Arizona Legislature Releases Survey of School Tuition Organizations

Published December 16, 2009

After a series of investigative reports alleging Arizona organizations distributing tax credit scholarships funds lack accountability, a legislative task force was created to review the situation. So far, little wrongdoing has been uncovered.

The first meeting, held October 14, developed a set of questions to ask school tuition organizations (STOs). The second meeting, in November, analyzed responses from the responding STOs.

“To date, the House Committee has not made any suggestions or recommendations,” reported Michael Kelly, executive director of the Arizona School Choice Trust. “They are analyzing responses from STOs that provide tax credit scholarships to children throughout the state and respective data from the Arizona Department of Revenue.”

Taking Stock

On November 16, the House Majority Research Staff released a report of the House of Representatives Ad Hoc Committee on Private School Tuition Tax Credit Review. It shows 51 of the state’s 53 STOs responded to the questions developed during the October meeting.

According to the report, 90 percent of respondents consider financial need when awarding scholarships and grants. Other factors considered when making the awards (with percentages based on the number of STOs reporting for that category), include: academic performance and scholastic merits (18 percent), required attendance in a specific school (44 percent), external recommendations (34 percent), self-determination by individual schools (20 percent), and parental and familial commitment to organizational philosophy and individual contribution to the school (14 percent).

The financial need consideration was also broken down into categories. Federal tax returns were considered by 71 percent of schools, expenses to income rations (50 percent), family size and number of schoolchildren in the home (44 percent), extenuating situations such as job loss (56 percent), and federal poverty guidelines (13 percent).

Eradicating Abuse

The report also indicates 40 percent of the STOs procure an annual audit by an independent certified public accountant. All deny arranging, facilitating, or otherwise encouraging parents to make contributions based on promises of scholarships for their children–the abuse local newspapers reported this summer. Kelly said this is an appropriate topic for the legislature to focus on.

“There is always room for improvement and reform,” he said. “The Arizona School Choice Trust (ASCT) is the oldest STO in Arizona. Since 1993, ASCT has raised $16 million and awarded about 10,000 scholarships to children from low-income families who have attended more than 125 private schools throughout Arizona. We adhere to the letter of state law, provide scholarships exclusively to low-income families, do not accept recommendations/designations for specific children, are not faith- based, conduct independent audits, have school choice experts on our board of directors, and are regularly defended by the Institute for Justice. ASCT strives to be the ‘gold standard,’ for school choice in Arizona.”

Sarah McIntosh ([email protected]) teaches constitutional law and American politics at Wichita State University in Kansas.