Arizona: The Petri Dish for the Future of American Education

What Happens When Public Schools, Charter Schools and Taxpayer-Funded Private Choice All Compete for the Same Children—and the Same Public Dollars

By Bear Howard and Associates

Note: This is more than an essay. It is, in many ways, a white paper, almost a thesis, to explore the topic in great detail. I apologize for the length. The topic is much bigger than most of us can comprehend. Arizona is an experiment in America, and it’s commitment to educating its children.

For most of modern American history, public education rested on a simple bargain.

Communities established schools. Taxpayers supported them. And those schools were expected to educate virtually every child who arrived at the door—rich or poor, gifted or struggling, disabled or able-bodied, highly motivated or chronically absent.

The system was never perfect. Bureaucracies grew. Regulations accumulated. School boards became political. Innovation could be painfully slow.

But one principle was clear:

The public school was the community’s educational institution of both first resort and last resort.

That arrangement is changing.

Across America, parents increasingly can choose among charter schools, magnet schools, open enrollment, private schools, homeschooling, online programs, vouchers and education savings accounts.

Few states have pushed this transformation further than Arizona.

Arizona first created one of America’s largest charter-school systems. It expanded open enrollment across district boundaries. Then, in 2022, it made its Empowerment Scholarship Account program essentially universal, allowing public education dollars to finance private schools, homeschooling and other approved educational expenses.

Arizona has therefore become something close to a Petri dish for the future of American education.

The question is no longer simply whether charter schools or private schools are good or bad.

The more important question is:

What happens to a universal public-school system when government creates competing educational systems with greater operating freedom, allows public money to follow families into those alternatives, and then judges the traditional schools partly by the students, finances and problems that remain?

Arizona is beginning to provide an answer.

Arizona Is Already Different

Traditional district schools still educate the overwhelming majority of American public-school students. In 2022–23, about 45.1 million of America’s 48.9 million public-school students attended traditional public schools, while about 3.7 million attended charters.

Arizona is different.

In 2024–25, Arizona reported about 871,500 students in district schools and 231,700 in charter schools. Roughly one out of every five Arizona public-school students was attending a charter—far above the national average.

Then came universal ESAs.

By August 2026, the Arizona Department of Education reported more than 102,000 students enrolled in the ESA program.

Arizona therefore has three substantial educational sectors operating simultaneously:

traditional district schools, public charter schools, and publicly financed private or home-based educational alternatives.

That makes Arizona especially useful for understanding what happens when school choice stops being an alternative around the edges of the public system and becomes a major part of the system itself.

The Rules Are Not the Same

The traditional public-school district does much more than operate individual schools. It maintains educational infrastructure for an entire geographical community.

It operates buildings, transportation systems, special education, personnel systems, cafeterias, libraries, counseling services and administrative structures. It remains available when children move into the community halfway through the year, when another school does not work out, when a child has serious disabilities or behavioral problems, or when parents never investigate an alternative.

The district has to remain there.

That universal availability is one of traditional public education’s greatest virtues.

It is also one of its greatest burdens.

Charter schools operate differently.

Arizona law still requires charters to meet important obligations involving health, safety, civil rights, financial accountability, special education and state testing. But Arizona also deliberately exempts charter schools from many of the statutes and rules governing traditional schools and school districts.

That produces a fundamentally different philosophy.

The district is generally told:

Here are the rules under which you will operate.

The charter is closer to:

Here are the results and essential protections we require. You have substantially more freedom in deciding how to get there.

Teacher employment provides one example. Arizona district teachers generally must hold the required state teaching certification. Charters have far greater latitude.

A charter may be able to hire an engineer to teach physics, a computer scientist to teach programming or another highly qualified specialist who did not follow the conventional teacher-certification route.

That freedom can be enormously valuable.

It can also be abused.

Freedom does not guarantee excellence. Freedom magnifies management.

Strong leadership can use flexibility brilliantly. Poor leadership can use the same flexibility disastrously.

Charters also have greater ability to define what they are.

A charter can organize itself around classical education, STEM, Montessori, fine arts, language immersion, college preparation or another specific philosophy. It can establish its size and grade configuration and, when demand exceeds capacity, use legally permitted enrollment procedures.

A traditional district must maintain a much broader educational system.

These are not identical assignments.

Some Charters Really Do Perform Better

It would be a mistake to dismiss strong charter-school results as nothing more than selective enrollment.

Some charters really do appear to produce better academic outcomes.

The major 2023 CREDO national study compared charter students with matched traditional-public-school students and found an average charter advantage equivalent to about 16 additional days of learning in reading and six additional days in mathematics per year.

That deserves attention.

If charter schools are succeeding because they can hire differently, change curriculum faster, reorganize staffing or escape unnecessary bureaucracy, the proper public-policy response should not merely be to congratulate the charter sector.

It should be:

Why aren’t successful freedoms extended to traditional public schools?

But there is another issue that makes raw comparisons difficult.

A school’s test score is not necessarily the same thing as the school’s contribution.

Children arrive with very different levels of previous education, parental education, family income, vocabulary, disability, attendance, stability, tutoring, transportation and parental expectations.

School choice adds another variable.

Choosing requires action.

Parents must investigate schools, fill out applications, compare programs, arrange transportation and sometimes change schools repeatedly until they find the right fit.

Those activities are not distributed randomly across the population.

Federal research has found a strong relationship between parental education and active school choice. In one national survey, parents with graduate or professional degrees were roughly twice as likely as parents without a high-school diploma to report considering alternative schools.

This does not mean less-educated parents care less about their children.

It means navigating an educational marketplace requires information, confidence, time and resources.

Choice does not randomly distribute families.

Put enough highly engaged families together and they begin changing the school itself. They demand good teachers. They monitor curriculum. They reinforce academic expectations. Their children reinforce those expectations among one another.

Consequently, when a charter reports substantially higher scores than a district school, some of the difference may represent better teaching and management.

Some may also have walked through the front door with the students.

That is why the serious measurement should be how much academic growth a school produces, not merely where its students score at a particular moment.

The District Can Become the Residual Provider

This is where school choice becomes structurally complicated.

The traditional public school remains available to everyone.

That includes families actively choosing it.

But over time it may also serve disproportionate numbers of children whose families cannot navigate alternatives, lack transportation, move frequently, require complicated services or return after another educational placement fails.

The district can gradually become what might be called the residual provider.

Not exclusively a school system for disadvantaged children.

Not exclusively a system for disabled children.

But increasingly the institution responsible for the students left after numerous other choices have operated.

Then society compares its performance with schools whose populations were created partly through voluntary selection.

That comparison can still be informative.

But it is not automatically an apples-to-apples measurement of effectiveness.

And then comes the money.

The Financial Catch-22

Modern school-choice policy increasingly operates on a simple principle:

The money follows the child.

There is obvious logic to it. If Johnny no longer attends School A, why should School A continue receiving all the money associated with educating Johnny?

The problem is that school expenses do not disappear one child at a time.

Suppose an elementary school with 500 students loses 25 students.

Its enrollment has fallen 5 percent.

Its expenses have not.

The school still needs the building, principal, office, library, heating and cooling system, custodians, counselors, technology, insurance and most of its teachers.

If those 25 departing children came from six different grades, there may not be a single classroom the district can eliminate.

Funding can disappear student by student.

Costs usually disappear in chunks—a classroom, a bus route or eventually an entire school.

These are often described as stranded or sticky costs.

Arizona is already confronting declining district enrollment. The Arizona Auditor General reported in 2026 that most Arizona districts were experiencing enrollment declines and associated funding reductions, with about one-third experiencing declines serious enough to potentially increase financial risk. The proportion of remaining students requiring special-education services was also increasing.

Not all of that is caused by school choice. Demographics, birth rates, migration and local management decisions matter.

But declining enrollment and school funding are directly connected.

And Arizona has now created an additional mechanism capable of accelerating that process.

The ESA Changes the Experiment

Charter schools changed who could operate a publicly funded school.

Universal ESAs changed something more fundamental:

where public education money can go.

A charter remains a public school. It participates in statewide testing and operates within a public accountability structure.

An ESA allows state education money to finance private-school tuition, homeschooling and other approved educational expenses.

Arizona has therefore moved from primarily:

government funding a public-school system

toward increasingly:

government financing the education chosen by an individual family.

Those philosophies overlap, but they are not identical.

Before universal eligibility, Arizona’s ESA program was relatively small. It served about 12,000 students in 2022.

By 2025, enrollment had grown to roughly 88,000.

By August 2026, ADE reported more than 102,000 ESA participants.

The money grew along with it.

ADE reported annualized ESA awards of approximately $881.7 million at the end of FY2025. State budget projections put the program around $1 billion in FY2026 and potentially about $1.2 billion in FY2027, depending upon enrollment.

At that size, ESA is no longer an educational experiment around the margins.

It is a major state financial commitment.

And there are two very different ways that money is being spent.

The Child Who Leaves Public School

A child attending a district or charter school enters ESA.

Public-school funding associated with that student declines and ESA spending replaces part of it.

That can intensify the stranded-cost problem for the school left behind.

The Child Who Was Already in Private School

Another child has attended private school for years. The parents have paid the tuition themselves.

Universal ESA makes the family eligible for public assistance.

The district has saved nothing because it never had the expense of educating that child.

The state has simply assumed part of a previously private expense.

Arizona’s own enrollment figures show both effects.

In FY2024, only about 47.6 percent of new universal ESA students in grades 1–12 had attended a public school immediately before entering ESA. By FY2025, that number had risen to 57 percent.

That evolution is important.

Initially, universal ESA substantially subsidized students already outside public schools.

Increasingly, it is also pulling students directly from public schools.

The first creates a new taxpayer obligation.

The second creates additional financial pressure on the public institutions students leave.

The Billion-Dollar Opportunity-Cost Question

It would be misleading to say every ESA dollar was literally removed from a teacher’s paycheck.

Government budgets do not work that way.

But the opportunity cost is real.

If Arizona spends approximately $1 billion annually on ESAs, that money cannot simultaneously be spent on teacher compensation, classroom aides, special education, counselors, school security, reading intervention, technology, building repairs and capital improvements without raising additional revenue or reducing spending elsewhere.

That does not prove those alternatives are automatically better uses of the money.

It means Arizona has made a choice.

And that choice becomes especially important when public money subsidizes families that were already purchasing private education without taxpayer assistance.

For those families, accepting an ESA is completely rational.

They pay taxes. They have chosen private education. Arizona tells them they qualify for thousands of dollars.

Why would they decline it?

Likewise, parents who find a superior charter should not be expected to sacrifice their own child’s education to protect district enrollment.

Children do not exist to financially support institutions.

That is perhaps the strongest moral argument for school choice.

But public policy must examine what happens when thousands or millions of individually rational decisions interact.

A policy can make perfect sense for each participating family while producing difficult consequences for the system as a whole.

Choice Is Universal. The Ability to Use It Isn’t.

Universal eligibility does not mean universal ability to take advantage of school choice.

An ESA does not create a private school in every community.

It does not provide every family with transportation.

It does not necessarily cover tuition above the scholarship amount.

It does not give a working parent time to homeschool.

And it cannot eliminate differences in parental education, knowledge and ability to navigate the system.

Research examining universal or near-universal choice programs has found disproportionately high participation in wealthier communities when programs lack income-based restrictions. Arizona has been one of the prominent examples.

The emerging division may therefore become less about public versus private than about:

families who actively manage an educational portfolio and families who depend upon the default system.

One group searches, compares, applies, moves, supplements, finds transportation and changes schools when dissatisfied.

The other primarily uses the institution that exists.

If that sorting becomes substantial enough, traditional schools may increasingly inherit a larger share of the problems that the educational marketplace does not solve.

Then their performance may decline.

And that declining performance becomes further evidence encouraging other families to leave.

That is how the Catch-22 can begin feeding itself.

There Is Also an Accountability Problem

Arizona’s three educational sectors exist on different points of an accountability spectrum.

District schools receive public money and operate under extensive public regulation.

Charters receive public money and enjoy substantially greater operating freedom, but they remain public schools subject to statewide testing and public academic reporting.

ESA-financed private or home education receives public money without participating in the same universal statewide testing and reporting system.

That leaves Arizona with an extraordinarily important unanswered question:

What educational return are taxpayers receiving from approximately $1 billion a year in ESA spending?

Arizona can count participants.

It can count dollars.

It can monitor qualifying expenditures.

But it cannot currently compare the academic growth of ESA students with similar district and charter students through the same statewide testing system.

That is a significant information gap.

Parental satisfaction matters, but it is not the same as educational effectiveness.

A child can enjoy school, parents can love the teachers and the program can sound impressive while the child remains seriously behind in mathematics or reading.

That is why objective assessment exists.

If taxpayers finance education, it is reasonable for taxpayers eventually to ask whether students are learning.

Arizona Is a Petri Dish, Not a Crystal Ball

Arizona cannot tell us exactly what will happen in every state.

Rural states differ from metropolitan ones. Private-school capacity differs. Transportation differs. Funding formulas, voucher amounts and regulations differ.

But if another state adopted substantially the same rules, it would be reasonable to expect many of the same incentives.

Families would have greater incentives to investigate alternatives.

Private schools would have incentives to expand.

Families already purchasing private education would have incentives to claim available subsidies.

Public schools would lose funding as students departed.

Districts would confront stranded costs.

And families with more information, transportation and financial flexibility would generally be better positioned to navigate the marketplace.

Arizona matters because it is increasingly not alone. Universal or near-universal choice programs have spread rapidly to other states.

Arizona may simply have arrived earlier.

The Answer Is Not to Eliminate Choice

None of this means traditional districts deserve protection merely because they are traditional districts.

Public schools can be bureaucratic.

Money can be wasted.

Poor teachers can remain too long.

Innovation can be blocked.

Some parents choose alternatives because their public schools genuinely failed them.

People leave institutions for reasons.

Those reasons should be studied.

Nor should children be forced to remain in bad schools simply to preserve district enrollment.

The better response is to make the rules more intellectually honest.

If charter flexibility produces better schools, give traditional public schools more of that flexibility.

If public money follows students, recognize that maintaining a universal educational infrastructure has unavoidable fixed costs.

If taxpayers finance private education, require enough comparable information to know whether students are actually learning.

If ESA is intended principally to create opportunity, ask whether an unlimited subsidy to a wealthy family already purchasing private schooling is the best use of scarce educational resources.

If choice is supposed to benefit disadvantaged families, address transportation and other barriers that determine whether choice is genuinely accessible.

And stop judging schools primarily by raw test averages.

Follow students.

Measure where they started.

Measure how much they learned.

Study who entered and who left.

Study the children who move from charters back into districts.

Determine which schools consistently add educational value rather than simply enrolling students who already perform well.

The Question America Eventually Must Answer

Arizona has done something historically significant.

The charter movement said:

Let public schools operate differently.

Open enrollment said:

Let families cross traditional district boundaries.

Universal ESA said:

Let public education dollars leave the public-school system altogether.

Each step can be defended individually.

Together they represent a fundamental transformation.

Arizona is increasingly moving from a public-school system with alternatives toward an education marketplace with a public-school system embedded inside it.

The traditional district remains the largest provider.

It retains some of the broadest obligations.

It maintains enormous physical and institutional infrastructure.

And it remains the institution that must be there for the family that arrives tomorrow, the child other arrangements do not serve, and the parents who never enter the educational marketplace at all.

That obligation has value.

It also has a cost.

The question is therefore not whether parents deserve choices.

They do.

The harder question is:

How do we preserve parental freedom and educational innovation without financially and socially hollowing out the institution that must remain capable of educating everybody?

Arizona may be one of the first states forced to answer that question on a large scale.

It will not be the last.

A good charter school demonstrates that autonomy can work.

A bad charter demonstrates that autonomy needs accountability.

A successful private school demonstrates that government does not possess a monopoly on good education.

The ESA demonstrates that public financing can empower individual families—but can also create substantial new public costs and difficult questions about equity and accountability.

And the traditional district school demonstrates something easier to overlook:

Somebody still has to be there for everybody.

If we create one educational sector with the broadest public obligations, substantial fixed infrastructure and heavier operating constraints; give competing sectors greater freedom; allow public money to follow families into those alternatives; and gradually concentrate more difficult educational responsibilities in the schools left behind, we should be extremely careful about what conclusions we draw from the eventual results.

Otherwise Arizona—and eventually America—could make a remarkable analytical mistake.

We could create the conditions under which the traditional public-school system becomes progressively more difficult to operate.

We could then measure its declining finances and performance.

And finally we could announce that the institution itself had failed.

If that happens, the most important question will be whether we discovered the failure—

or designed it.