Empowerment Scholarship – ESA

The ESA program has been around for several years for families who had children with disabilities and more.  In 2022, Arizona legislators approved HB2853 that expanded this ESA program.   This “expansion” allows all Arizona families now to be eligible to receive ESA scholarship funds to be used for K-12 private schools.

Note that these are funds from public sources, that would normally be used for district/public/charter schools.   These funds come from property taxes, mostly.    STO tax credit scholarships that would be from Az4Education, are from private sources which are not used for district/public/charter schools.

Per state law, a student who is approved for ESA funding at a private school, will not be eligible to use STO tax credit scholarships during the same time period and vice versa.   These funding sources for K-12 private school education are mutually exclusive.

You must choose either STO tax credit scholarships or ESA.

The law states that you cannot receive STO and ESA payments, concurrently. ESA makes payments on a quarterly basis, so that is the time frame to be considered. In other words, if Q1 is July – September and you received payments during this time from an STO, but then also get approved for an ESA during this time, your must pick one or the other, but you cannot receive both.

To explain how this will work, if the one student tuition is $8K for the entire school year, that means each quarter is $8K/4 or $2K per quarter. Therefore, concurrent payments would be in that quarter.

Now, how much would be refunded, IF the parent accepts the ESA contract?

If the student received an STO scholarship payment in Q1 for any amount and the parent also accepts a Q1 ESA contract, then all STO scholarship funds must be refunded to the STO.

If the student received an STO scholarship payment in Q1 and it was LESS than 1/4 of the annual tuition, and a parent accepts a Q2 ESA contract, then zero (0) funds need to be refunded to the STO.

If the student received an STO scholarship payment in Q1 and it was GREATER than 1/4 of the annual tuition, and the parent accepts a Q2 ESA contract, then the STO Q1 paid amount minus 1/4 of annual tuition will need to be refunded to the STO.

If we use the example above of a student tuition of $8K, then if the STO paid $3K in Q1 and parent accepts a Q2 ESA contract, the school would refund $3K – $2K = $1K. If the STO paid $3K in Q1 and the parent accepts a Q3 contract, the school would not need to refund anything, since the tuition for Q1 and Q2 is $4K.

For Az4Education, the refunded amounts could be for ANY type of scholarship type, ie corporate, individual. Any refunded amounts will be held by Az4Education, for future use, provided the student continues to remain eligible to receive funds.

If we approved and sent funds to your school to be used toward 22-23 school year and you get approved for an ESA to start payment in Q1, then all the STO scholarship funds will need to be refunded to us.   We will hold onto those funds for use in future years, provided you maintain eligibility.    Once you cancel your ESA, you can use the STO funds.

If you get approved for an ESA to start payment in Q2, then any funds we sent will be again refunded, but pro-rated based on tuition for Q1.

Yes. If you are approved for ESA and accepting ESA payments, then we cannot send STO tax credit payments during the same time period… but if we do receive a student recommendation or make an award during this same time (when approved for ESA), the funds will be just assigned/associated to your student, but held for the next academic school year.

Note that if we send a scholarship in Q1 that is actually more 1/4 of the annual tuition, then that means the portion that would go toward Q2 (or Q3, Q4) would be refunded IF you were approved for ESA during Q2 (or Q3, Q4).

Az4Education will hold refunds/awards for future use, provided your student a) continues to attend a qualified Arizona K-12 private school, and b) you submit an application to our STO every school year.

Our online applications allow you to indicate if you are getting an ESA, which then just indicates ANY funds we approve, will be held.

When you want to use those funds, you must cancel the ESA contract, update the cancel document and we will be able to use those funds.

The amount of time we can hold your approved tax credit scholarship funds or “multi-year” scholarship is up to 12 years, while you continue to receive ESA funding or until the student transfers out or graduates from private school.   The only requirement is that your child continues to be eligible for tuition tax credit scholarships during this same time period.

Continuing to be eligible for tax credit scholarships from Az4Education means your student must a) continue to attend a private K-12 school.   If your student is transferred out of the private school, then those funds could be reallocated to another student after 1 year or they could be transferred to other eligible siblings.

In addition, you will need to b) submit an application to us every school year.   If you do not submit your application every school year, in order to retain the use of “multi-year” scholarships funds in future years, then we may reallocate those funds to other students.

Therefore, if you applied to Az4Education when your student is in 1st grade and your student received a tuition scholarship from Az4Education that school year, but then applied for an ESA (and was approved) for the same school year, the initial Az4Educatyion funds will be refunded to Az4Education and converted into a “multi-year” scholarship, for use in future years.

If you choose to accept the ESA scholarship funding, then the school will refund all of the Az4Education tax credit scholarship funds, per state law.    The student cannot use tax credit STO tuition funds and ESA at the same time.   Once the refunded scholarship is received by Az4Education, the funds will be converted into a “multi-year” scholarship for use in future years.   You will be able to see the total amounts and totals per child on your member dashboard, when you log in.

Please let us know if you were approved for an ESA so we can update your application.   Note that choosing ESA funding does not eliminate your opportunity to continue to receive a tuition scholarship from Az4Education, only that we cannot send any payments for tuition to the school while you are receiving ESA funds.

To learn more about the ESA program, here is the official link: azed.gov/esa

To learn more about the requirements, please go to the ADE ESA website: azed.gov/esa/eligibility-requirements.