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Education Options in the States: State Programs That Provide Financial Assistance for Attendance at Private Elementary or Secondary Schools
Revised February 2009
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Arizona

1. Arizona-Individual School Tuition Organization Tax Credit

Program type: Tax credits for individuals for contributions to scholarship organizations

Description: Individual taxpayers may receive Arizona income tax credits for charitable contributions to school tuition organizations (STOs). STOs provide scholarships for attendance at qualified private schools. The amount of credit is equal to the amount contributed. The maximum credit allowed to single taxpayers or heads of household is $500. The maximum credit allowed to married couples for the 2006 taxable year and subsequent taxable years is $1,000. There is no maximum aggregate amount of tax credits allowed in any year.

Student eligibility for scholarships is determined by STOs individually. Most STOs base eligibility on financial need, while others benefit students in specific areas or private school system. Schools enrolling scholarship students may not discriminate on the basis of race, color, disability, familial status, or national origin.

Amount of assistance: The scholarship amount is established by STOs individually.

Number of participants: During the 2007 calendar year, 27,153 students received scholarships from 55 STOs to attend 359 participating private schools.

Authorizing statute: Arizona Revised Statutes §43-1089

Legislative history: The Arizona tax credit program was signed into law in 1997 and first implemented in the 1998 taxable year. It was the first program of its kind in the United States. On May 20, 2005, Arizona increased the maximum tax credit available to married couples.

Judicial history: In January 1999, the Arizona Supreme Court upheld the constitutionality of the tax credit program in Kotterman v. Killian. In October 1999, the Supreme Court of the United States declined to review the case, thereby allowing the state ruling to stand. In February 2000, the Arizona Civil Liberties Union filed a second, separate challenge to the program in federal district court in Winn v. Hibbss. The district court dismissed the suit under the Tax Injunction Actt, which forbids federal court tax suits if state court suits are possible. This dismissal was later overturned by the United States Court of Appeals for the Ninth Circuit, whose ruling was affirmed by the Supreme Court of the United States in June 2004, returning the case to federal district court for trial. The case was subsequently dismissed in federal district court on March 24, 2005.

For more information, see: http://www.azdor.gov/ResearchStats/Schooltaxcredit.htm.

2. Arizona—Corporate School Tuition Organization Tax Credit

Program type: Tax credits for corporations for contributions to scholarship organizations

Description: Corporations may receive a tax credit for contributing to a scholarship organization. The amount of credit is equal to the amount contributed. Under the state statute, the maximum aggregate amount of tax credits is $10 million in 2007 and increases annually by 20 percent. Tax credits are awarded to corporations on a first-come, first-served basis.

STOs provide scholarships for attendance at qualified private schools in the state. To be eligible for one of these scholarships, the student's family income cannot exceed 185 percent of the income limit required for students to qualify for federal free or reduced-price lunch program. Additionally, the student must have attended a public school during the prior year or be entering kindergarten. In order to be a state-qualified school, schools may not discriminate on the basis of race, color, disability, familial status or national origin.

Amount of assistance: The maximum scholarship for K-8 students is $4,300, and $5,600 for students in grades 9-12. These limits are set to increase by $100 each year.

Number of participants: In the 2007 calendar year, 1,947 scholarships were awarded by 18 scholarship organizations to attend 156 private schools.

Authorizing statute: Arizona Revised Statutes §43-183

Legislative history: On March 29, 2006, this program was signed into law, thereby creating a new tax credit program to corporations for contributions to scholarship organizations. The law originally established the annual aggregate amount of credits at $5 million; the amount was increased to $10 million by another bill signed into law later that legislative session.

Judicial history: On March 7, 2007, a Maricopa County Superior Court judge threw out the case against Arizona's corporate school tuition organization tax credit. In Green v. Garriott, the judge held that the tax credit did not violate the Arizona constitution, upholding the Kotterman (see page 7) decision made on the individual tax credit.

For more information, see: http://www.revenue.state.az.us/ResearchStats/
corporateprivateschoolmenu.htm
.

3. Arizona—Arizona Scholarships for Pupils with Disabilities Program

Program type: Scholarships for students with disabilities

Description: This scholarship program provides students with disabilities with the option of attending another public school or receiving a scholarship for attendance at a qualified private school. Established in 2006, the program authorizes $2.5 million for students with disabilities to use for tuition and fees or the actual cost per pupil, whichever is greater. To be eligible for the scholarship, a student must determined to be an eligible student with a disability under the Individuals with Disabilities Education Act (IDEA), must have been issued an Individualized Education Program (IEP), and must have attended a public school during the prior year. In order to be a state-qualified school, schools may not discriminate on the basis of race, color, disability, familial status, or national origin.

Amount of assistance: The amount of assistance is the school's tuition and fees or actual cost per pupil, whichever is greater, but may not exceed the amount of funding the student would have generated had he or she remained in a public school. For the 2007-08 school year, the average scholarship amount of assistance was $8,238.

Number of participants: For the 2007-08 school year, 186 students received scholarships to attend 62 participating private schools.

Authorizing statute: Arizona Revised Statutes §§15-1891-18-891.06

Legislative history: On June 21, 2006, the Scholarships for Pupils with Disabilities Program was signed into law, creating a new statewide scholarship program for students with disabilities. The first year of implementation was the 2006-07 school year.

Judicial history: On June 13, 2007, the Maricopa County Superior Court judge ruled that the Scholarships for Pupils with Disabilities Program was constitutional and did not violate the state's constitution. In May 2008, the Arizona Court of Appeals reversed the Superior Court, holding that the program violated the state constitution's provision that "No tax shall be laid or appropriation of public money made in aid of any church, or private or sectarian school, or any public service corporation." On Dec. 9, 2008, the Arizona Supreme Court heard arguments in the case Cain v. Horne to determine the constitutionality of the program.

For more information, see: http://www.azed.gov/ess/StateFedInitiatives/AZScholarship.asp.

4. Arizona—Displaced Pupils Choice Grant Program

Program type: Scholarships for children in foster care

Description: These scholarships are available to any student who has been in the foster care system at any time before high school graduation. Students who have since been adopted will still qualify for the scholarship. Scholarships are on a first come, first served basis and can be used to pay tuition at any private school in the state of Arizona that chooses to participate. Participating schools may not discriminate on the basis of race, color, disability, familial status or national origin.

Amount of assistance: For the 2007-08 school year, the average scholarship amount was $3,945.

Number of participants: In the 2007-08 school year, 189 students received scholarships.

Authorizing statute: Arizona Revised Statutes §§15-817-15-817.07

Legislative history: The Displaced Pupils Choice Grant Program was signed into law on June 21, 2006.

Judicial history: On June 13, 2007, the Maricopa County Superior Court judge ruled that the Displaced Pupil Choice Grant Program was constitutional and did not violate the state's constitution. In May 2008, the Arizona Court of Appeals reversed the Superior Court, holding that the program violates the state constitution's provision that "No tax shall be laid or appropriation of public money made in aid of any church, or private or sectarian school, or any public service corporation." On Dec. 9, 2008, the Arizona Supreme Court heard arguments in the case Cain v. Horne to determine the constitutionality of the program.

For more information, see: http:/www.ade.az.gov/displacedpupilgrants.


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Last Modified: 04/30/2009