Record Donations to Scholarship Programs Boost School Choice in Arizona

Published August 5, 2015

Two Arizona tax credit scholarship programs reached their funding cap limits within a week of each other in early July.

The programs expand school choice for Arizona children who may not otherwise have the opportunity to attend private schools.

One program benefits low-income students and is supported by corporate and individual donations given to scholarship-providing nonprofit organizations. Corporations and individuals donating to these organizations receive tax breaks. Every year since the program was initiated, the Arizona government has raised the cap on tax breaks provided to corporations. In 2015, the cap is $52 million dollars; up from $43 million in 2014.

It took 10 weeks for corporate donations to reach the cap in 2014; it took only three days to reach the cap in 2015, on July 8.

The second program gives students with disabilities scholarships to attend the schools of their choice, with the state providing a tax credit for corporate donations. The cap for 2015 donations eligible for tax credits is $5 million, and the program reached its limit on July 10.

For the first time, S-corporations were allowed to receive state tax credits for their donations, which totaled 9.2 percent and 2.1 percent for the first and second program, respectively.

Making the Case for Expansion

Lance Izumi, a senior fellow and the senior director of education studies at the Pacific Research Institute, says the success of these programs shows Arizona and other states should expand choice.

“First, these two programs have met the real needs of students and therefore enjoy broad support in the community,” Izumi said. “Second, there is obviously a large demand on the part of donors to participate in these programs, so Arizona lawmakers should consider enlarging the programs so that more businesses can donate to these programs and more children can receive scholarships.”

Izumi says imposing corporate tax credit limits on scholarship donations does children a disservice.

“Government-imposed caps necessarily limit the reach of choice programs such as these to assist every student who needs and wants assistance to attend a private school that will better address his or her particular challenges,” Izumi said.

Joy Pullmann, a research fellow on education policy at The Heartland Institute, which publishes School Reform News, says the scholarships’ record of success shows the increasing legitimacy of school choice among Arizona’s students, parents, businesses, and the state government.

Pullmann says the funding caps limit the programs’ effectiveness.

“Research has shown [the scholarship programs] increase student achievement at a cost to taxpayers of $0,” said Pullmann. “Tax-credit scholarship programs tend to assist far fewer students than do straight voucher programs, typically because of drastic government limits on these highly effective programs.”

Pullmann says Arizona should raise its caps on corporate donations still higher or eliminate them entirely.  

Danni Ondraskova ([email protected]) writes from Chicago, Illinois.

Image by Tracy O.

Internet Info:

Mary C. Tillotson, “Record donations help school choice in Arizona,”, July 8, 2015:

Mary C. Tillotson, “Second Arizona scholarship program maxes out this week,”, July 10, 2015: