State panel to review tuition tax credits

Three Republican representatives have joined House Democrats on a committee to review private school tuition tax credits in Arizona.

Mesa's Rich Crandall and Steve Court have signed onto the task force, along with Rep. Doris Goodale of Kingman.

“I think it brings certain legitimacy to it to see there are members of both parties on the task force,” said Rep. David Schapira, D-Tempe.

Schapira will serve as chairman of the group.

The Democratic caucus in the House on Tuesday called for a probe into Arizona's private school tuition tax credit program in response to a Tribune investigation.

At that time, the Democratic leaders also announced creation of the task force to examine possible changes, and called for bipartisan participation.

Crandall serves as chairman of the House Education Committee and is a former Mesa Unified School District governing board member.

He said he wants to examine how school tuition organizations operate in other states to see if there are ideas Arizona can adopt, particularly in the area of oversight.

"As I read in your story, it seems the rules on the books are not followed very well," he told the Tribune. "Can we improve what's on the books?"

Crandall said he also hopes to invite members of the Goldwater Institute to participate in the discussions early on.

"Obviously the Goldwater Institute feels strongly there are abuses taking place," he said.

The Goldwater Institute is a Phoenix think tank that advocates for limited government.

The state Legislature created the private school tuition tax credit in 1997. Under the program, taxpayers give money to nonprofit charities called school tuition organizations, or STOs for short. STOs give scholarships to children for private school tuition, and the state provides donors a dollar-for-dollar tax credit in exchange for their contribution.

Proponents have argued that low-income students are the program's primary beneficiaries, which was the main drive behind its creation.

The Tribune investigation found the tax credit system is rife with abuses and has failed to increase low-income and minority students' access to private schools.

Further, many STOs, schools and parents use the tax credit in ways that violate federal tax laws. And executives at two of the largest scholarship charities have used state income tax donations to enrich themselves.

Matt Ladner, vice president for research at the Goldwater Institute, said he had not spoken to Crandall, but would welcome the opportunity to share ideas with the task force.

“Certainly it is our view there needs to be a cleanup bill. It needs to be done and done well. The tax credit program needs to be in a position where it is above suspicious. That is not where the program is now,” he said.

Crandall said a number of constituents who called him following the Tribune's series are donors who give to STOs. Many asked about how their money is being put to use.

"The fact that they're calling, obviously there are some things to look at," he said.

Court, a freshman lawmaker at the Capitol, said he joined the task force to learn more about the program and how it can be improved.

The first meeting of the task force will be 10 a.m. Sept. 21 in House Hearing Room 3.

Rep. Tom Chabin, D-Flagstaff, will serve as vice chair. Other Democrats on the committee are Rep. Chad Campbell of Phoenix, Rep. Nancy Young Wright of Tucson and Rep. Cloves Campbell of Phoenix.