Rob O'Dell, and Yvonne Wingett Sanchez

The Arizona Republic

Two years after state lawmakers granted children from poor-performing schools the right to attend private schools at taxpayer expense, most children using the program are leaving high-performing public schools in wealthy districts, an analysis by The Arizona Republic has found.

Empowerment Scholarship Accounts allow parents to take tax money that would otherwise go directly to their local public schools and put it toward private-school tuition. Passed in 2011 as a program only for disabled children, the Legislature has continued to expand it, including to children in failing schools and others.

Lawmakers are now considering allowing all public-school students to use ESAs by 2020.

The Senate voted 17-13 Monday to expand the program to all public-school students. The House of Representatives was scheduled to debate on the bill Wednesday morning but held it, a sign that it might not have the votes needed to advance.

The Republic found that during the 2015-16 school year, the program accounted for $20.6 million being taken out of public schools that were rated A or B. Only $6.3 million was taken from schools rated C or D by the Arizona Department of Education, far less than the share of C and D schools statewide.

This is the first time the program's statewide impact on school funding has been made public. Several school districts contacted by The Republic said they were unaware of how much money empowerment scholarships had taken from their state funding.

With this story, the newspaper is publishing a database of the impact on districts statewide.

Database: Search for Empowerment Scholarship Accounts awards in your district

The Republic’s analysis shows it's largely the parents of disabled and special-needs children from wealthy and high-performing schools using the ESAs to put their children into private schools, while parents of disabled children from poorer districts are not.

Critics say this creates a system that subsidizes better-off families, while poorer Arizonans are unable to use ESAs because they cannot afford the remaining costs of private-school attendance, including transportation and their share of tuition.

Finding a better fit

Noah Grant is the kind of student lawmakers say they intended to help when they created the ESA program. And he's the type of success story Republicans in the Legislature use to bolster their argument for expanding the program to all public-school students.

Without an ESA, Noah, who is autistic, might have gotten lost in the public-school system, unable to keep up with the work and struggling with social interactions, according to Jackie Taylor, Noah's mom.

Two years ago, Noah, then 14, dreaded going to his neighborhood public school in Gilbert.

He was in special-education classes and largely spent his days isolated from other kids, Jackie said. He often didn't get the attention he needed, she said.

Noah ate lunch alone at his desk and spent recess in the library buried in Greek mythology books to avoid being bullied. He began to wear hooded sweatshirts so he could cover his head during class and zone out or fall asleep.

"I never really fit in," said Noah, now 16.

Jackie and Tim Taylor were convinced their son would be unable to live on his own.

Jackie, 35, began researching alternatives, and found PiecefulSolutions Schools, which specialize in teaching K-12 children with autism and other developmental delays. But she accepted that they would never be able to afford the $23,400 a year in tuition.

Then, PiecefulSolutions officials told her about the Empowerment Scholarship Account program.

Noah began attending his new school — a 35-minute drive from his home — in 2014, shortly after the family moved to San Tan Valley. Tim, who stays at home to help care for Noah's siblings, makes the trek twice a day.

Because of Noah's disability and other factors, the ESA covered his full tuition.

And Noah has flourished, surrounded by kids with similar experiences. His teachers take time to teach him math and language arts. They emphasize social skills and managing his behavior.

He has made friends. His classmates elected him to the student council. He's studying for his driver's test and is talking about getting a summer job.

As Noah has succeeded, Jackie and Tim's enthusiasm for the ESA program has grown. But Jackie said she has mixed feelings about lawmakers' plans to expand the program to all public schoolchildren.

On one hand, she believes parents should have choices, but on the other she doesn't want public schools to suffer at the expense of ESAs.

Where the money goes

Empowerment scholarships are based on the level of a child's disability and the cost of educating them. For Noah, it covers his private-school tuition, but for many children the program won't fund the full cost of a private school.

The result is wealthier areas receiving, on average, much higher benefits from the state program because families there can afford the additional costs.

The Republic found students in the 25 percent of schools with the fewest students receiving free or reduced-price lunches — a reliable measure of an area's poverty or wealth — received an average ESA benefit of $15,200. In the 25 percent of schools with the highest share of children receiving free or reduced-price lunches, the benefit averaged $7,350.

The ESA cap for a non-disabled student is $6,873.

"On the surface, it seems like one of the reasons you would see that disparity" between more affluent and less affluent areas' use of ESAs, said Charles Tack, spokesman for the Arizona Department of Education. "If it doesn't cover everything, it would be up to you to pay the bill. ... The economic situation of a family will always factor in."

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Meanwhile, the program is, in effect, penalizing the state's better-performing public schools as ESA payments reduce their budgets.

The average ESA amount per child from A-rated schools was $15,700 annually, and for B-rated schools it was $13,450. For C schools, it drops to $8,300 a year, and for D schools it was $5,850.

The figures show children coming from A- and B-rated schools are much more disabled than those coming from lower-performing schools, reflected in the higher payments on average.

"It's simply because of the number of students with disabilities in those areas that have chosen to participate," Tack said.

The financial impact on public schools is complicated: They lose an additional 10 percent on top of the amount of the empowerment scholarships given to students in their districts. At the same time, they no longer incur some of the cost of educating those students, but officials note many expenses — transportation and electricity, for example — don't decline with fewer students.

House Minority Leader Eric Meyer, D-Paradise Valley, said The Republic's findings confirm what he has long believed: Higher-income parents use ESAs, while those with fewer resources do not.

Without transportation or money to cover the portion of tuition the state doesn't cover, "it makes it hard to take advantage of these accounts," Meyer said. "It essentially gives the wealthy a discount at a private school."

He said expanding the program to include all students in public school would drain huge amounts of money from public schools, leaving behind children at poor-performing schools.

Districts in the dark

Districts from Gilbert to Scottsdale said they were unaware how many students from their districts used the program until the newspaper contacted them with its findings.

Among all districts, Gilbert ranked third in losses at $1.6 million. Many of the 90 students who left the district were disabled or had special needs. The average ESA per student in Gilbert was more than $18,000.

Teddy Dumlao, the director of finance for Gilbert Public Schools, said district officials had been trying to identify the cause of a decline in enrollment of special-education students.

"You’re giving me more information than I’m giving you at this point," he told The Republic.

Dumlao declined to talk about ESA expansion legislation. But he said state education officials should make ESA enrollment figures available to school districts.

"We shouldn't have to jump through hoops to know we’re losing enrollments for these reasons. Otherwise, how can we make our programs more effective and attract the right people?" he asked. "That information should be available for districts so we can better respond to the choices that parents are looking for."

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Scottsdale Unified School District officials also said they had not seen the data.

Scottsdale's Chief Financial Officer Daniel O'Brien said his district feels the impact of the 85 students who did not attend district schools and instead used ESAs -- although the $1.5 million the district did not receive is a small part of the district's $147 million budget.

The average ESA in Scottsdale was $17,650 during the 2015-16 school year.

As eligibility for ESAs expands, the financial impact on the district will grow, O'Brien said.

Laura Felten, Paradise Valley's assistant superintendent for business operations, said the school district doesn't track ESAs because they are just one of the many options that can take kids out of district schools — private schools, charter schools and open enrollment.

"We've had to become much more competitive," she said.

Paradise Valley lost nearly $1.3 million to ESAs in 2015-16, losing 70 students who received an average benefit of more than $18,500.

Felten said the ESAs don't eliminate the need to serve disabled students because many students in the district have similar needs.

Opening ESAs to all public-school students would certainly be felt by Paradise Valley, she said.

"Every charter school that opens in our area has an effect on us," Felten said. "I'm sure it would affect us."

Plans to expand

Rep. Justin Olson of Mesa and Sen. Debbie Lesko of Peoria say the successes of disabled students using ESAs are the motivation for expanding it to all public schoolchildren.

The expansion legislation is being pushed in companion bills, House Bill 2482 and Senate Bill 1279, to expedite passage.

The Republican lawmakers say ESA expansion is the natural progression of school choice in Arizona. All public-school parents should have the flexibility to choose schools, programs and tutors best tailored to their kids' needs, they said.

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Parents of disabled children have been able to use the program since 2011. Since then, it has been opened to students from military families, kids in foster care, siblings of students in the program, kids in D- and F-rated schools, and children who live on Indian reservations.

Olson and Lesko would not directly address The Republic's findings that children are leaving wealthier and higher-performing schools to go to private schools and that disabled children from poorer and lower-performing schools are not using ESAs to the same extent rich parents have.

Olson said he was pleased "all different sectors are taking advantage" of the program and said children from lower-performing and lower-income areas would qualify in larger numbers as parents become aware of the program.

Lesko said in a written statement that her legislation "will help all children, no matter what their economic status or background. I want all children to have the same opportunities."

Matthew Ladner, senior adviser for policy and research at the non-profit Foundation for Excellence in Education, has advocated for the ESA program since its inception and pushed for expansion.

He said The Republic's findings are "fairly predictable" for a program that few know about. Although some organizations are spreading the word about ESAs in lower-performing districts — at neighborhood gatherings, swap meets and community events — it hasn't yet caught on, he said.

"I'm not here to tell you we've got it all figured out, because we don't," Ladner said. "At the end of the day, all we can hope to do is make this a useful program that serves the needs for as many people as we can. It will never supplant the public-school system — it's simply an option."

Jonathan Butcher, education director for the think tank the Goldwater Institute, said the onus is on everyone involved with ESAs to better publicize them so more low-income students can participate.

Sen. David Bradley, D-Tucson, said he supports ESAs for children with disabilities — "the only kids it was originally intended for."

He sponsored a bill that would extend the age that children with disabilities can use an ESA to complete high school, from 18 to 22 years old. It unanimously passed the Senate Appropriations Committee and the Senate Education Committee last week.

Bradley said The Republic's analysis confirmed the anecdotal evidence that ESAs are used more by students at wealthy schools. He said it shows disabled students in poor areas and at low-performing schools are being "disadvantaged yet again."

"In general, you want the equity based on the need," Bradley said. "That should be the variable, not the parents' status."

Follow the reporters on Twitter: @robodellaz and @yvonnewingett and reach them at rob.odell@arizonarepublic.com or 602-444-4465 and yvonne.wingett@arizonarepublic.com or 602-444-4712

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