HB2782 - 471R

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  Senate Engrossed House Bill
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  State of Arizona
  House of Representatives
  Forty-seventh Legislature
  First Regular Session
  2005
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      HOUSE BILL 2782
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AN ACT

AMENDING SECTION 15-482, ARIZONA REVISED STATUTES; AMENDING TITLE 15, CHAPTER 8, ARIZONA REVISED STATUTES, BY ADDING ARTICLE 1.2; AMENDING SECTION 15-901.02, ARIZONA REVISED STATUTES; AMENDING TITLE 15, CHAPTER 9, ARTICLE 1, ARIZONA REVISED STATUTES, BY ADDING SECTION 15-901.03; AMENDING SECTION 43-222, ARIZONA REVISED STATUTES; AMENDING TITLE 43, CHAPTER 10, ARTICLE 3, ARIZONA REVISED STATUTES, BY ADDING SECTION 43-1032; AMENDING SECTION 43-1121, ARIZONA REVISED STATUTES; AMENDING TITLE 43, CHAPTER 11, ARTICLE 6, ARIZONA REVISED STATUTES, BY ADDING SECTION 43-1182; MAKING APPROPRIATIONS; RELATING TO SCHOOL FINANCE.

(TEXT OF BILL BEGINS ON NEXT PAGE)

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 15-482, Arizona Revised Statutes, is amended to read:

15-482. Special budget override provisions; special programs to improve academic achievement of pupils in kindergarten programs and grades one through three

A. An additional budget increase may be requested and authorized as provided in section 15-481, subsections I and J of up to five per cent of the revenue control limit as provided in subsection B of this section if the following conditions are met:

1. The school district uses a task force of educators and other persons to develop a special program designed to improve the academic achievement of low achieving pupils in kindergarten programs and grades one through three, with the goal that all pupils capable of doing so will learn the basic skills necessary for fourth grade work by the end of the third grade.

2. The amount of the proposed budget increase as provided in subsection B of this section is for use for the special program, SHALL ONLY BE USED FOR PUPILS IN KINDERGARTEN PROGRAMS AND GRADES ONE THROUGH THREE and is to supplement, not supplant, programs for pupils in kindergarten programs and grades one through three which were in existence prior to the budget increase, unless in the fiscal year prior to the fiscal year of the proposed budget increase special programs for pupils in kindergarten programs and grades one through three were in existence and were funded with proceeds from the sale or lease of school property, as provided in section 15-1102.

B. The maximum amount of the budget increase requested and authorized shall not exceed the budgeted expenditures of the proposed special program for each fiscal year, not to exceed a total of five per cent of the revenue control limit for each fiscal year. For a unified school district, a common school district not within a high school district or a common school district within a high school district that offers instruction in high school subjects as provided in section 15-447, five per cent of the revenue control limit means five per cent of the revenue control limit attributable to the weighted student count in preschool programs for children with disabilities, kindergarten programs and grades one through eight as provided in section 15-971, subsection B.

C. For each fiscal year in which a budget increase of up to five per cent of the revenue control limit is authorized as provided in subsection A of this section, the governing board shall:

1. Utilize a separate annual special program budget on a form prescribed by the auditor general in conjunction with the department of education. The budget format shall be designed to allow a school district to plan and provide in detail for expenditures to be incurred as a result of the special program.

2. Prepare as a part of the school district annual financial report a detailed report of expenditures incurred as a result of the special program, in a format prescribed by the auditor general in conjunction with the department of education, as provided in section 15-904.

D. The special program may be designed for any or all of the pupils enrolled in kindergarten programs and grades one through three and may involve efforts to remove barriers to academic achievement as well as efforts to improve instruction or increase the amount of instruction. The special program, at a minimum, shall focus on pupils who, because of innate factors, are not succeeding in the school environment as identified by parents, guardians or school personnel. These pupils may include, but are not limited to, those who do not qualify for special education services, who have measured intelligence quotients of between seventy and eighty-five or who exhibit characteristics of attention deficit disorder or learning patterns attributable to prenatal substance exposure.

E. During any fiscal year in which proceeds from the sale or lease of school property are used for the maintenance and operation section of the budget as provided in section 15-1102, a budget increase is in effect as provided in section 15-481, subsection E or F, or a budget increase is in effect as provided in this section, or any combination of these conditions occurs, the total amount of the proceeds and increases which may be expended is equal to fifteen per cent of the revenue control limit for that year as provided in section 15-947, subsection A, provided that the following maximum amount is attributable to any one of the conditions:

1. Fifteen per cent of the revenue control limit if using the proceeds from the sale or lease of school property for the maintenance and operation section of the budget as provided in section 15-1102.

2. Ten per cent of the revenue control limit if using a budget increase as provided in section 15-481, subsection E or F, or both.

3. Five per cent of the revenue control limit if using a budget increase as provided in this section.

Sec. 2. Title 15, chapter 8, Arizona Revised Statutes, is amended by adding article 1.2, to read:

ARTICLE 1.2. PARENTAL EDUCATIONAL CHOICE GRANTS

15-817. Definitions

IN THIS ARTICLE, UNLESS THE CONTEXT OTHERWISE REQUIRES:

1. "CUSTODIAN" MEANS A RESIDENT OF THIS STATE WHO IS A PARENT OR THE LEGAL GUARDIAN OF A QUALIFYING PUPIL.

2. "GRANT" MEANS A GRANT OF AID MADE UNDER THIS ARTICLE TO A QUALIFYING PUPIL, THROUGH THE QUALIFYING PUPIL'S CUSTODIAN, TO BE USED BY AND FOR THE BENEFIT OF THE PUPIL AS PROVIDED IN THIS ARTICLE.

3. "GRANT SCHOOL" MEANS A PRIVATE SCHOOL, WHETHER SECULAR OR SECTARIAN, THAT MAINTAINS ONE OR MORE GRADE LEVELS FROM KINDERGARTEN THROUGH GRADE TWELVE, THAT ELECTS AND IS ENTITLED TO PARTICIPATE IN AND REDEEM GRANTS PURSUANT TO THIS ARTICLE AND THAT IS ACCREDITED BY A NATIONALLY RECOGNIZED ACCREDITING ORGANIZATION THAT HAS AT LEAST TEN YEARS EXPERIENCE ACCREDITING KINDERGARTEN THROUGH GRADE TWELVE PROGRAMS.

4. "QUALIFYING PUPIL" MEANS A STUDENT WHO IS ELIGIBLE TO RECEIVE A GRANT UNDER THIS ARTICLE.

15-817.01. Parental educational choice grant program; nature of grants

A. A PARENTAL EDUCATIONAL CHOICE GRANT PROGRAM IS ESTABLISHED UNDER WHICH EACH CUSTODIAN OF A QUALIFYING PUPIL WHO COMPLETES AN APPLICATION FOR A GRANT UNDER THIS ARTICLE SHALL RECEIVE A GRANT THAT IS TO BE REDEEMED AT THE GRANT SCHOOL IN WHICH THE QUALIFYING PUPIL ENROLLS AND APPLIED TOWARD PAYMENT OF THE TUITION AND FEES PAYABLE FOR THE EDUCATIONAL AND RELATED SERVICES PROVIDED TO THE QUALIFYING PUPIL BY THAT GRANT SCHOOL.

B. A GRANT PROVIDED UNDER THIS ARTICLE CONSTITUTES A GRANT OF AID TO A QUALIFYING PUPIL THROUGH THE QUALIFYING PUPIL'S RESPECTIVE CUSTODIAN AND NOT TO THE GRANT SCHOOL IN WHICH THE QUALIFYING PUPIL IS ENROLLED. THE GRANT DOES NOT CONSTITUTE TAXABLE INCOME TO THE CUSTODIAN OR THE QUALIFYING PUPIL.

C. A QUALIFYING PUPIL SHALL NOT RECEIVE A GRANT FOR ANY PORTION OF A SCHOOL YEAR IN WHICH THE QUALIFYING PUPIL IS ENROLLED IN A PRIVATE SCHOOL THAT DOES NOT REDEEM GRANTS UNDER THIS ARTICLE.

D. A CUSTODIAN IS FREE TO CHOOSE ANY GRANT SCHOOL FOR ENROLLMENT OF THE QUALIFYING PUPIL, AND THAT CHOICE OR SELECTION IS NOT AND SHALL NOT BE DEEMED TO BE A DECISION OR ACT OF THIS STATE OR ANY OF ITS POLITICAL SUBDIVISIONS.

15-817.02. Grant eligibility

A. A PUPIL IS ELIGIBLE TO RECEIVE A GRANT UNDER THIS ARTICLE IF, DURING THE SCHOOL YEAR IN WHICH THE GRANT IS TO BE EFFECTIVE, THE PUPIL MEETS ALL OF THE FOLLOWING CONDITIONS:

1. RESIDES IN THIS STATE.

2. IS AT LEAST FIVE YEARS OF AGE BEFORE SEPTEMBER 1 OF THE SCHOOL YEAR THAT THE PUPIL IS ENROLLED.

3. IS UNDER TWENTY-TWO YEARS OF AGE AND HAS NOT GRADUATED FROM HIGH SCHOOL OR OBTAINED A GENERAL EQUIVALENCY DIPLOMA.

4. ENROLLS AS A FULL-TIME PUPIL IN A GRANT SCHOOL AT A GRADE LEVEL IN WHICH QUALIFYING PUPILS IN THAT GRADE ARE ENTITLED TO RECEIVE A GRANT PURSUANT TO THIS ARTICLE.

5. THE PUPIL'S FAMILY IS AT OR BELOW ONE HUNDRED EIGHTY-FIVE PER CENT OF THE FEDERAL POVERTY LEVEL.

B. A QUALIFYING PUPIL WHO RECEIVES A GRANT PURSUANT TO THIS ARTICLE SHALL CONTINUE TO RECEIVE A GRANT EACH YEAR IF THE QUALIFYING PUPIL HAS COMPLETED ALL NECESSARY COURSEWORK TO BE PROMOTED TO AT LEAST THE NEXT GRADE LEVEL IN THE GRANT SCHOOL, THE QUALIFYING PUPIL IS IN GOOD ACADEMIC STANDING WITH THE GRANT SCHOOL AND THE CUSTODIAN COMPLETES ALL APPLICATIONS REQUIRED BY THE GRANT SCHOOL AND THE DEPARTMENT WITHIN THE REQUIRED TIMELINES.

15-817.03. Implementation schedule

BEGINNING WITH THE 2006-2007 SCHOOL YEAR AND EACH FISCAL YEAR THEREAFTER, THE DEPARTMENT SHALL PROVIDE A GRANT TO EACH QUALIFYING PUPIL IN A GRANT SCHOOL IN A KINDERGARTEN PROGRAM. BEGINNING WITH THE 2007-2008 SCHOOL YEAR AND EACH FISCAL YEAR THEREAFTER, THE DEPARTMENT SHALL PROVIDE A GRANT TO EACH QUALIFYING PUPIL IN A GRANT SCHOOL IN A KINDERGARTEN PROGRAM AND GRADE ONE. BEGINNING WITH THE 2008-2009 SCHOOL YEAR AND EACH FISCAL YEAR THEREAFTER, THE DEPARTMENT SHALL PROVIDE A GRANT TO EACH QUALIFYING PUPIL IN A GRANT SCHOOL IN A KINDERGARTEN PROGRAM, GRADES ONE AND TWO. BEGINNING WITH THE 2009-2010 SCHOOL YEAR AND EACH FISCAL YEAR THEREAFTER, THE DEPARTMENT SHALL PROVIDE A GRANT TO EACH QUALIFYING PUPIL IN A GRANT SCHOOL IN A KINDERGARTEN PROGRAM AND GRADES ONE THROUGH THREE. BEGINNING WITH THE 2010-2011 SCHOOL YEAR AND EACH FISCAL YEAR THEREAFTER, THE DEPARTMENT SHALL PROVIDE A GRANT TO EACH QUALIFYING PUPIL IN A GRANT SCHOOL IN A KINDERGARTEN PROGRAM AND GRADES ONE THROUGH FOUR. BEGINNING WITH THE 2011-2012 SCHOOL YEAR AND EACH FISCAL YEAR THEREAFTER, THE DEPARTMENT SHALL PROVIDE A GRANT TO EACH QUALIFYING PUPIL IN A GRANT SCHOOL IN A KINDERGARTEN PROGRAM AND GRADES ONE THROUGH FIVE. BEGINNING WITH THE 2012-2013 SCHOOL YEAR AND EACH FISCAL YEAR THEREAFTER, THE DEPARTMENT SHALL PROVIDE A GRANT TO EACH QUALIFYING PUPIL IN A GRANT SCHOOL IN A KINDERGARTEN PROGRAM AND GRADES ONE THROUGH SIX. BEGINNING WITH THE 2013-2014 SCHOOL YEAR AND EACH FISCAL YEAR THEREAFTER, THE DEPARTMENT SHALL PROVIDE A GRANT TO EACH QUALIFYING PUPIL IN A GRANT SCHOOL IN A KINDERGARTEN PROGRAM AND GRADES ONE THROUGH SEVEN. BEGINNING WITH THE 2014-2015 SCHOOL YEAR AND EACH FISCAL YEAR THEREAFTER, THE DEPARTMENT SHALL PROVIDE A GRANT TO EACH QUALIFYING PUPIL IN A GRANT SCHOOL IN A KINDERGARTEN PROGRAM AND GRADES ONE THROUGH EIGHT. BEGINNING WITH THE 2015-2016 SCHOOL YEAR AND EACH FISCAL YEAR THEREAFTER, THE DEPARTMENT SHALL PROVIDE A GRANT TO EACH QUALIFYING PUPIL IN A GRANT SCHOOL IN A KINDERGARTEN PROGRAM AND GRADES ONE THROUGH NINE. BEGINNING WITH THE 2016-2017 SCHOOL YEAR AND EACH FISCAL YEAR THEREAFTER, THE DEPARTMENT SHALL PROVIDE A GRANT TO EACH QUALIFYING PUPIL IN A GRANT SCHOOL IN A KINDERGARTEN PROGRAM AND GRADES ONE THROUGH TEN. BEGINNING WITH THE 2017-2018 SCHOOL YEAR AND EACH FISCAL YEAR THEREAFTER, THE DEPARTMENT SHALL PROVIDE A GRANT TO EACH QUALIFYING PUPIL IN A GRANT SCHOOL IN A KINDERGARTEN PROGRAM AND GRADES ONE THROUGH ELEVEN. BEGINNING WITH THE 2018-2019 SCHOOL YEAR AND EACH FISCAL YEAR THEREAFTER, THE DEPARTMENT SHALL PROVIDE A GRANT TO EACH QUALIFYING PUPIL IN A GRANT SCHOOL IN A KINDERGARTEN PROGRAM AND GRADES ONE THROUGH TWELVE.

15-817.04. Participation by grant schools; qualifying pupil list

A. A PRIVATE SCHOOL, WHETHER SECULAR OR SECTARIAN, THAT MAINTAINS ANY GRADE IN WHICH A QUALIFYING PUPIL ENROLLED IS ENTITLED TO RECEIVE A GRANT PURSUANT TO THIS ARTICLE SHALL HAVE THE OPTION EACH SCHOOL YEAR OF PARTICIPATING OR NOT PARTICIPATING IN THE GRANT PROGRAM ESTABLISHED UNDER THIS ARTICLE. A SCHOOL THAT WISHES TO PARTICIPATE IN THE PROGRAM AS A GRANT SCHOOL MUST COMPLETE ALL APPLICATIONS WITH THE DEPARTMENT, IN A FORM AND MANNER PRESCRIBED BY THE DEPARTMENT, BY DECEMBER 15 OF EACH CALENDAR YEAR FOR INCLUSION IN THE PROGRAM FOR THE FOLLOWING SCHOOL YEAR AND SHALL AGREE TO PROCESS PUPIL APPLICATIONS WITHIN FORTY-FIVE DAYS AFTER RECEIVING AN APPLICATION BUT NOT LATER THAN AUGUST 1 OF EACH YEAR.

B. A PRIVATE SCHOOL THAT PARTICIPATES IN THE GRANT PROGRAM AND THAT IS ENTITLED TO REDEEM A GRANT FOR A QUALIFYING PUPIL WHO ENROLLS IN THAT GRANT SCHOOL IS NOT REQUIRED TO ACCEPT THE GRANT AS FULL PAYMENT FOR THE EDUCATIONAL AND RELATED SERVICES THAT THE SCHOOL PROVIDES TO THAT QUALIFYING PUPIL AND MAY CHARGE THE QUALIFYING PUPIL AN ADDITIONAL AMOUNT REPRESENTING THE BALANCE OF THE TUITION AND FEES THAT REMAINS PAYABLE AFTER CREDITING THE QUALIFYING PUPIL WITH THE AMOUNT OF THE GRANT RECEIVED BY THE QUALIFYING PUPIL UNDER THIS ARTICLE. A PRIVATE SCHOOL THAT REDEEMS GRANTS UNDER THIS ARTICLE SHALL USE THE GRANT PROCEEDS SOLELY TO PROVIDE EDUCATIONAL GOODS, SERVICES AND FACILITIES FOR ITS QUALIFYING PUPILS AND IS NOT ENTITLED TO RECEIVE, FOR REDEEMING A GRANT, ANY AMOUNT IN EXCESS OF THE TUITION AND FEES CUSTOMARILY CHARGED BY THE SCHOOL TO COVER THE COST OF PROVIDING THOSE EDUCATIONAL GOODS, SERVICES AND FACILITIES.

C. EACH GRANT SCHOOL SHALL BY AUGUST 1 OF EACH YEAR, SUBMIT A LIST OF QUALIFYING PUPILS AND THE CONTACT INFORMATION OF EACH CUSTODIAN OF A QUALIFYING PUPIL ACCEPTED INTO THE SCHOOL FOR THAT SCHOOL YEAR TO THE DEPARTMENT.

15-817.05. Annual list of grant schools; applications for grant and admission

A. ON OR BEFORE DECEMBER 31, 2005 AND EACH DECEMBER 31 THEREAFTER, THE DEPARTMENT SHALL ISSUE A PRESS RELEASE AND SHALL PUBLISH ON ITS WEB SITE A LIST OF ALL GRANT SCHOOLS IN THE STATE THAT WILL REDEEM GRANTS UNDER THIS ARTICLE FOR THE SCHOOL YEAR THAT BEGINS IN THAT CALENDAR YEAR. EACH SCHOOL ON THE LIST SHALL BE IDENTIFIED BY AT LEAST CONTACT INFORMATION AND BY THE GRADE LEVEL OR LEVELS FOR WHICH THE SCHOOL WILL REDEEM GRANTS FOR THAT SCHOOL YEAR.

B. A CUSTODIAN WHO WISHES TO ENROLL A QUALIFYING PUPIL IN A GRANT SCHOOL SHALL COMPLETE AND SUBMIT AN APPLICATION FOR A GRANT THROUGH THE DEPARTMENT BEGINNING JANUARY 1 OF THE CALENDAR YEAR FOR THE NEXT SCHOOL YEAR. THE FORM OF APPLICATION FOR A GRANT SHALL BE DEVELOPED BY THE DEPARTMENT AND SHALL BE PUBLISHED ON ITS WEB SITE IN A FORMAT THAT MAY BE DOWNLOADED BY PUPILS OR CUSTODIANS OF PUPILS WHO REQUEST THE FORM. THE GRANT FORM SHALL PROVIDE FOR IDENTIFICATION OF A QUALIFYING PUPIL BY AT LEAST THE PUPIL'S NAME, DATE OF BIRTH, ADDRESS, SCHOOL DISTRICT OF RESIDENCE, SCHOOL AND GRADE OF CURRENT ENROLLMENT AND GRADE OF SCHOOL IN WHICH THE GRANT APPLIED FOR IS TO BE EFFECTIVE.

C. THE DEPARTMENT SHALL:

1. ENSURE THE ELIGIBILITY OF THE PUPIL FOR A GRANT. IF THE DEPARTMENT DETERMINES THE PUPIL IS NOT ELIGIBLE FOR A GRANT PURSUANT TO THIS ARTICLE, THE DEPARTMENT SHALL NOT ISSUE A GRANT TO THE CUSTODIAN OR THE PUPIL.

2. ISSUE GRANTS ON A FIRST COME, FIRST SERVED BASIS. IF THE DEPARTMENT OF EDUCATION DETERMINES THAT THERE ARE MORE QUALIFYING PUPILS THAN GRANTS AVAILABLE, THE DEPARTMENT OF EDUCATION SHALL ESTABLISH A WAITING LIST OF QUALIFYING PUPILS.

3. ISSUE A TOTAL OF ONE THOUSAND FIVE HUNDRED GRANTS FOR EACH GRADE LEVEL INCLUDED IN THE PARENTAL EDUCATIONAL CHOICE GRANT PROGRAM. PUPILS WHO RECEIVED A GRANT IN THE PREVIOUS SCHOOL YEAR SHALL CONTINUE TO BE PROVIDED A GRANT IF THEY MEET THE REQUIREMENTS PURSUANT TO SECTION 15-817.03, SUBSECTION B.

D. A CUSTODIAN WHO WISHES TO ENROLL A QUALIFYING PUPIL IN A GRANT SCHOOL FOR ANY SCHOOL YEAR ON A GRANT THAT IS TO BE ISSUED UNDER THIS ARTICLE SHALL COMPLETE AND SUBMIT, NOT LATER THAN JUNE 15 OF THE CALENDAR YEAR IN WHICH THE SCHOOL YEAR THAT THE GRANT IS TO BE EFFECTIVE BEGINS, AN APPLICATION TO THE GRANT SCHOOL ON A FORM PROVIDED BY THE SCHOOL.

E. NOTWITHSTANDING ANY OTHER LAW, THE DEPARTMENT SHALL REDUCE THE AVERAGE DAILY MEMBERSHIP OF THE PUBLIC SCHOOL FOR EACH QUALIFYING PUPIL WHO RECEIVES A GRANT PURSUANT TO THIS ARTICLE IF THE PUPIL WAS COUNTED BY THE SCHOOL DISTRICT FOR FUNDING PURPOSES.

15-817.06. Grant value

A. A GRANT ISSUED UNDER THIS ARTICLE FOR THE BENEFIT OF A QUALIFYING PUPIL IN KINDERGARTEN PROGRAMS AND GRADES ONE THROUGH TWELVE SHALL HAVE A VALUE EQUAL TO THREE THOUSAND FIVE HUNDRED DOLLARS OR THE TOTAL AMOUNT OF TUITION AND FEES CHARGED BY THE SCHOOL, WHICHEVER IS LESS.

B. GRANTS SHALL BE DISTRIBUTED BY THE DEPARTMENT FROM MONIES RECEIVED FOR THIS PURPOSE.

15-817.07. Distribution of grant monies; transfer from grant school

A. THE MONIES TO PAY A GRANT THAT IS ISSUED FOR THE BENEFIT OF A QUALIFYING PUPIL AND THAT IS TO BE EFFECTIVE DURING THE SCHOOL YEAR WITH RESPECT TO WHICH THOSE MONIES ARE PAID SHALL BE DISTRIBUTED BY THE DEPARTMENT IMMEDIATELY ON RECEIPT OF PROOF OF THE PUPIL'S ENROLLMENT IN THE GRANT SCHOOL DURING A SCHOOL YEAR AND IN THE FORM OF A GRANT TO THE CUSTODIAN. THE CUSTODIAN SHALL RESTRICTIVELY ENDORSE THE GRANT FOR THE USE OF THE GRANT SCHOOL AND SURRENDER THE GRANT TO THE GRANT SCHOOL. THE GRANT SCHOOL SHALL IMMEDIATELY CREDIT THE ACCOUNT OF THE CUSTODIAN OF THE QUALIFYING PUPIL AND APPLY THE GRANT FOR THE BENEFIT OF THE QUALIFYING PUPIL IN PAYMENT OF THE TUITION AND FEES DUE FROM, OR THE COSTS OF PROVIDING EDUCATIONAL AND RELATED SERVICES TO, THAT PUPIL.

B. THE DEPARTMENT SHALL MAKE MONTHLY PAYMENTS TO A GRANT SCHOOL BASED ON THE NUMBER OF QUALIFYING PUPILS LISTED PURSUANT TO SECTION 15-817.04, SUBSECTION C.

C. IF A PUPIL TRANSFERS OUT OF A GRANT SCHOOL, THE PUPIL'S GUARDIAN SHALL IMMEDIATELY NOTIFY THE DEPARTMENT AND THE DEPARTMENT SHALL SUSPEND PAYMENTS PURSUANT TO SUBSECTION B, OF THIS SECTION.

D. IF A PUPIL TRANSFERS OUT OF A GRANT SCHOOL TO ANOTHER GRANT SCHOOL, THE PUPIL'S GUARDIAN SHALL IMMEDIATELY NOTIFY THE DEPARTMENT AND THE DEPARTMENT SHALL BEGIN MAKING PAYMENTS TO THE QUALIFIED GRANT SCHOOL WHERE THE PUPIL IS NOW ENROLLED.

E. IF A CUSTODIAN OF A PUPIL FAILS TO NOTIFY THE DEPARTMENT PURSUANT TO SUBSECTION C OR D OF THIS SECTION WITHIN THIRTY DAYS OF THE PUPIL'S TRANSFER, THE CUSTODIAN SHALL BE RESPONSIBLE TO REIMBURSE THE DEPARTMENT FOR ANY AMOUNTS PAID TO THE GRANT SCHOOL FOR THE TRANSFERRED PUPIL.

15-817.08. Parental educational choice grant fund

A. THE PARENTAL EDUCATIONAL CHOICE GRANT FUND IS ESTABLISHED. THE DEPARTMENT SHALL ADMINISTER THE FUND. MONIES IN THE FUND SHALL BE USED FOR PARENTAL EDUCATIONAL CHOICE GRANTS PURSUANT TO THIS ARTICLE. MONIES IN THE FUND SHALL BE DERIVED FROM LEGISLATIVE APPROPRIATIONS AND TRANSFERS PURSUANT TO SECTION 43-1182.

B. MONIES IN THE FUND ARE EXEMPT FROM THE PROVISIONS OF SECTION 35-190 RELATING TO LAPSING OF APPROPRIATIONS.

C. THE DEPARTMENT MAY USE UP TO ONE PER CENT OF THE ANNUAL LEGISLATIVE APPROPRIATION FOR PAYMENT OF THE COSTS AND EXPENSES THAT ARE INCURRED BY THE DEPARTMENT IN PERFORMING THE DUTIES AND RESPONSIBILITIES UNDER THIS ARTICLE.

15-817.09. Violations; classification

A PERSON WHO DOES ANY OF THE FOLLOWING IS GUILTY OF A CLASS 6 FELONY:

1. USES OR ATTEMPTS TO USE A GRANT OR CERTIFICATE OF GRANT FOR ANY PURPOSE OTHER THAN THOSE PERMITTED BY THIS ARTICLE.

2. WITH INTENT TO DEFRAUD, KNOWINGLY FORGES, ALTERS OR MISREPRESENTS INFORMATION ON A GRANT OR CERTIFICATE OF GRANT OR ON ANY DOCUMENTS SUBMITTED IN APPLICATION FOR A GRANT.

3. ISSUES OR DELIVERS ANY GRANT, CERTIFICATE OF GRANT OR OTHER GRANT RELATED DOCUMENT KNOWING IT HAS BEEN FORGED, ALTERED OR BASED ON MISREPRESENTATION.

4. POSSESSES, WITH INTENT TO ISSUE OR DELIVER, ANY GRANT, CERTIFICATE OF GRANT OR OTHER GRANT RELATED DOCUMENT KNOWING IT HAS BEEN FORGED, ALTERED OR BASED ON MISREPRESENTATION.

15-817.10. Limitation on regulation of private schools

A. IN ANY LEGAL PROCEEDING CHALLENGING THE APPLICATION OF THIS ARTICLE TO A PRIVATE SCHOOL, THIS STATE BEARS THE BURDEN OF ESTABLISHING THAT THE LAW IS NECESSARY AND DOES NOT IMPOSE ANY UNDUE BURDEN ON PRIVATE SCHOOLS.

B. A PRIVATE SCHOOL SHALL NOT BE REQUIRED TO ALTER ITS CREED, PRACTICES OR CURRICULUM IN ORDER TO REDEEM GRANTS ISSUED PURSUANT TO THIS ARTICLE OR IN ORDER TO PARTICIPATE AS A GRANT SCHOOL.

Sec. 3. Section 15-901.02, Arizona Revised Statutes, is amended to read:

15-901.02. Full-day kindergarten instruction; study committee; full-day kindergarten fund

A. A school or charter school that is provided and accepts monies pursuant to this section for full-day kindergarten shall offer full-day kindergarten instruction to all pupils who meet the enrollment requirements for kindergarten programs. EACH SCHOOL THAT OFFERS FULL-DAY KINDERGARTEN SHALL OFFER HALF-DAY KINDERGARTEN INSTRUCTION THAT PROVIDES ACADEMICALLY MEANINGFUL INSTRUCTION IN EACH OF THE ACADEMIC STANDARDS ADOPTED FOR KINDERGARTEN BY THE STATE BOARD OF EDUCATION. Parents of pupils who meet the enrollment requirements for voluntary kindergarten programs in a school or charter school that is required to provide full-day kindergarten instruction shall choose either half-day kindergarten instruction or full-day kindergarten instruction.

B. The legislature shall develop a plan, including capital monies, ~~considering recommendations of the joint legislative study committee on full-day kindergarten established in subsection D of this section,~~ to provide statewide full-day kindergarten instruction by fiscal year 2009-2010. Schools and charter schools that are provided full-day kindergarten funding pursuant to this subsection and subsection C of this section shall continuously be provided full-day kindergarten funding throughout the statewide implementation of the full-day kindergarten plan adopted by the legislature.

C. FUNDING FOR FULL-DAY KINDERGARTEN SHALL BE SUBJECT TO ANNUAL APPROPRIATION. EACH ANNUAL APPROPRIATION SHALL SPECIFY THE ELIGIBILITY REQUIREMENTS BASED ON THE PERCENTAGE OF PUPILS WHO MEET THE ELIGIBILITY REQUIREMENTS PRESCRIBED IN THIS SUBSECTION. Funding for full-day kindergarten shall be provided for fiscal year 2004-2005 to schools or charter schools with a student count in which at least ninety per cent of the pupils meet the economic eligibility requirements established under the national school lunch and child nutrition acts (42 United States Code sections 1751 through 1785). THE AUDITOR GENERAL SHALL RANDOMLY SELECT AT LEAST FIVE BUT NO MORE THAN TEN SCHOOLS THAT RECEIVE FULL-DAY KINDERGARTEN MONIES PURSUANT TO THIS SECTION FOR ELIGIBILITY VERIFICATION FOR THE NATIONAL SCHOOL LUNCH AND CHILD NUTRITION ACTS (42 UNITED STATES CODE SECTIONS 1751 THROUGH 1785). THE SAMPLE SHALL INCLUDE BOTH RURAL AND URBAN SCHOOLS. THE SCHOOL SHALL COOPERATE WITH THE AUDITOR GENERAL IN OBTAINING ALL NECESSARY DOCUMENTATION IN ACCORDANCE WITH ALL APPLICABLE FEDERAL GUIDELINES. The school district or charter school shall receive monies for full-day kindergarten pursuant to this section for each pupil who attends kindergarten instruction.

D. The joint legislative study committee on full-day kindergarten is established and shall consist of three members of the house of representatives appointed by the speaker of the house of representatives, no more than two shall be from the same political party, three members of the senate appointed by the president of the senate, no more than two shall be from the same political party and three members appointed by the governor who represent school districts or charter schools that offer kindergarten programs. The joint legislative study committee shall forward preliminary recommendations by December 1, 2004 to the speaker of the house of representatives, the president of the senate and the governor for full-day kindergarten implementation. The joint legislative study committee shall consider funding for each year of implementation, capital accommodations and program implementation issues such as professional development and diagnostic assessment.

E. D. The full-day kindergarten fund is established consisting of monies appropriated to the department of education for this purpose. The department of education shall administer the fund. If there are insufficient monies available in the fund to provide full funding pursuant to this section, the department of education shall prorate the amount per pupil distributed to each school district and charter school that is eligible to receive monies from the fund. The amount budgeted by the school district or charter school pursuant to this section shall not be included in the allowable budget balance carryforward calculated pursuant to section 15-943.01. The full-day kindergarten fund terminates on July 1, 2009, and any unencumbered monies remaining in the fund on that date shall be transferred to the state general fund.

F. E. Monies in the full-day kindergarten fund are continuously appropriated and are exempt from the provisions of section 35-190 relating to lapsing of appropriations, and the allocation to each charter school and school district for a fiscal year shall equal the per pupil amount established in this section for the fiscal year multiplied by the weighted student count for the school district or charter school for the fiscal year pursuant to section 15-943, paragraph 2, subdivision (a). For the purposes of this subsection, the weighted student count for a school district that serves as the district of attendance for nonresident pupils shall be increased to include nonresident pupils who attend school in the school district.

G. F. Monies distributed from the full-day kindergarten fund shall be spent only for full-day kindergarten instruction.

H. G. School districts and charter schools that receive monies from the full-day kindergarten fund shall submit a report to the superintendent of public instruction on a per school basis that provides an accounting of the expenditures of monies distributed from the fund during the school year, a description of any professional development required under this section, class size and any district class size policies, data collected from state or district assessments of kindergarten pupils in both full-day and half-day programs, the number of pupils, the number of pupils not served and the reasons those pupils were not served and other information determined by the department of education and the office of the auditor general. The department of education in conjunction with the auditor general shall prescribe the format and due date of the report required under this subsection.

I. H. School districts and charter schools that receive monies from the full-day kindergarten fund shall receive these monies monthly in an amount not to exceed one-twelfth of the monies estimated pursuant to subsection C of this section, except that if there are insufficient monies in the fund that month to make payments, the distribution for that month shall be prorated for each school district or charter school. The department of education may make an additional payment in the current month for any prior month or months in which school districts or charter schools received a prorated payment if there are sufficient monies in the fund that month for the additional payments. The state is not required to make payments to a school district or charter school full-day kindergarten fund if the monies in the state full-day kindergarten fund are insufficient to meet the estimated allocations to school districts and charter schools pursuant to subsection C of this section.

J. I. The Arizona state schools for the deaf and the blind shall receive monies from the full-day kindergarten fund in the same manner as school districts and charter schools. The Arizona state schools for the deaf and the blind are subject to this section in the same manner as school districts and charter schools.

K. J. Each school district and charter school shall establish a local level full-day kindergarten fund to receive allocations from the state level full-day kindergarten fund. The local level full-day kindergarten fund shall be a budgetary controlled account. Interest charges for any registered warrants for the local level full-day kindergarten fund shall be a charge against the local level full-day kindergarten fund. Interest earned on monies in the local level full-day kindergarten fund shall be added to the local level full-day kindergarten fund. This state shall not be required to make payments to a school district or charter school local level full-day kindergarten fund that are in addition to monies appropriated to the state level full-day kindergarten fund.

L. K. If the state board of education, the department of education, the auditor general or the attorney general determines that a school district is substantially and deliberately not in compliance with this title, and if the school district has failed to correct the deficiency within ninety days after receiving notice from the department of education, the state board of education may direct the superintendent of public instruction, pursuant to state board of education rules, to withhold the monies the school district would otherwise be entitled to receive from the full-day kindergarten fund from the date of the determination of noncompliance until the department of education determines that the school district is in compliance with this title.

M. L. If the sponsor of the charter school determines at a public meeting that the charter school is not in compliance with federal law, with the laws of this state or with its charter, the sponsor of a charter school shall notify the department of education to withhold the monies that the charter school would otherwise be entitled to receive from the full-day kindergarten fund. The sponsor shall provide written notice to the charter school at least seventy-two hours before the meeting and shall allow the charter school to respond to the allegations of noncompliance at the meeting before the sponsor makes a final determination to notify the department of education of noncompliance. When the sponsor determines that the charter school is in compliance, the department of education shall restore the amount of monies that the charter school is entitled to receive from the full-day kindergarten fund.

N. M. Schools are not required to offer full-day kindergarten instruction to qualifying students if there is insufficient classroom space. Schools shall not accept monies from the full-day kindergarten fund if space limitations result in class sizes that exceed the average class size of the district or charter school.

O. N. All schools that accept monies from the full-day kindergarten fund shall provide professional development that is directly related to the delivery of kindergarten standards in a full-day program. Any school that has not yet undergone professional development for implementation of the delivery of a research-based reading curriculum as prescribed in section 15-704 may not receive money from the full-day kindergarten fund until this training has been received by the kindergarten instructors on staff.

P. O. For any school district that funds voluntary full-day kindergarten instruction with monies from a desegregation levy or a special budget override pursuant to section 15-482 and that qualifies for monies from the full-day kindergarten fund and if the desegregation monies or special budget override monies are used ~~solely~~ to provide full-day kindergarten instruction, the governing board shall hold a public meeting to determine the reallocation of those monies to other programs or whether those monies shall be used to reduce the school district's primary or secondary property tax levy, or both.

P. THE DEPARTMENT OF EDUCATION SHALL CONDUCT A COMPREHENSIVE REVIEW OF THE EXISTING RESEARCH ON FULL-DAY KINDERGARTEN INSTRUCTION, INCLUDING ACADEMIC LITERATURE, ACADEMIC STUDIES AND RESEARCH AND REVIEWS CONDUCTED BY PUBLIC AND PRIVATE INSTITUTIONS ON FULL-DAY KINDERGARTEN INSTRUCTION. THE DEPARTMENT SHALL CONSIDER RESEARCH THAT PROVIDES SUPPORT FOR FULL-DAY KINDERGARTEN AND RESEARCH THAT DOES NOT PROVIDE SUPPORT FOR FULL-DAY KINDERGARTEN. THE REVIEW CONDUCTED BY THE DEPARTMENT OF EDUCATION SHALL EMPHASIZE LONGITUDINAL STUDIES THAT ASSESS THE LONG-TERM ACADEMIC IMPACT OF FULL-DAY KINDERGARTEN INSTRUCTION. THE DEPARTMENT SHALL SUBMIT A REPORT THAT SUMMARIZES THE DEPARTMENT'S FINDINGS AND CONCLUSIONS TO THE GOVERNOR, THE PRESIDENT OF THE SENATE, THE SPEAKER OF THE HOUSE OF REPRESENTATIVES AND THE JOINT LEGISLATIVE BUDGET COMMITTEE ON OR BEFORE DECEMBER 1, 2005. THE DEPARTMENT SHALL PROVIDE A COPY OF THIS REPORT TO THE SECRETARY OF STATE AND THE DIRECTOR OF THE ARIZONA STATE LIBRARY, ARCHIVES AND PUBLIC RECORDS.

Q. NOTWITHSTANDING SUBSECTION B OF THIS SECTION, THE LEGISLATURE SHALL NOT CONSIDER THE APPROPRIATION OF ANY ADDITIONAL STATE MONIES FOR FULL-DAY KINDERGARTEN INSTRUCTION AFTER THE EFFECTIVE DATE OF THIS AMENDMENT TO THIS SECTION UNTIL AFTER THE JOINT LEGISLATIVE BUDGET COMMITTEE HAS REVIEWED THE STUDY PRESCRIBED IN SUBSECTION P OF THIS SECTION.

R. STATE MONIES FOR FULL-DAY KINDERGARTEN INSTRUCTION SHALL NOT BE PROVIDED FOR ANY PUPIL WHO IS NOT AT LEAST FIVE YEARS OF AGE BEFORE SEPTEMBER 1 OF THE SCHOOL YEAR IN WHICH THE PUPIL IS ENROLLED.

Sec. 4. Title 15, chapter 9, article 1, Arizona Revised Statutes, is amended by adding section 15-901.03, to read:

15-901.03. Fund transfers; review

NOTWITHSTANDING SECTION 35-173, SUBSECTION C, ANY TRANSFER TO OR FROM THE AMOUNT APPROPRIATED FOR BASIC STATE AID ENTITLEMENT, ADDITIONAL STATE AID TO SCHOOLS, CERTIFICATES OF EDUCATIONAL CONVENIENCE OR THE SPECIAL EDUCATION FUND LINE ITEMS SHALL REQUIRE REVIEW BY THE JOINT LEGISLATIVE BUDGET COMMITTEE.

Sec. 5. Section 43-222, Arizona Revised Statutes, is amended to read:

43-222. Income tax credit review schedule

Each year the joint legislative income tax credit review committee shall review the following income tax credits:

1. In 2004, sections 43-1081.01, 43-1083, 43-1084 and 43-1170.01.

2. In 2005, sections 43-1087, 43-1088 and 43-1175.

3. In 2006, sections 43-1073, 43-1089, 43-1089.01, 43-1089.02, 43-1090, 43-1176 and 43-1181.

4. In 2007, sections 43-1077, 43-1078, 43-1079, 43-1080, 43-1165, 43-1166, 43-1167 and 43-1169.

5. In 2008, sections 43-1074.01, 43-1081, 43-1168, 43-1170 and 43-1178.

6. In 2009, sections 43-1076 and 43-1162.

7. IN 2010, SECTION 43-1182.

Sec. 6. Title 43, chapter 10, article 3, Arizona Revised Statutes, is amended by adding section 43-1032, to read:

43-1032. Parental educational choice grants not taxable income

PARENTAL EDUCATIONAL CHOICE GRANTS AWARDED PURSUANT TO TITLE 15, CHAPTER 8, ARTICLE 1.2 SHALL NOT BE CONSIDERED TAXABLE INCOME OF THE CUSTODIAN OF THE CHILD OR THE CHILD WHO RECEIVES THE PARENTAL EDUCATIONAL CHOICE GRANT.

Sec. 7. Section 43-1121, Arizona Revised Statutes, is amended to read:

43-1121. Additions to Arizona gross income; corporations

In computing Arizona taxable income for a corporation, the following amounts shall be added to Arizona gross income:

1. The amounts computed pursuant to section 43-1021, paragraphs 3 through 9, 12, 26 and 27.

2. The amount of dividend income received from corporations and allowed as a deduction pursuant to sections 243, 244 and 245 of the internal revenue code.

3. Taxes which are based on income paid to states, local governments or foreign governments and which were deducted in computing federal taxable income.

4. Expenses and interest relating to tax-exempt income on indebtedness incurred or continued to purchase or carry obligations the interest on which is wholly exempt from the tax imposed by this title. Financial institutions, as defined in section 6-101, shall be governed by section 43-961, paragraph 2.

5. Commissions, rentals and other amounts paid or accrued to a domestic international sales corporation controlled by the payor corporation if the domestic international sales corporation is not required to report its taxable income to this state because its income is not derived from or attributable to sources within this state. If the domestic international sales corporation is subject to article 4 of this chapter, the department shall prescribe by rule the method of determining the portion of the commissions, rentals and other amounts which are paid or accrued to the controlled domestic international sales corporation and which shall be deducted by the payor. "Control" for purposes of this paragraph means direct or indirect ownership or control of fifty per cent or more of the voting stock of the domestic international sales corporation by the payor corporation.

6. Federal income tax refunds received during the taxable year to the extent they were deducted in arriving at Arizona taxable income in a previous year.

7. The amount of net operating loss taken pursuant to section 172 of the internal revenue code.

8. The amount of exploration expenses determined pursuant to section 617 of the internal revenue code to the extent that they exceed seventy-five thousand dollars and to the extent that the election is made to defer those expenses not in excess of seventy-five thousand dollars.

9. Amortization of costs incurred to install pollution control devices and deducted pursuant to the internal revenue code or the amount of deduction for depreciation taken pursuant to the internal revenue code on pollution control devices for which an election is made pursuant to section 43-1129.

10. The amount of depreciation or amortization of costs of child care facilities deducted pursuant to section 167 or 188 of the internal revenue code for which an election is made to amortize pursuant to section 43-1130.

11. Arizona state income tax refunds received, to the extent the amount of the refunds is not already included in Arizona gross income, if a tax benefit was derived by deduction of this amount in a prior year.

12. The amount paid as taxes on property in this state by a qualified defense contractor with respect to which a credit is claimed under section 43-1166.

13. The loss of an insurance company that is exempt under section 43-1201 to the extent that it is included in computing Arizona gross income on a consolidated return pursuant to section 43-947.

14. The amount by which the depreciation or amortization computed under the internal revenue code with respect to property for which a credit was taken under section 43-1169 exceeds the amount of depreciation or amortization computed pursuant to the internal revenue code on the Arizona adjusted basis of the property.

15. The amount by which the adjusted basis computed under the internal revenue code with respect to property for which a credit was claimed under section 43-1169 and which is sold or otherwise disposed of during the taxable year exceeds the adjusted basis of the property computed under section 43-1169.

16. The amount by which the depreciation or amortization computed under the internal revenue code with respect to property for which a credit was taken under either section 43-1170 or 43-1170.01 exceeds the amount of depreciation or amortization computed pursuant to the internal revenue code on the Arizona adjusted basis of the property.

17. The amount by which the adjusted basis computed under the internal revenue code with respect to property for which a credit was claimed under either section 43-1170 or 43-1170.01 and which is sold or otherwise disposed of during the taxable year exceeds the adjusted basis of the property computed under section 43-1170 or 43-1170.01, as applicable.

18. The deduction referred to in section 1341(a)(4) of the internal revenue code for restoration of a substantial amount held under a claim of right.

19. The amount by which a capital loss carryover allowable pursuant to section 1341(b)(5) of the internal revenue code exceeds the capital loss carryover allowable pursuant to section 43-1130.01, subsection F.

20. Any amount deducted in computing Arizona taxable income as expenses for installing solar stub outs or electric vehicle recharge outlets in this state with respect to which a credit is claimed pursuant to section 43-1176.

21. Any wage expenses deducted pursuant to the internal revenue code for which a credit is claimed under section 43-1175 and representing net increases in qualified employment positions for employment of temporary assistance for needy families recipients.

22. Any amount of expenses that were deducted pursuant to the internal revenue code and for which a credit is claimed under section 43-1178.

23. Any amount deducted for conveying ownership or development rights of property to an agricultural preservation district under section 48-5702 for which a credit is claimed under section 43-1180.

24. The amount of any deduction that is claimed in computing Arizona gross income and that represents a donation of a school site for which a credit is claimed under section 43-1181.

25. ANY AMOUNT DEDUCTED PURSUANT TO SECTION 170 OF THE INTERNAL REVENUE CODE REPRESENTING CONTRIBUTIONS TO A SCHOOL TUITION ORGANIZATION FOR WHICH A CREDIT IS CLAIMED UNDER SECTION 43-1182.

Sec. 8. Title 43, chapter 11, article 6, Arizona Revised Statutes, is amended by adding section 43-1182, to read:

43-1182. Credit for contributions to school tuition organization; definitions

A. FOR TAXABLE YEARS BEGINNING FROM AND AFTER DECEMBER 31, 2005, A CREDIT IS ALLOWED AGAINST THE TAXES IMPOSED BY THIS TITLE FOR THE AMOUNT OF VOLUNTARY CASH CONTRIBUTIONS MADE BY THE TAXPAYER DURING THE TAXABLE YEAR TO A SCHOOL TUITION ORGANIZATION.

B. THE AMOUNT OF THE CREDIT IS:

1. IF THE TOTAL AMOUNT OF THE TAXPAYER'S CONTRIBUTIONS FOR THE TAXABLE YEAR UNDER SUBSECTION A OF THIS SECTION IS LESS THAN TEN THOUSAND DOLLARS, THE AMOUNT OF THE CONTRIBUTION.

2. IF THE TOTAL AMOUNT OF THE TAXPAYER'S CONTRIBUTIONS FOR THE TAXABLE YEAR UNDER SUBSECTION A OF THIS SECTION IS TEN THOUSAND DOLLARS OR MORE, AN AMOUNT THAT IS PREAPPROVED BY THE DEPARTMENT. FOR THE PURPOSES OF THIS PARAGRAPH ONLY, THE DEPARTMENT:

(a) SHALL NOT ALLOW TAX CREDITS FOR CONTRIBUTIONS MADE IN ANY CALENDAR YEAR THAT EXCEED:

(i) TEN MILLION DOLLARS FOR 2006.

(ii) FIFTEEN MILLION DOLLARS FOR 2007.

(iii) TWENTY MILLION DOLLARS FOR 2008.

(iv) TWENTY-FIVE MILLION DOLLARS FOR 2009.

(v) THIRTY MILLION DOLLARS FOR 2010.

(vi) THIRTY-FIVE MILLION DOLLARS FOR 2011.

(vii) FORTY MILLION DOLLARS FOR 2012.

(viii) FORTY-FIVE MILLION DOLLARS FOR 2013.

(ix) FIFTY MILLION DOLLARS FOR 2014.

(x) FROM AND AFTER DECEMBER 31, 2014, FIFTY-FIVE MILLION DOLLARS.

(b) SHALL PREAPPROVE TAX CREDITS SUBJECT TO SUBSECTION C OF THIS SECTION.

C. ONLY FOR THE PURPOSES OF SUBSECTION B, PARAGRAPH 2, SUBDIVISION (b) OF THIS SECTION, BEFORE MAKING A CONTRIBUTION TO A STUDENT TUITION ORGANIZATION, THE TAXPAYER SHALL NOTIFY THE STUDENT TUITION ORGANIZATION OF THE TOTAL AMOUNT OF CONTRIBUTIONS THAT THE TAXPAYER INTENDS TO MAKE TO THE STUDENT TUITION ORGANIZATION. BEFORE ACCEPTING THE CONTRIBUTION, THE STUDENT TUITION ORGANIZATION SHALL REQUEST PREAPPROVAL FROM THE DEPARTMENT FOR THE TAXPAYER'S INTENDED CONTRIBUTION AMOUNT. THE DEPARTMENT SHALL PREAPPROVE OR DENY THE REQUESTED AMOUNT WITHIN TWENTY DAYS AFTER RECEIVING THE REQUEST FROM THE STUDENT TUITION ORGANIZATION. IF THE DEPARTMENT PREAPPROVES THE REQUEST, THE STUDENT TUITION ORGANIZATION SHALL IMMEDIATELY NOTIFY THE TAXPAYER THAT THE REQUESTED AMOUNT WAS PREAPPROVED BY THE DEPARTMENT. IN ORDER TO RECEIVE A TAX CREDIT UNDER THIS SUBSECTION, THE TAXPAYER SHALL MAKE THE CONTRIBUTION TO THE STUDENT TUITION ORGANIZATION WITHIN TEN DAYS AFTER RECEIVING NOTICE FROM THE STUDENT TUITION ORGANIZATION THAT THE REQUESTED AMOUNT WAS PREAPPROVED. IF THE STUDENT TUITION ORGANIZATION DOES NOT RECEIVE THE PREAPPROVED CONTRIBUTION FROM THE TAXPAYER WITHIN THE REQUIRED TEN DAYS, THE STUDENT TUITION ORGANIZATION SHALL IMMEDIATELY NOTIFY THE DEPARTMENT AND THE DEPARTMENT SHALL NO LONGER INCLUDE THIS PREAPPROVED CONTRIBUTION AMOUNT WHEN CALCULATING THE LIMITS PRESCRIBED IN SUBSECTION B, PARAGRAPH 2 OF THIS SECTION.

D. IF THE ALLOWABLE TAX CREDIT EXCEEDS THE TAXES OTHERWISE DUE UNDER THIS TITLE ON THE CLAIMANT'S INCOME, OR IF THERE ARE NO TAXES DUE UNDER THIS TITLE, THE TAXPAYER MAY CARRY THE AMOUNT OF THE CLAIM NOT USED TO OFFSET THE TAXES UNDER THIS TITLE FORWARD FOR NOT MORE THAN FIVE CONSECUTIVE TAXABLE YEARS' INCOME TAX LIABILITY.

E. THE CREDIT ALLOWED BY THIS SECTION IS IN LIEU OF ANY DEDUCTION PURSUANT TO SECTION 170 OF THE INTERNAL REVENUE CODE AND TAKEN FOR STATE TAX PURPOSES.

F. THE TAX CREDIT IS NOT ALLOWED IF THE TAXPAYER DESIGNATES THE TAXPAYER'S CONTRIBUTION TO THE SCHOOL TUITION ORGANIZATION FOR THE DIRECT BENEFIT OF ANY SPECIFIC STUDENT.

G. A SCHOOL TUITION ORGANIZATION THAT RECEIVES CONTRIBUTIONS UNDER THIS SECTION SHALL USE AT LEAST SEVENTY PER CENT OF THOSE CONTRIBUTIONS TO PROVIDE EDUCATIONAL SCHOLARSHIPS OR TUITION GRANTS ONLY TO CHILDREN WHOSE FAMILY INCOME DOES NOT EXCEED ONE HUNDRED EIGHTY-FIVE PER CENT OF THE INCOME LIMIT REQUIRED TO QUALIFY A CHILD FOR REDUCED PRICE LUNCHES UNDER THE NATIONAL SCHOOL LUNCH AND CHILD NUTRITION ACTS (42 UNITED STATES CODE SECTIONS 1751 THROUGH 1785) AND WHO EITHER:

1. ATTENDED A GOVERNMENTAL PRIMARY OR SECONDARY SCHOOL AS A FULL-TIME STUDENT AS DEFINED IN SECTION 15-901 FOR AT LEAST THE FIRST ONE HUNDRED DAYS OF THE PRIOR FISCAL YEAR AND TRANSFERRED FROM A GOVERNMENTAL PRIMARY OR SECONDARY SCHOOL TO A QUALIFIED SCHOOL.

2. ENROLL IN A QUALIFIED SCHOOL IN A KINDERGARTEN PROGRAM.

3. RECEIVED AN EDUCATIONAL SCHOLARSHIP OR TUITION GRANT UNDER PARAGRAPH 1 OR 2 OF THIS SUBSECTION IF THE CHILDREN CONTINUE TO ATTEND A QUALIFIED SCHOOL IN A SUBSEQUENT YEAR.

H. IN 2006, A SCHOOL TUITION ORGANIZATION SHALL NOT ISSUE AN EDUCATIONAL SCHOLARSHIP OR A TUITION GRANT IN AN AMOUNT THAT EXCEEDS FOUR THOUSAND TWO HUNDRED DOLLARS FOR STUDENTS IN A KINDERGARTEN PROGRAM OR GRADES ONE THROUGH EIGHT OR FIVE THOUSAND FIVE HUNDRED DOLLARS FOR STUDENTS IN GRADES NINE THROUGH TWELVE. IN EACH YEAR AFTER 2006, THE LIMITATION AMOUNT FOR A SCHOLARSHIP OR A GRANT UNDER THIS SUBSECTION SHALL BE INCREASED BY ONE HUNDRED DOLLARS.

I. A CHILD IS STILL ELIGIBLE TO RECEIVE AN EDUCATIONAL SCHOLARSHIP OR TUITION GRANT UNDER SUBSECTION G OF THIS SECTION IF THE CHILD MEETS THE CRITERIA TO RECEIVE A REDUCED PRICE LUNCH BUT DOES NOT ACTUALLY CLAIM THAT BENEFIT.

J. THE SCHOOL TUITION ORGANIZATION SHALL REQUIRE THAT THE CHILDREN USE THE EDUCATIONAL SCHOLARSHIPS OR TUITION GRANTS ON A FULL-TIME BASIS. IF A CHILD LEAVES THE QUALIFIED SCHOOL BEFORE COMPLETING AN ENTIRE SCHOOL YEAR, THE QUALIFIED SCHOOL SHALL REFUND A PRORATED AMOUNT OF THE EDUCATIONAL SCHOLARSHIP OR TUITION GRANT TO THE STUDENT TUITION ORGANIZATION THAT ISSUED THE EDUCATIONAL SCHOLARSHIP OR TUITION GRANT TO THE CHILD. ANY REFUNDS RECEIVED BY THE SCHOOL TUITION ORGANIZATION UNDER THIS SUBSECTION SHALL BE ALLOCATED FOR EDUCATIONAL SCHOLARSHIPS OR TUITION GRANTS TO QUALIFIED CHILDREN IN THE FOLLOWING YEAR.

K. CHILDREN WHO RECEIVE EDUCATIONAL SCHOLARSHIPS OR TUITION GRANTS UNDER THIS SECTION SHALL BE ALLOWED TO ATTEND ANY QUALIFIED SCHOOL OF THEIR PARENTS' CHOICE.

L. A SCHOOL TUITION ORGANIZATION THAT RECEIVES A VOLUNTARY CASH CONTRIBUTION PURSUANT TO SUBSECTION A OF THIS SECTION SHALL REPORT TO THE DEPARTMENT, IN A FORM PRESCRIBED BY THE DEPARTMENT, BY JUNE 30 OF EACH YEAR THE FOLLOWING INFORMATION:

1. THE NAME, ADDRESS AND CONTACT NAME OF THE SCHOOL TUITION ORGANIZATION.

2. THE TOTAL NUMBER OF CONTRIBUTIONS RECEIVED DURING THE PREVIOUS CALENDAR YEAR.

3. THE TOTAL DOLLAR AMOUNT OF CONTRIBUTIONS RECEIVED DURING THE PREVIOUS CALENDAR YEAR.

4. THE TOTAL NUMBER OF CHILDREN AWARDED EDUCATIONAL SCHOLARSHIPS OR TUITION GRANTS DURING THE PREVIOUS CALENDAR YEAR.

5. THE TOTAL DOLLAR AMOUNT OF EDUCATIONAL SCHOLARSHIPS AND TUITION GRANTS AWARDED DURING THE PREVIOUS CALENDAR YEAR.

6. FOR EACH SCHOOL TO WHICH EDUCATIONAL SCHOLARSHIPS OR TUITION GRANTS WERE AWARDED:

(a) THE NAME AND ADDRESS OF THE SCHOOL.

(b) THE NUMBER OF EDUCATIONAL SCHOLARSHIPS AND TUITION GRANTS AWARDED DURING THE PREVIOUS CALENDAR YEAR.

7. VERIFICATION THAT AN INDEPENDENT REVIEW OF FINANCIAL STATEMENTS ACCORDING TO GENERALLY ACCEPTED ACCOUNTING PRINCIPLES WAS COMPLETED BY A CERTIFIED PUBLIC ACCOUNTANT FOR THE PREVIOUS CALENDAR YEAR.

M. THE DEPARTMENT SHALL ADOPT RULES NECESSARY FOR THE ADMINISTRATION OF THIS SECTION.

N. EACH SCHOOL TUITION ORGANIZATION, BY FEBRUARY 28, 2007 AND EACH FEBRUARY 28 THEREAFTER, SHALL ANNUALLY TRANSFER TWENTY PER CENT OF MONIES COLLECTED PURSUANT TO THIS SECTION FROM THE PREVIOUS TAX YEAR TO THE PARENTAL EDUCATIONAL CHOICE GRANT FUND ESTABLISHED PURSUANT TO SECTION 15-817.09.

O. FOR THE PURPOSES OF THIS SECTION:

1. "QUALIFIED SCHOOL" MEANS A NONGOVERNMENTAL PRIMARY SCHOOL OR SECONDARY SCHOOL THAT IS LOCATED IN THIS STATE, THAT DOES NOT DISCRIMINATE ON THE BASIS OF RACE, COLOR, HANDICAP, FAMILIAL STATUS OR NATIONAL ORIGIN AND THAT SATISFIES THE REQUIREMENTS PRESCRIBED BY LAW FOR PRIVATE SCHOOLS IN THIS STATE ON JANUARY 1, 2005.

2. "SCHOOL TUITION ORGANIZATION" MEANS A CHARITABLE ORGANIZATION IN THIS STATE THAT BOTH:

(a) IS EXEMPT FROM FEDERAL TAXATION UNDER SECTION 501(C)(3) OF THE INTERNAL REVENUE CODE AND THAT ALLOCATES NINETY PER CENT OF ITS ANNUAL REVENUE FOR EDUCATIONAL SCHOLARSHIPS OR TUITION GRANTS TO CHILDREN TO ALLOW THEM TO ATTEND ANY QUALIFIED SCHOOL OF THEIR PARENTS' CHOICE.

(b) PROVIDES EDUCATIONAL SCHOLARSHIPS OR TUITION GRANTS TO STUDENTS WITHOUT LIMITING AVAILABILITY TO ONLY STUDENTS OF ONE SCHOOL.

Sec. 9. Purpose

Pursuant to section 43-223, Arizona Revised Statutes, the legislature enacts section 43-1182, Arizona Revised Statutes, as added by this act, to encourage businesses to direct a portion of their taxes by contributing to student tuition organizations in order to improve education by raising tuition scholarships for children in this state.

Sec. 10. APPROPRIATION; PARENTAL EDUCATIONAL CHOICE GRANT FUND

A. The sum of $5,500,000 is appropriated from the state general fund in fiscal year 2006-2007 to the parental educational choice grant fund for distribution by the department of education to custodians of qualifying pupils to attend grant schools that offer kindergarten programs under the parental educational choice grant program.

B. The appropriation made in subsection A of this section is exempt from the provisions of section 35-190, Arizona Revised Statutes, relating to lapsing of appropriations.

Sec. 11. Appropriation; purpose; exemption

A. The sum of $38,050,000 is appropriated from the state general fund in fiscal year 2005-2006 to the department of education for distribution to schools and charter schools that qualify to receive state monies for full-day kindergarten instruction as prescribed in section 15-901.02, Arizona Revised Statutes, as amended by this act. Funding for full-day kindergarten shall be provided for fiscal year 2005-2006 to schools or charter schools with a student count in which at least eighty per cent of the pupils meet the economic eligibility requirements established under the national school lunch and child nutrition acts (42 United States Code sections 1751 through 1785.)

B. Of the monies appropriated pursuant to subsection A of this act, the department of education may use up to $150,000 for two additional full-time equivalent positions within the department to carry out the purposes of this act.

C. The appropriation made in subsection A of this section is exempt from the provisions of section 35-190, Arizona Revised Statutes, relating to lapsing of appropriations.

Sec. 12. Conforming legislation

The legislative council staff shall prepare proposed legislation conforming the Arizona Revised Statutes to the provisions of this act for consideration in the forty-seventh legislature, second regular session.

Sec. 13. Severability

If a provision of this act or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the act that can be given effect without the invalid provision or application, and to this end the provisions of this act are severable.