Empowerment Savings Accounts and Arizona’s Aid Clause

By Kate Kaufman. 

In Governor Katie Hobbs’s State of the State address, she proclaimed that Arizona “has long failed to live up to its obligation to adequately invest fairly in public education in every community.” Hobbs committed to making education reform a top priority of her administration this year. She specifically addressed the state’s student voucher program. Arizona’s student voucher program allocates funds the state would have spent on a student if they attended public school into an Empowerment Savings Account (“ESA”), which the parents of that student can then use on preapproved education expenses.

The ESA program was designed for students with qualifying disabilities whose needs were not being met in the public school system. If a parent decided not to enroll their child in the public school system, the ESA program provided parents funds to be used on different preapproved educational expenses. In 2022, Arizona expanded the school choice voucher program, making it one of the broadest and most expensive in the country. The expansion made virtually every student able to participate by loosening eligibility requirements. As a result, the program size increased from around 12,000 students to almost 70,000 and is estimated to cost Arizona taxpayers $950 million. Hobbs has proposed passing restrictions that would make it more difficult for students to qualify for the program. However, she has received strong pushback from the state’s legislature. If Hobbs is unable to make headway in the legislature, she may try to seek redress through the judiciary.

Constitutional Challenges Against Student Voucher Programs

Student voucher programs have been a hot-button topic in education reform. On one hand, proponents of voucher programs advocate for student and parent choice in education. On the other hand, critics argue it is wrong to reduce the resources being provided to struggling school districts. Student voucher programs have been challenged on a wide variety of state and federal grounds. In Zelman v. Simmons-Harris, the Supreme Court upheld Ohio’s student voucher program against challenges that it violated the Establishment Clause of the First Amendment. The Court reasoned that while some of the funds went to private religious schools, the aid from the government was neutral because parents could choose to send their kids to any school. Zelman effectively ended federal claims under the Establishment Clause, but student voucher programs are still being challenged on state constitution grounds.

Two landmark cases in Arizona evaluate the constitutionality of student voucher programs: Cain v. Horne and Niehaus v. Huppenthal. In Cain, the Arizona Supreme Court found that two student voucher programs violated the Aid Clause of Arizona’s constitution. Under the Aid Clause, no “appropriation of public money [shall be] made in aid of any church, or private or sectarian school, or any public service corporation.” The court reasoned that the drafters of Arizona’s constitution designed the Aid Clause to protect the state’s affirmative right to public education by ensuring funding to school districts. The student voucher programs redirected money that would be given to public schools to private schools. Thus, the court held that the voucher programs violated the Aid Clause and were unconstitutional.

Four years later in Niehaus, the Arizona Court of Appeals upheld Arizona’s ESA program against similar state constitutional challenges. The court distinguished the ESA program from the student voucher programs in Cain in two ways. First, the court found that unlike in Cain, the state was not paying any institution directly but instead depositing funds into accounts for parents to use. Second, the court reasoned that the money could be used for a variety of expenses for students with disabilities, tuition at private schools being just one of them. Unlike Cain, “[n]o funds in the ESA are earmarked for private schools.” Therefore, the court found the ESA program did not violate the Aid Clause of the Arizona Constitution. The Arizona Supreme Court denied the plaintiff’s appeal to review the case.

New Claims Against the ESA Program

There is a strong argument that Niehaus precludes any future claims that Arizona’s ESA program violates the state’s Aid Clause. However, more than ten years have passed since Niehaus was decided. Arizona’s ESA program has undergone significant changes in the past decade and the court may be open to rehearing the matter. Niehaus was decided only two years after the program went into effect when there was limited oversight on how parents were spending ESA funds. This made it easier for the state to argue that ESA funds were used to pay for a variety of educational expenses.

However, newly collected data now shows that nearly two-thirds of the money is spent on private school tuition and fees. Critics of the ESA program may argue that this data undermines the state’s argument that the ESA program does not apportion money to private schools. With the expansion of the ESA program, the percentage of funds being spent solely on private school tuition could increase even more. Many of the new participants who took advantage of the expansion already attended private schools. Therefore, the expansion is just “subsidizing tuition for students who already attend pricey private schools.” If new participants are using 100% of their funds to pay for private school tuition, then the option to use the funds to pay for other expenses is seemingly meaningless. This undermines the court’s reasoning in Niehaus, which relies on the multiple potential uses of ESA funds as a reason to find the program did not violate the Aid Clause. 

Looking Forward

The ESA program has been part of Arizona’s school reform movement for over a decade. It has been challenged on constitutional grounds before and prevailed. However, the new expansion drastically increased participation and may have reopened the possibility of legal scrutiny, especially given the significant allocation of funds toward private school tuition. New claims challenging the constitutionality of the ESA program would add an additional layer of complexity to the ongoing political debate.

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"Classroom Chairs 2" by James Sarmiento (old account) is licensed under CC BY 2.0.

By Kate Kaufman

J.D. Candidate, 2025

Kate Kaufman is a 2L Staff Writer for the Arizona State Law Journal. Before law school, she attended Texas Christian University where she earned a B.B.A. in Finance and Accounting. Kate is interested in working in corporate law. In her free time, she enjoys running, trying new restaurants, and hanging out with friends.