on this issue: a financial audit system in place for private schools getting voucher cash. The state has periodically removed schools from its voucher system for failing to maintain financial health—examples of the “sub-prime” private school market I warn about all over the country.

Even when fraud or financial shortcomings aren’t necessarily apparent, there’s an enormous potential for waste with the newer voucher schemes. In Iowa, the state auditor found its voucher vendor was charging taxpayers twice what the pro-voucher governor originally promised those fees would cost. While back in Arizona, which inexplicably allows voucher users to roll over unspent funds into the next year, a report found more than $300 million in unspent funds just sitting in individual voucher accounts. One account had amassed more than $200,000. As voucher costs have ballooned, Arizona has had to borrow against its opioid settlements just to fund its Department of Corrections—an example of how voucher waste harms state budgets outside of education spending.

Wrapping Up

All of this is to say that to the extent there’s any difference at all between classic voucher schemes where the state covers private school tuition and the new-fangled versions that bring in a middleman and allow additional expenses, those differences just add more opportunities for waste and fraud to take hold.

The fact that these schemes are now available on a universal or near-universal basis regardless of family income only adds to the problem. The newer versions of voucher programs have all but removed the few safeguards that were part of older programs (accountability and transparency anyone?), while putting more taxpayer money on the table.

I’m not a gambling man, but I know one thing about high stakes: a bad bet made with good money is still a bad bet.

Josh

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