 |
           
|
|
Enacted 2006, Began Operation 2006
| FAST FACTS |
- 35 scholarships worth $49,380 in 2006
- Average scholarship worth $1,411
- 17 School Tuition Orginizations
|
|
Arizona provides a credit on corporate income taxes for donations to School Tuition Organizations (STOs), privately run non-profit organizations that support private-school scholarships. This program is modeled after Arizona’s existing personal tax credit for donations to STOs, and the two programs work in tandem. All organizations registered as STOs may participate in both programs. Corporate taxpayers contributing to STOs may claim a tax credit equal to the full amount of their contribution. In 2006 a total of 17 STOs participated in the program.
|
| Scholarship or Voucher Value: |
STOs provide varying amounts of student aid. In 2005 the average scholarship award under Arizona’s other tax-credit scholarship program, which is funded by individuals rather than corporate donors, was worth $1,372. Scholarships funded by corporate donations will be subject to a legislated cap of $4,200 in grades K-8 and $5,500 in grades 9-12; the cap will automatically rise by $100 per year. |
| Student or School Participation: |
In 2006, 35 scholarships worth a total of $49,380 were awarded at three private schools. The program is limited to a total of $10 million worth of tax credits per year; corporations can donate more than that, but will not get more than $5 million of tax credits in each year |
| Student Eligibility: |
Students receiving scholarships under the corporate tax credit program must have family incomes below 185 percent of the income eligible for free and reduced price lunch, which in turn is set at 185 percent of the federal poverty level (meaning a final program eligibility cutoff of $69,473 for a family of four in 2006) and must have previously attended a public school or be entering kindergarten. The income requirement does not apply to Arizona’s other tax-credit scholarship program, which is funded by individuals rather than by corporate donors. In addition, each STO may set its own eligibility guidelines. Most STOs give to students based solely on financial need, sometimes concentrating on a specific location or school system. |
| Legal Status of Program: |
In September 2006, the Arizona Civil Liberties union, the Arizona School Boards Association and the Arizona Center for Law in the Public Interest filed suit in Maricopa County Superior Court to block the program under the state’s Blaine Amendment. The Institute for Justice, representing four Arizona families, moved to dismiss the suit on grounds that the Arizona Supreme Court had already found that school choice doesn’t violate the state constitution (see the entry for Arizona’s other tax-credit scholarship program). The Institute was joined by the former chief justice of the state high court, who wrote the opinion in that case. The suit was dismissed by the Maricopa County Superior Court in March 2007. The plaintiffs have appealed to the Arizona Court of Appeals, where the case was pending at the time of this publication. |
| Regulations on the Program: |
STOs are required to be non-profit organizations that allocate at least 90 percent of their revenue to private-school scholarships. STOs must file fiscal reports with the Department of Revenue and may not restrict their scholarships to a single school. Participating private schools may not discriminate on the basis of race, color, handicap, familial status or national origin. |
| Research on Program: |
|
| News on Program: |
|
| Governing Statutes: |
Title 43-1183 of the Arizona statutes |
|
|
