Arizona’s attorney general has stepped back from a controversial requirement that families participating in the state’s school-choice program document every purchase made with Empowerment Scholarship Account funds for “general educational supplemental materials,” resolving a legal challenge and prompting changes to how such purchases will be monitored going forward. The policy, introduced in 2024, had drawn immediate criticism from advocates for school choice and from some state officials who said it created burdensome paperwork for parents. The Goldwater Institute sued on behalf of ESA families in 2024, and the parties — the attorney general, the Goldwater Institute and the Arizona Department of Education — reached a settlement that will dismiss the lawsuit with prejudice and remove the blanket documentation demand that had sparked the dispute.
Arizona official speaking into a microphone at a public event after the state reached a settlement to drop regulation of school-choice programs. Jon Riches, an attorney for the Goldwater Institute, welcomed the settlement, saying it restores the statutory structure of the ESA program and makes participation less cumbersome for parents. The ESA program routes money that would otherwise pay for a student in a neighborhood public school to a different school chosen by parents or to homeschooling expenses, a design intended to give families control over educational choices. Riches said the attorney general’s earlier demand ran counter to that aim by making routine purchases more difficult to document and to get reimbursed, and he described the settlement as a step toward returning the program to the way the law intended it to function.
Representatives for the attorney general framed the settlement differently, saying it avoids further litigation costs for taxpayers while putting in place more targeted procedures to verify appropriate use of ESA funds. Richie Taylor, communications director for the attorney general’s office, said the settlement “approved this settlement agreement to stop wasting taxpayer dollars on this lawsuit.” At the same time, he outlined two new processes the Arizona Department of Education has agreed to implement to assess whether purchases of supplementary materials are allowable under the program. Those measures require ESA account holders to attest that any supplementary materials purchased are for use by the student associated with the account and to identify at the time of purchase the curriculum or course of study the materials will support.
Taylor said the department will have broader authority under the settlement to request additional documentation from parents to support purchases when needed, and he characterized those steps as “important” for ensuring accountability in the use of education tax dollars. The attestation requirement, he said, is straightforward: ESA holders must confirm that the materials they buy with ESA funds will be used by the qualified student tied to that account. The curriculum-identification step requires parents to link purchases to a course of study at the moment the purchase is made. Taylor described those actions as reasonable checks to verify that reimbursements correspond to actual educational needs for a given student.
From the perspective of the Goldwater Institute and the families it represented, the settlement eases a prior burden without eliminating oversight entirely. Riches noted that as part of the agreement, families submitting reimbursement requests will be required to click a checkbox confirming they are qualified ESA families and that the materials being reimbursed will support their stated course of study. He said the change will make it easier for families to secure the materials they need to educate their children, correcting what he described as the attorney general’s earlier rule that had, in his view, made even simple purchases such as pencils or books harder to get reimbursed. Riches framed the settlement as restoring common-sense administration aligned with the ESA program’s stated purpose of putting parents in control of their children’s education.
State education officials and the superintendent of public instruction also weighed in on the background to the settlement, pointing to administrative strain within the department that complicated implementation of any new documentation regime. Superintendent Tom Horne called the attorney general’s initial demand “ridiculous” and said the extra documentation did not create a new burden for the department itself so much as it created an additional hurdle for parents using ESA funds. Horne said department staffers have attempted to limit the documentation required to what is necessary to confirm legitimate educational expenses at reasonable cost, but pointed to a long-standing staffing shortage that makes handling ESA account requests difficult at current capacity.
Horne provided staffing and workload figures that helped explain the department’s operational challenges: the agency has the same number of staff now as it did when the ESA program served about 11,000 students, even though enrollment in the program has since expanded to more than 100,000 students. That mismatch means a handful of employees are responsible for reviewing a vastly larger volume of reimbursement requests. Horne said the department effectively has eight people to examine roughly two million requests a year — a workload equivalent to nearly a quarter-million reviews per person annually — which he characterized as “humanly impossible.” Lawmakers responded last year by passing a risk-based auditing policy for ESA accounts intended to focus oversight where the department identified higher risk; the change came after families experienced delays in reimbursement of between two and six months under the prior review practices.
To address the staffing shortfall, the department requested an additional $4 million from the Legislature to expand capacity. Horne said there was an agreement late in the session to include that funding as part of a broader education package, but that the deal ultimately fell apart before final passage. With that outcome, he said the department intends to pursue a special appropriation for the funding in January 2027. Meanwhile, the settlement resolving the lawsuit means the more expansive documentation requirement imposed in 2024 will be withdrawn, replaced by the attestation and course-of-study identification procedures and by the department’s retained authority to request supporting materials on a case-by-case basis as it administers the ESA program going forward.
The settlement, filed in Maricopa County Superior Court as Case No. CV2024-026463, identifies Velia Aguirre as the plaintiff and sets the agreement's Effective Date as July 1, 2026.
The agreement requires the Arizona Department of Education to add specific course-of-study checkboxes (reading/grammar, social studies, science, mathematics, physical education, art, vocational instruction, or Other) to the ESA platform and to require a written curriculum name when "Other" is selected; those technology changes must be implemented as soon as feasible or by the second quarter of fiscal year 2027, and ADE agreed it will not process reimbursements for general supplemental materials until the requirements are available or that deadline is reached.
The parties agreed to file a stipulation to dismiss the action with prejudice within ten days of executing the settlement, the agreement is a public document, each party will bear its own attorneys' fees and costs, and the settlement may be enforced in Maricopa County Superior Court.
The settlement explicitly preserves the attorney general's authority to investigate or enforce law in cases involving suspected fraud, misuse of funds, or unlawful expenditures and to request information in specific cases where there is a reasonable basis to believe a violation has occurred.