State tuition groups might have to open books - East Valley Tribune: News

State tuition groups might have to open books

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Posted: Friday, October 9, 2009 3:50 pm | Updated: 1:04 pm, Tue Dec 4, 2012.

Nonprofit charities that give students scholarships for private school tuition may be asked to turn over more information on who receives the money, said the chairman of a legislative committee reviewing the program.

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Nonprofit charities that give students scholarships for private school tuition might be asked to turn over more information on who receives the money, said the chairman of a legislative committee reviewing the program.

Rep. Rick Murphy, R-Glendale, chairman of the Private School Tuition Tax Credit committee, which meets Wednesday, said his group will ask Arizona's 55 school tuition organizations to shed more light on the family income levels of those who get scholarships.

Arizona law allows individual taxpayers to receive a state tax credit of up to $1,000 a year for a donation to a school tuition organization or STO, a 501(c)3 charity under federal tax law. STOs then give scholarships to students attending private schools or to students with special needs attending preschool programs.

"As a person who is an advocate for school choice, one of my goals is to make sure that it's doing what it is intended to do, which is to provide opportunities for as many children as possible to attend private school if their parents choose that. ... This program is not there to simply pay the tuition for people who don't really need the help," Murphy said.

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House Speaker Kirk Adams, R-Mesa, named Murphy chairman of the official committee created to look into the state's $55-million-a-year program in mid-September. His group, made up of members of the House Ways and Means Committee, will look into the practices of the STOs and could recommend legislation by Dec. 15.

The committee was appointed several weeks after the Tribune published its investigation into the private school program created 12 years ago.

The Tribune investigation, Rigged Privilege, published in August, found that the individual Private School Tuition Tax Credit program is rife with abuse, lacks oversight, and has failed to increase to any significant degree the access that disadvantaged children have to private schools.

In the last few weeks, lawmakers on both sides of the political spectrum have said there needs to be more transparency with the scholarship process and from the groups that dole out the funds. That's why, Murphy said, he's asking for more information from the STOs.

"One of my goals is to find a way to clearly identify, on an individual basis by STO, how much of the funding is going to people with financial need and how much is not. More than likely there is going to be a range where some STOs are doing a great job of getting funding to people with financial need and some are not," Murphy said.

Rep. Tom Chabin, D-Flagstaff, sits on both the task force created by Adams and a separate panel created by the Democratic Caucus the week following the Tribune's publication of its findings.

"Much of the information that came as a result of the article in the Tribune and other publications begs us to address these issues," Chabin said. "I think it's very evident that the whole system lacks transparency and regulation, and abuse of tax dollars and waste of tax dollars can occur if it hasn't in fact already occurred. ... I'm interested in getting to the bottom of that."

Murphy said the task force also will look at the reporting requirements to see if they need to be tightened up or if "loopholes" exist.

"If some of the accusations are true that we've read in the news stories, clearly there are some behaviors going on that I think are over the line and that we want to take a good look at," Murphy said. "I suspect some of those are anomalies that have been generalized for the sake of a story. But until we get some data we don't know whether it's a widespread problem or if it is a problem in some select areas that we can get data on."

Murphy said that will be discussed at a subsequent task force hearing.

Currently for the individual Private School Tuition Tax Credit, STOs are required to file an annual report with the Arizona Department of Revenue stating the amount of donations collected, the number of scholarships awarded, how much funding those scholarships totaled and which schools received the funding.

They do not have to report any information on which students receive scholarships, nor are there any family income requirements in place to receive a scholarship from the individual taxpayer program. That differs from a corporate program in which corporations and insurance companies can make donations to the nonprofit groups in exchange for a tax credit. Students who receive those scholarships must demonstrate financial need.

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