Assigned to K-12 ED & APPROP†††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† FOR COMMITTEE






Forty-seventh Legislature, Second Regular Session




parental educational choice grant program




††††††††††† Establishes the Parental Educational Choice Grant Program (Program), which provides up to $3,500 per elementary school pupil and $4,500 per high school pupil to attend any participating private school in the state.†




††††††††††† In 1994, Arizona adopted an open enrollment policy for public schools (Laws 1994, Ninth Special Session, Chapter 2).† This law provides parents and students full public school choice on an intra-district and inter-district basis.† Additionally, in 1994, the Legislature permitted the establishment of publicly funded charter schools in this state to provide additional academic choices for parents and students (Laws 1994, Ninth Special Session, Chapter 2).† In 1997, the Legislature enacted an individual tax credit for contributions to organizations that give students grants redeemable at private elementary and secondary schools (Laws 1997, Chapter 48).† Currently, an individual can receive a state tax credit of up to $500 and a married couple can receive a credit of up to $625.† The Arizona Department of Revenue estimates that from 1998 to 2002, the tax credit program generated $56 million and financed nearly 36,000 grants.


††††††††††† In the 2005 legislative session, the Joint Legislative Budget Committee (JLBC) prepared a fiscal note for H.B. 2625, which is an identical bill to S.B.1443.† In the fiscal note for H.B. 2625, JLBC estimated that the billís ultimate net fiscal impact would depend on whether enough public school students transferred to private schools to generate savings to offset the cost of providing grants to pupils who would have attended private schools even without the bill. The fiscal note further stated that the bill would be ďcost-neutralĒ if approximately 21,000 pupils transferred out of public schools in FY 2006-2007 and if the total cumulatively increased to 150,000 in FY 2017-2018.




Parental Educational Choice Grant Program


1.      Establishes the statewide Parental Educational Choice Grant Program, which provides a grant for tuition and fees at a participating school to the custodian of each qualifying pupil.


2.      Stipulates that the Program grants constitute a grant to the children through their custodians, and not the grant schools.


3.      Specifies that the grants are not considered taxable income for the custodians or the children.

4.      Prohibits a child from receiving a grant for any portion of a school year in which the child is enrolled in a private school that does not redeem a program grant.


5.      Authorizes a custodian to choose any school for their qualifying pupilís enrollment and specifies that the choice is not deemed to be a decision of Arizona or any of its political subdivisions.


Grant Eligibility


6.      Establishes grant eligibility if an Arizona student is under age 22, has not graduated from high school or obtained a general education diploma, enrolls as a full-time student in an authorized grade level and was enrolled in and attending a public school for at least 90 percent of the previous school year, unless the student is in kindergarten or first grade.†


7.      Requires a qualifying pupil to continue to receive a grant each year if the student completes all necessary coursework for promotion to at least the next grade level, the student is in good academic standing and the custodian completes all applications required by the grant school and the Arizona Department of Education (ADE).




8.      Implements the following program eligibility schedule for qualifying students:

a)      beginning with the 2006-2007 school year, students in a kindergarten program, grade one and grade twelve.

b)      beginning with the 2007-2008 school year, students in grades two and eleven.

c)      beginning with the 2008-2009 school year, students in grades three, nine and ten.

d)     beginning with the 2009-2010 school year, students in grades four, seven and eight.

e)      beginning with the 2010-2011 school year, students in grades five and six.


Program Participation


9.      Provides an option for a secular or sectarian private school that offers any grade level eligible for student enrollment under the program implementation guidelines to participate in the Program by completing all applications with ADE each year by February 15.


10.  Allows participating schools to charge an additional amount above the grant representing the balance of the tuition and fees and requires the schools to use the grant proceeds solely to provide educational goods, services and facilities for its students.


11.  Prohibits a private school from redeeming a grant for any amount in excess of the tuition and fees customarily charged by the school.†


12.  Establishes the following requirements for each grant school:

a)      ensure the eligibility of each applicant for a grant.

b)      submit a list of qualifying students and the contact information of each custodian to ADE by August 1 annually.

c)      submit a list of qualifying students enrolled in and attending the school with a grant as of the date of the report to ADE on August 15, January 15 and April 15 constituting the base student level of qualifying students, which must accurately reflect the number of qualifying students.

d)     annually meet one of the following standards:

         70 percent of the students advance at least one grade level each year.

         the grant schoolís average attendance rate is at least 90 percent.

         at least 80 percent of the grant students demonstrate significant academic progress.

         at least 70 percent of the families of students in the Program meet parent involvement criteria established by the grant school.


Application Process


13.  Requires ADE, beginning March 31, 2007 and each March 31 thereafter, to issue a press release and publish a list of all schools that will redeem program grants and the grade levels available for the following school year in addition to contact information for each school.†


14.  Requires a custodian who wishes to enroll a qualifying student in a grant school using a grant to complete and submit to the grant school, no later than June 15 of the calendar year, a grant school developed application form as well as a grant application form filed with ADE at the same time.


15.  Requires a grant school to notify an applicant, in writing, within 45 days regarding the applicationís acceptance.


16.  Requires ADE to ensure that private schools determine acceptance on a random basis, except that a grant school may give preference for currently enrolled studentsí siblings and returning students.


17.  Requires a custodian who wishes to enroll a qualifying student in a grant school to submit an ADE developed application for a grant to ADE, which may be downloaded from the ADE website.


18.  Requires the grant form to provide for identification of a qualifying pupilís name, date of birth, address, school district of residence, school and grade of current enrollment, grant school applied to and grade level applied for under the grant.


19.  Requires ADE, notwithstanding any other law, to reduce the average daily membership of the public school of previous year attendance for each qualifying student who receives a grant.


Grant Value


20.  Sets the value of a program grant for students in kindergarten and grades one through eight at a maximum of $3,500 and $4,500 for students in high school grades or, in either case, the total amount of tuition and fees, whichever is less.


21.  Increases the grant value each year by the lesser of two percent of the annual change in the GDP price deflator.


Distribution of Grant


22.  Requires ADE to distribute monies immediately upon receipt of proof of the studentís enrollment in the form of a grant to the studentís custodian, who must restrictively endorse and surrender the grant to the grant school.


23.  Requires a grant school to immediately credit the account of the custodian of the qualifying student in payment of the tuition and fees due from, or the costs of providing educational services to, that student.


24.  Authorizes ADE to make four annual payments to a grant school based on the base pupil level on the first of September, November, February and May.


25.  Requires a grant school, if a qualifying student transfers to another school, to provide written notice of the transfer to ADE within ten days and to return any scholarship monies already distributed to be held in trust and maintained by ADE in the name of the transferring studentís custodian.


Education Savings Account


26.  Establishes the ADE administered Parental Educational Choice Grant Fund (Fund) for use for parental educational choice grants. Exempts the Fund monies from lapsing.


27.  Allows ADE to use up to one percent of the annual legislative appropriation for payment of the cost and expenses that are incurred by ADE in performing its duties and responsibilities regarding the grant program.




28.  Classifies a person who does any of the following as guilty of a class 6 felony:

a)      uses or attempts to use a grant for any purpose other than those specifically permitted.

b)      forges, alters or misrepresents information on a grant or certificate of grant or on any documents submitted in the grant application with intent to defraud.

c)      issues or delivers any grant, certificate of grant or other grant related document knowing it has been forged, altered or based on misrepresentation.

d)     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. 


Limitation on Private School Regulation


29.  Requires the state to bear the burden of establishing that the law is necessary and does not impose any undue burden on private schools in any legal proceeding challenging the application of the Program.


30.  Exempts private schools from being required to alter their creed, practices or curriculum to redeem grants or to participate as a school in the Program.




31.  Requires Legislative Council staff to prepare proposed legislation conforming the Arizona Revised Statutes to the provisions of this legislation for consideration in the 48th Legislature, 1st Regular Session.


32.  Contains a legislative intent clause regarding the current state of elementary and secondary education in Arizona, parental choice and competition.


33.  Includes definitions for the Program.


34.  Becomes effective on the general effective date.


Prepared by Senate Research

February 17, 2006