PHOENIX — Unable to convince Republican lawmakers to repeal universal vouchers, Democratic Gov. Katie Hobbs is trying to get them to at least scale back eligibility.
In unveiling her $17.65 billion state spending proposal for next fiscal year, Hobbs said allowing the program, which funds tuition for private and parochial schools as well as homeschooling, to continue as is would cost nearly $964 million. So Hobbs proposes placing some income restrictions on families' eligibility.
Under her proposal, full universal vouchers of between $7,000 and $8,000 per student — those for children who do not meet any other category to make them eligible — would continue to be available to families earning less than $100,000 a year.
But she calls for reduced vouchers at incomes above that. And any family earning more than $200,000 would be ineligible.
All that is estimated to save at least $150 million a year.
None of this would affect those who were entitled to vouchers before lawmakers opened the program to all in 2023. Those include students with special needs, those attending schools rated D or F by the state, children in foster care and children of those in military service.
Hobbs' modified plan, however, is unlikely to get more traction in the Republican-controlled Legislature than her two prior attempts to kill universal vouchers outright. Both House Speaker Steve Montenegro and Senate President Warren Petersen said they will oppose any effort to scale back what they describe as "parental choice'' in education.
Other priorities
But gubernatorial press aide Christian Slater said lawmakers will have to choose between what he called an "entitlement program'' and other priorities in Hobbs' spending proposal, including:
— Putting more money into reducing the cost of child care for working families;
— Providing additional dollars for direct help in down-payment assistance for first-time homebuyers and expanding tax credits for builders of affordable housing;
— Giving a 15% raise to state firefighters, 5% raises to state police and corrections officers, and smaller raises to other state employees;
— Making grants available to local law enforcement to help stem the flow of drugs across the border.
"So, at some point, our friends in the Legislature are going to have to ask themselves, 'Do you like pay raises for police and firefighters or would you like to keep paying for grand pianos in multi-million dollar homes?' '' Slater said. That refers to reports that some parents used their education voucher funds for items beyond traditional books and curriculum under the claim that equipment — such as a piano — is needed for music instruction.
"Do you want to lower the cost of child care and do you want to lower the cost of housing, or do you want to keep paying for luxury car driving lessons of the children of the 1%?,'' the governor's spokesman continued. If Republicans insist on maintaining the universal voucher program "they need to be held accountable for their unwillingness to bring that accountability over where taxpayer dollars are being spent," Slater added.
Slater bristled, however, at a question of whether Hobbs considers this to be strictly a binary choice — universal vouchers versus child care and affordable housing — especially as there are other items in the governor's spending proposal that lawmakers may decide deserve lower priority than vouchers.
Vouchers have been the subject of debate since they were first approved by lawmakers in 2012. At the time they were sold as a way for parents of children with special needs to get the services they need that were not offered in public schools.
But eligibility was expanded to covers students who attend public schools rated D or F, foster children and children living on reservations. There are currently about 24,000 students enrolled in that part of the program.
And in 2022 GOP lawmakers and Republican then-Gov. Doug Ducey removed all limits, making the vouchers available to all. That added another more than 70,000 students.
Of note is that the Governor's Office says nearly three out of every four of those now in the universal voucher program have never been to public school. That, they say, is proof that most, if not all of them, already were attending private schools with their parents picking up the tab — a tab that now is borne by taxpayers.
Helping families pay for child care
On the issue of child care, a new "Bright Futures AZ'' initiative proposed by Hobbs would tap a small amount of state general fund money — $7 million a year — along with a small amount from a special Department of Health Services fund to create a new public-private partnership in which businesses, the state and parents each chip in a third of the cost of child care.
"It's asking a business, 'Hey, will you chip in $400 a month, government will match you, and then families pick up the rest,'" Slater said. "That public private partnership for participating families will cut child care costs by two thirds.''
There's also a newly proposed tax credit that could reach $1 million per business if they fund child-care slots, plus tuition assistance for people interested in early childhood education. Hobbs also wants grants to help care providers improve health and safety conditions.
The biggest spending on child care in the governor's plan calls for more than $190 million a year to increase a current subsidy program for low-income working Arizonans.
That program was greatly expanded using federal pandemic relief funds but those are going away. Hobbs wants to continue the program and cut the number pf families sitting on a wait list for public funding. An estimated 25,000 children should qualify for assistance under the plan, her office says.
"We really have a multipronged approach to both ensure that we're opening up (child care) slots and ensuring that we're lowering costs for people,'' Slater said.
The Governor's Office says there is a price tag for inaction because some parents who can't afford child care end up not being able to work, creating an economic loss to the state's economy estimated at $5 billion a year.
State involvement in affordable child care has strong support from business interests.
But it may be a difficult sell among some GOP lawmakers. Senate President Petersen, for example, has questioned the need for state subsidies, saying the best thing lawmakers could do is create more high-paying jobs so parents can afford the care themselves.
Goals for affordable housing
Then there's housing.
Lawmakers from both parties have complained for years that housing, both for buyers and renters, has become unaffordable. Legislators approved measures last session designed to deal with some of that, ranging from requiring cities to allow more duplexes, triplexes, fourplexes and townhomes, to allowing homeowners to build backyard "casitas'' that can be rented out.
The governor's budget instead focuses on steps more likely to help low- and moderate-income families, both with direct financial aid and by using grants and tax breaks to get developers to build more affordable homes and apartments.
There is also $5 million proposed in what the governor is calling a "Homes for Heroes'' program to provide housing for veterans.
Some other issues in the governor's budget that might be considered must-fund items range from an increase in enrollment in the Arizona Health Care Cost Containment System, the state's Medicaid program, to boosting the money given to K-12 education for a yearly inflation increase.
Prison health-care shortfall
Where Hobbs' budget plan may fall short is in increased spending for prison health-care costs.
The state is under a federal court order to vastly improve what has been ruled unconstitutionally poor mental and physical health care for inmates. Despite the state adding $179 million in new health-care money in the current budget, a new report filed with the judge overseeing the long-running case over poor inmate care shows it is still woefully inadequate.
Judge Roslyn Silver recently asked for a report on any additional state spending proposed to help fix the issue. Hobbs' budget gave the judge her answer: adding $6 million to the current budget and $6 million to the upcoming one.
Slater said Hobbs is well aware there are issues in the prisons and that having Silver take over direct oversight would not be good for taxpayers. But he blamed the problems on years of Republican administrations and lawmakers ignoring prison health care as a real issue.
"Look, we didn't get to this problem overnight. We're not going to fix it overnight,'' Slater said.
"It's a complex and multi-layered problem,'' he continued. "But this budget does contemplate steps forward in order to address some of the problems.''
'Border security'
One thing not in the budget is money for state and local police to enforce a provision of Proposition 314 approved in November by voters. It allows them to arrest those who are not U.S. citizens who enter the country at other than a port of entry.
Instead, pretty much all of what the governor has labeled as "border security'' money is earmarked to help law enforcement stem the flow of illegal drugs into the country.
At least part of the reason for that absence of Prop. 314 funding, according to the Governor's Office, is that the arrest provision cannot take effect until federal courts rule on the legality of a nearly identical program enacted by Texas. So far that has not occurred.
Other asks by the governor include:
— Setting aside $3 million for the Department of Water Resources to use if it has to go to court to protect Arizona's share of Colorado River water;
— Additional dollars to help maintain the caseload limit of workers in the state's Adult Protective Services program;
— Expanding family planning and postnatal care services for those enrolled in the Arizona Health Care Cost Containment System, the state's Medicaid program;
— Providing state dollars to eliminate the co-pay that now exists for school lunches for certain students who do not meet federal guidelines for free meals.
