Contrary to Allegations, the Data Show Little Fraud in Arizona School Choice Program

Education freedom is under attack, including baseless accusations.

By J.D. Tuccille of Reason. 

"Arizona's Democratic Gov. Katie Hobbs has long waged war against the state's school choice programs, reserving particular venom for Empowerment Scholarship Accounts (ESA), which allow much per-pupil education funding to follow students to their preferred schooling. She's been assisted in her crusade by some media outlets which have amplified inaccurate stories about ESAs. But the ESA program remains not just wildly popular but, according to researchers, also well-managed.

Is a Popular Program Rife With Fraud?

"About 2.0% of dollars spent by ESA account holders is for items that are unallowable under program rules," the Arizona Department of Education announced earlier this month in response to allegations of widespread fraud. "In addition, actual fraud or egregious purchases are at 0.3%, according to the same study."

There's a story behind that announcement, as you might expect. It's the tale of a fight over a very popular school choice program that's despised by a few politicians and their supporters.

As of this week, 102,598 Arizona students use ESAs to pay private school tuition, for curriculum, home education, tutoring, and other education expenses. Instead of being locked to specific brick-and-mortar buildings, 90 percent of per-pupil funding is deposited in accounts to be used for permitted expenses by families that want something other than traditional public schooling. ESAs are powerful tools for freeing families from one-size-fits-some schooling, but that liberating power offends proponents of traditional institutions, among them the governor.

A State Program Attacked by State Officials

"While other government entitlements have strict requirements and oversight, the ESA program continues to operate unchecked, squandering taxpayer dollars with no accountability," Gov. Hobbs charged in her State of the State address in January. "It seems like every day, we learn about new shopping sprees happening at the expense of taxpayers…diamond jewelry, high-end clothing and furniture…who knows what taxpayers will be footing the bill for tomorrow?"

Sure enough, on March 4, the Arizona Republic's Alexandra Hardle claimed that "audit data shows over 20% of vendor purchases made with Empowerment Scholarship Account dollars could be barred under the program's guidelines." She added that "records released by the Arizona Attorney General's Office show Arizonans have spent millions of dollars on expenses that appear to fall afoul of the program's guidelines."

Arizona Attorney General Kris Mayes, it should be noted, is another Democrat who has waged a continuous battle against ESAs and against Superintendent of Public Instruction Tom Horne, a Republican, who administers the school choice program. Two years ago, she tried to bury ESA families in requirements for documentation of even minor purchases. She and Hobbs insist all education spending not controlled by government bureaucrats is suspicious, and they're determined to convince the public of that claim by any means necessary.

The ESA Program 'Withstands More Scrutiny Than Many Public Programs'

The Department of Education rebutted the fraud claims, referring to a recent study it commissioned.

Per the department, "the 20% figure represented program participants that ADE [Arizona Department of Education] had selected for risk-based auditing." That is, of expenditures flagged as questionable and put aside for scrutiny, one in five were then found to be disallowed. Across the whole program, the real figure for disallowed expenses, ADE insisted, is the 2 percent mentioned above—and it's mostly unintentional.

"Most are innocent mistakes, such as an error in a form that must be resubmitted, or educational items that are not on the allowable list but that the user could have in good faith believed were permitted. Some examples would be backpacks, lunch boxes and water bottles," ADE added. Horne and company say the figure for intentional fraud is 0.3 percent.

EdChoice, an independent organization that supports education reform, sought to settle the dispute and asked for documentation of ESA participants' educational expenses.

"We were granted access to data on all ESA transactions for the school year 2024-25 (the year prior to the one ADE studied)," according to EdChoice's Susan Pendergrass and John Kristof. "After our review, the ADE's numbers seem plausible. Not only that, but unallowable expenses seem to be almost entirely concentrated in one source, which should make improvements simpler."

To the extent that there's a problem, write Pendergass and Kristof, "essentially all the potentially controversial purchases are found in Amazon transactions" made as education expenses. "Even if every Amazon transaction was eyebrow-raising, we would only be questioning around 7% of the total spend on the program. And not every Amazon transaction was eyebrow-raising." They put the total for questionable expenses at 1 to 2 percent—essentially the same as the ADE study.

"Based on our preliminary research and the Arizona Department of Education's study, the ESA withstands more scrutiny than many public programs," the EdChoice analysts conclude.

It's All Part of the Policy Battle Over School Choice

Now, that's a lot of wading into the auditing weeds for a school choice—or any—program. But Arizona's governor and attorney general can't eliminate ESAs on their own. School choice supporters control the state legislature and aren't about to abolish the program. ESAs currently enjoy 66 percent support among Arizona adults and 75 percent support among parents of school-age children, according to polls.

That means the only way for Hobbs, Mayes, and their friends to kill the ESA program and damage school choice overall in the state is to erode support for portable education funding. They have to convince Arizonans that the program is hopelessly corrupt—even though there's little evidence to support that claim. Only by turning the public against ESAs can they corral some escaped students back into government schools. And their side is desperate as the tide of public opinion turns against them.

"To date, 18 states have programs on the books that make virtually all their students eligible for state funding to use on private school tuition or home-school expenses," EducationWeek's Matthew Stone and Caitlynn Peetz Stephens noted in January. "And every one of those states made their programs universal within the past four years."

Arizona and Florida have been pathfinders in the shift toward education freedom. Opponents of school choice, including Arizona's governor and attorney general, hope that reversing course in a pioneering state can move the whole country back in their direction. Their efforts deserve to fail."

Cray 1978 versus iPhone 2022 (and the astronomical drop in the cost of light over time)

By David R Henderson.

"On January 20, 2024, I posted on EconLog about the differences between a 1978 Cray computer, the most powerful computer at the time, and a 2022 iPhone 13. The latter dominates in every way, and by a very large margin. Here’s my post, edited slightly.

Cray 1978 versus iPhone 2022

If you want to see a truly amazing trip down 44 years of memory lane, check out this comparison of the 1978 Cray computer, at the time the most powerful computer in the world, and the 2022 iPhone. I won’t bother giving you the specifics because the narrator, Dave Darling, does a very good job in a short time.

In talks I gave in the early 2000s in which I highlighted the huge advances in computing, I said that if we had seen the same advances in, say, kidney surgery, you could have decided whether to get kidney surgery–or buy yourself a cup of coffee. Now the comparison would be way more extreme.

The video reminds me of the less spectacular, but still spectacular, effects of the lightbulb that William D. Nordhaus pointed out years ago. Interestingly, in granting him his half of the Nobel Prize in economics, the Nobel committee didn’t even bother to mention what I thought was one of his biggest contributions. Here’s what I wrote on the issue in my biography of Nordhaus in David R. Henderson, ed., The Concise Encyclopedia of Economics:

He showed that the price of light in 1992, adjusted for inflation, was less than one tenth of one percent of its price in 1800. Failure to take this reduction fully into account, noted Nordhaus, meant that economists have substantially underestimated the real growth rate of the economy and the growth rate of real wages." 

Average Wealth for Younger Generations Continues To Exceed Past Generations

By Jeremy Horpedahl.

"Today I am posting an update to the generational wealth chart that I have posted many times in the past. This update brings the data through the 3rd quarter of 2025 for the youngest cohort, which includes both Millennials and a growing part of Gen Z in the data from the Federal Reserve. I am somehow hesitant to post this chart, as it is starting to be data that is less useful as the younger generations age, for two reasons.

The first problem with the data is that the Fed is lumping everyone from ages 18-43 together as one generation. Given that the youngest Millennials were 29 in 2025, we are now including a significant part of Gen Z, which is OK in itself, but it becomes harder to compare with generations that encompass only 16 or 17 years of birth cohorts. Secondly, the data from the Fed’s Distributional Financial Accounts is only benchmarked every three years with the Fed’s more detailed Survey of Consumer Finances. Currently only the 2022 version of the survey is available, which is now probably a bit out of date. Based on past updates, it is entirely possible that it is underestimating wealth for the youngest cohort. But I think we will have much more certainty about this data once the 2025 SCF is available and used as a benchmark for the DFA data.

With all of those caveats aside, here is the updated chart:

 

As I am currently working on a book manuscript using the Survey of Consumer Finances, I will be very excited to finally have the 2025 data available. Until then, this is probably the best intergenerational comparison we can do, and it continues to look very positive for the youngest cohorts. With an average of almost $146,000 of wealth for the combined Millennial/Gen Z cohort, they are well ahead of where Gen X was even in their late 30s, and ahead of Boomers at around age 37 as well. All of this bodes well for young people, despite frequent expressions of pessimism, but we should hold off judgement until the 2025 data is fully updated." 

Cuban infant mortality and longevity: health care or repression?

Gilbert Berdine, Vincent Geloso & Benjamin Powell. Excerpts:

"Centralized planning has disadvantages. Physicians are given health outcome targets to meet or face penalties. This provides incentives to manipulate data. Take Cuba’s much praised infant mortality rate for example. In most countries, the ratio of the numbers of neonatal deaths and late fetal deaths stay within a certain range of each other as they have many common causes and determinants. One study found that that while the ratio of late fetal deaths to early neonatal deaths in countries with available data stood between 1.04 and 3.03 (Gonzalez, 2015)—a ratio which is representative of Latin American countries as well (Gonzalez and Gilleskie, 2017).² Cuba, with a ratio of 6, was a clear outlier. This skewed ratio is evidence that physicians likely reclassified early neonatal deaths as late fetal deaths, thus deflating the infant mortality statistics and propping up life expectancy.³ Cuban doctors were re-categorizing neonatal deaths as late fetal deaths in order for doctors to meet government targets for infant mortality."

"physicians who worried that a mother’s behavior might lead to missing the centrally established targets will prescribe the forceful internment in a state clinic (casa de maternidad) so that they may regulate her behavior.⁴ Physicians often perform abortions without clear consent of the mother, raising serious issues of medical ethics, when ultrasound reveals fetal abnormalities because ‘otherwise it might raise the infant mortality rate’"

"Coercing or pressuring patients into having abortions artificially improve infant mortality by preventing marginally riskier births from occurring help doctors meet their centrally fixed targets. At 72.8 abortions per 100 births, Cuba has one of the highest abortion rates in the world.⁶ If only 5% of the abortions are actually pressured abortions meant to keep health statistics up, life expectancy at birth must be lowered by a sizeable amount. If we combine the misreporting of late fetal deaths and pressured abortions, life expectancy would drop by between 1.46 and 1.79 years for men."

"car ownership is heavily restricted in Cuba and as a result the country’s car ownership rate is far below the Latin American average (55.8 per 1000 persons as opposed to 267 per 1000) (Road Safety, 2016). A low rate of automobile ownership results in little traffic congestion and few auto fatalities." 

"The maternal mortality ratio of Cuba in 2015 was higher than in Latin American countries like Barbados, Belize, Chile, Costa Rica, Mexico and Uruguay (Trends in Maternal Mortality 1990 to 2015, 2015). In terms of healthy life expectancy, Cuba ranked behind Costa Rica, Chile, Peru and Bermuda and marginally surpassed Uruguay, Puerto Rica, Panama, Nicaragua and Colombia"

State records show 89 hospice companies at one Los Angeles office plaza. We went to look for ourselves.

By Laura Geller of CBS News. Excerpts:

"The Merabi Professional Medical Plaza, a three-story, 32,000 square foot stucco and glass office building in Los Angeles, is home to a salon, a law office, a modeling agency, a realty corporation and, also, 89 licensed hospice companies."

"The building is among the most extreme cases of what's known as "clustering" to turn up in a sweeping CBS News investigation — a grouping of large numbers of hospice offices that state auditors consider a major red flag for potential fraud. 

The Van Nuys address for Merabi Plaza appears dozens of times in state records for licensed hospice companies. Inside the building's entry hall, a directory lists numerous  hospice agencies that line the long tiled hallways, although the building's owner claims many are no longer there."

"Auditors said the clustering of so many firms raised concerns because it suggests that "the number of agencies in these areas likely exceeds the number of patients who need services."

Concerns about clustering appear in a 2022 California State Auditor's report, which found that Los Angeles County had experienced a 1,500% increase in hospice companies countywide since 2010. That's six times more hospice providers than the national average, relative to the county's elderly population."

"other warning signs for potential fraud included multiple hospices in one building, geographic clustering, low patient counts, high rates of terminally ill patients later discharged alive, excessive billing and staff shared across multiple companies."

"72 of the 89 registered hospices in Merabi Plaza have at least three of those six potential warning signs."

"regulators visited multiple suites in Merabi Plaza between 2021 and 2025. They found nearly 400 violations at 75 companies"

"Many of the hospice companies in Marabi Plaza have been billing Medicare for years and collecting reimbursements that come from federal tax dollars."

[there are] ""ghost hospices." Those are paper companies that bill the government for patients, even if they don't actually provide any real care."

Newsom’s Climate False Alarms

Global warming isn’t behind California’s wildfires, and fires around the world are declining

By Bjorn Lomborg. Excerpts:

"Age-adjusted heat-related death risk in California has risen modestly in recent decades—enough to account for 90 additional annual deaths"

"Warming has helped reduce age-adjusted cold-related deaths by more than 5,000 a year"

"In the early 2000s, about 3% of the world’s land burned annually—in total acreage, an area about twice Mexico’s size. The trend since has been downward: 2022 hit a record low of 2.169%, and 2025 nearly matched it at 2.198%, the second-lowest."

"global warming isn’t the main driver of fires in North America. Poor planning puts more houses in extreme fire-risk zones. California’s surge in wildfires stems overwhelmingly from poor forest management: decades of fire suppression that built up fuels, with almost no prescribed burns" 

"nearly 20% of the state needs controlled burns to reduce risk, yet only 0.1% to 0.3% receives them annually."

"deaths from fire-related air pollution declined between 2000 and 2019, even as the global population increased over 26%"

"In the early 1900s, nearly 4% of global land burned yearly. Last year, only 2.2% did."

"2024 Nature paper that declared extreme fire events doubled globally from 2003 to 2023. But a subsequent Nature review demolished that claim"

"even if the world’s wealthiest nations made major emissions reductions . . . It would avert less than 0.2 degree Fahrenheit of warming at significant cost" 

The Credit Engine Behind China’s Economy Is Sputtering

Cheap lending to low-quality borrowers renders one of Beijing’s prime policy tools less efficient.

By Joseph C. Sternberg. Excerpts:

"Beijing itself doesn’t believe the economy is improving. Officials this month promulgated a series of economic plans centered on a GDP growth target of 4.5% to 5%, the lowest since 1991. In part that target sends a signal from the senior Communist Party leadership to other officials that Beijing will tolerate some of the pain of an economic adjustment. Local cadres shouldn’t rush to juice the stats with excessive lending and white-elephant public-works projects."

"It’s widely understood that the government economic data concerning GDP growth are a lie intended to flatter the party."

"Since Mr. Xi embarked on the property correction in August 2020, Beijing has tried to steer the economic rebalancing carefully—sometimes allowing fate to run its course by bankrupting some companies or stressing some local governments overexposed to off-balance-sheet real-estate lending, other times arresting the decline with old-style policy hacks such as credit subsidies."

"Evidence is accumulating that Beijing’s firepower is running down"

"the total rate of credit growth is slowing dramatically: to 6.1% year-on-year in January, compared with an average of 9% a year in 2017-24 and 18.1% in 2007-16."

"Some 58% of loans in December were made at interest rates at or below the official benchmark lending rate of 3%"

"that proportion has risen steadily over the past couple years"

"This suggests banks are struggling to find borrowers (read: in the private sector) that could generate returns above 3%, which is remarkable in a developing economy with enormous potential for catch-up growth"

"banks are lending to inefficient state-owned enterprises and investment pools linked to local governments. Cheap lending to low-quality borrowers then weighs on bank profits, hindering future productive lending"