Lawmaker questions unspent tuition donations

The Arizona Attorney General’s Office should explore whether the state can access millions of unspent tuition tax credit dollars in light of information presented Thursday, one state lawmaker said.

Rigged Privilege: A Tribune investigation

Rep. David Schapira, D-Tempe, made the statement after Susan Myers, assistant attorney general, confirmed her office has found several school tuition organizations, or STOs, are sitting on millions of dollars donated by taxpayers instead of giving the funds out as private school scholarships. Myers did not give a specific dollar figure.

Myers made the statement during a meeting of the Democrat-created task force on the state’s Private School Tuition Tax Credits program. The panel was created in August after the Tribune published Rigged Privilege, an investigation that found the program to be rife with abuse.

Following the Tribune’s investigation and other media reports, the Attorney General’s Office asked 19 of the 55 nonprofit STOs to clarify why their reports to the Department of Revenue show they did not meet the state’s requirement that they dole out 90 percent of donations as scholarships in 2008.

While discussing those findings, Myers said there were some STOs that were holding onto money for a number of reasons — from setting aside dollars for multiyear scholarships to setting aside dollars “just in case the Legislature does away with STOs or donations are less than expected.”

Some reported to the AG’s office that they could not find enough students to give scholarships to, Myers said.

Those unallocated dollars — that are not tied to specific students — could be back in the state coffers, Schapira said, especially in light of the “decimating” of funding for public schools and social services.

Arizona lawmakers have announced a special session next week to grapple with a current $2 billion deficit in the 2009-10 budget.

“There are millions of dollars that should be in the state,” Schapira said. “I’m going to encourage the Attorney General’s Office to take action. It makes no sense that we have state tax dollars sitting there” in STO accounts.

Following Myers’ statement, Schapira invited the public to make comment. All of the statements were made by parents or taxpayers who questioned the tax credit program as it is run now, many calling for more accountability and transparency.

Schapira said after the meeting that the members of the committee and others will come together in the next few months to possibly create legislation toward that goal.

Schapira’s panel is one of two meeting at the Legislature to review the Private School Tax Credits program. A formal committee appointed by Speaker Kirk Adams, R-Mesa, will meet 1 p.m. Monday. It is led by Rep. Rick Murphy, R-Glendale. The agenda includes a report on responses from the STOs to a letter Murphy sent them requesting information about who is receiving the scholarships.

Murphy’s meeting will also include a presentation on the program’s economic impact on the state by Charles M. North, an associate professor of economics at Baylor University in Texas, and a presentation on federal tax implications.

Schapira questioned why Thursday’s task force meeting was not aired on Arizona Capitol Television, as most meetings are and as his last meeting was. That would be something handled by Speaker Adams’ office.

“Once again, this is just an example of Republicans’ closed-door process that we’ve seen all year long,” said Sarah Muench, spokeswoman for the Democratic caucus of the House. “The fact that the majority would ask that a bipartisan task force meeting to ensure the STO program isn’t violating state and federal laws not be aired just shows their unwillingness to be open and transparent with the public.”

Becky Blackburn, spokeswoman for the Republican Caucus of the House, said Schapira’s committee didn’t make a request for the hearing room in time, so Adams’ office wasn’t aware that the meeting was taking place.

“There’s just a process that needs to happen and that procedure wasn’t followed,” Blackburn said.

When a group wants to use a committee hearing room, it has to go through the House Speaker’s Office to request to use it.

“We have to notify Cap TV that there’s going to be a meeting there,” Blackburn said. “But the request to Cap TV wasn’t made, so it was a procedural error.”

Tribune writer Sonu Munshi contributed to this story.