Income limit nixed for tuition scholarships - East Valley Tribune: News

Income limit nixed for tuition scholarships

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Posted: Thursday, December 10, 2009 4:11 pm | Updated: 1:34 am, Sat Oct 8, 2011.

A legislative panel refused Thursday to recommend changes to Arizona’s Private School Tax Credits program that would require income limits for families receiving tuition scholarships or reduce the amount of money charities can use to administer the program.

Rigged Privilege: A Tribune investigation

A legislative panel refused Thursday to recommend changes to Arizona’s Private School Tax Credits program that would require income limits for families receiving tuition scholarships or reduce the amount of money charities can use to administer the program.

Rigged Privilege: A Tribune investigation

Survey data incomplete on tuition tax credits

Panel's tuition tax credit proposals expected

Instead, the official House committee charged with reviewing the program recommended that lawmakers expand it by increasing the amount taxpayers can donate from $500 each year for an individual to $750, and from $1,000 each year for married couples to $1,500.

The now $55 million-a-year program allows taxpayers to receive a dollar-for-dollar tax credit for their donations to school tuition organizations, or STOs, that give private school scholarships.

The committee’s recommendations come just months after the Tribune published Rigged Privilege, an investigation that found the program is rife with abuse.

Thursday’s moves clearly irked one member of the committee, who said any increase to the tax credit will take money away from Arizona’s public schools.

“We are in a crisis in Arizona,” said Rep. Tom Chabin, the lone Democrat on the committee. “We all know we have to cut $1.5 billion that has to be taken away by July 1.”

In the last several months, the program has been under scrutiny by House Republicans and Democrats following the publication of the Tribune investigation and other media reports.

But Rep. Andy Biggs, R-Gilbert, argued in favor of increasing the amount that taxpayers can donate because, he said, it saves the state money because children will move from public schools to private schools.

In fact, however, there is no evidence that the program has saved the state money so far. Arizona does not keep track of how many students receive scholarships, and students are allowed to receive multiple scholarships.

And, it’s unknown how many of the students receiving the scholarships were already in private schools or would have enrolled in private schools regardless of whether they received a scholarship.

Chabin said the committee did not address the issues raised: taxpayers recommending specific students for their donations, lack of transparency among the STOs, and whether to require income limits for families receiving scholarships.

The committee’s chairman, Rep. Rick Murphy, R-Glendale, said the group did make necessary recommendations, including requiring audits and CPA reviews.

“It’s not surprising that people have found things that could be done better and people have found ways to build a better mousetrap,” Murphy said. “I think these recommendations go a long way toward providing transparency that is going to be helpful going forward to make sure the program does what it is intended to do.”

In August, the Tribune reported that the program is often abused, lacks oversight, and has failed to increase to any significant degree the access that disadvantaged children have to private schools.

Not long afterward, two House groups formed. The official committee — appointed by House Speaker Kirk Adams, R-Mesa — held its final meeting Thursday afternoon.

Harry Miller, who has been president of an STO, TOPS for Kids, said he supports changes to “make a great program better.”

He suggested that STOs that collect a certain funding level be required to put themselves through an annual audit or CPA report. He also suggested changing the reporting time frame to give a better picture of revenue in and scholarships out, since so much funding comes to STOs in December.

Larry Mohrweis, who leads the Flagstaff Scholarship Organization and is a Northern Arizona University professor, listed his own suggestions, some that mirror the ideas proposed by lawmakers. But he also proposed the banning of recommendations, in which taxpayers give a donation designated for a specific student.

“What’s wrong with parents going out and hustling and trying to raise money for their children? It is illegal. It is illegal for an STO to be a conduit, simply collecting dollars to help a child,” he said.

The individual tax credit program does not have a family income requirement, unlike a separate corporate program that allows corporations and insurance companies to donate to STOs and receive a tax credit. The corporate program, in place since 2006, requires that scholarships only go to families whose income does not exceed 185 percent of the income limit required to qualify for the federal school lunch program.

For a family of four, that income limit would be $75,466 this school year.

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