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DINO HADZIAHMETOVIC ASSISTANT RESEARCH ANALYST |
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LIAM MAHER |
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LEGISLATIVE RESEARCH ANALYST APPROPRIATIONS COMMITTEE Telephone: (602) 926-3171 |
ARIZONA STATE SENATE
RESEARCH STAFF
TO: MEMBERS OF THE SENATE
APPROPRIATIONS COMMITTEE
DATE: February 5, 2021
SUBJECT: Strike everything amendment to S.B. 1118, relating to technical correction; heritage fund; audit
Purpose
Expands eligibility for low-income corporate scholarships or grants, increases the statutory required cap for low-income scholarships and grants, and increases the annual low-income scholarship and grant cap.
Background
A certified school tuition organization (STO) is a nonprofit organization that receives income tax credit contributions that fund scholarships for students to attend qualified private schools in Arizona. Once certified with the Arizona Department of Revenue, a STO may receive tax credit donations from individual and corporate taxpayers (A.R.S. §§ 43-1089 and 43-1183).
A STO must use at least 90 percent of its annual tax credit contributions to provide educational scholarships or tuition grants for students who: 1) attended public school as a full-time student or a public preschool program for children with disabilities for one full semester or 90 days of the prior fiscal year before transferring to a private school; 2) are enrolled in a private school kindergarten or private preschool program for students with disabilities; 3) are the dependent of a member of the U.S. armed forces who is stationed in Arizona due to military orders; or 4) received an educational scholarship or tuition grant in the prior year. STOs must include a notice with statutorily required language (STO notice) on any printed materials solicitating donations, applications for scholarships and on its website. The STO notice includes STO rules, regulations and scholarship eligibility requirements (A.R.S. § 43-1603).
A STO that receives corporate contributions must use at least 90 percent of its annual tax credit contributions to provide educational scholarships or tuition grants to low-income students. To qualify for low-income STO corporate scholarships or grants, a student's family income must not exceed 185 percent of the income limit required to qualify for reduced-price lunches under the National School Lunch and Child Nutrition Acts (income limit). Beginning in 2006, low-income corporate STO scholarship and grant amounts were capped at $4,200 for students in a preschool program, for students with disabilities and K-8 students, and $5,500 for grade 9-12 students. The scholarship limitation amount increases $100 annually (A.R.S. § 43-1504).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Expands low-income corporate scholarship and grant eligibility to include a child whose family income does not exceed the income limit and:
a) is homeschooled before enrolling in a qualified school;
b) moved to Arizona from out of state before enrolling in a qualified school; or
b) participated in an Arizona Empowerment Scholarship Account (ESA) and did not renew the ESA or accept the scholarship in order to accept a low-income scholarship or tuition grant.
2. Requires the STO notice to include the expanded eligibility criteria.
3. Increases, beginning in 2021, the low-income scholarship or grant cap amount to:
a) $5,600, rather than $4,200, for K-8 students and students who are in a preschool program that offers disability services; and
b) $7,500, rather than $5,500, for students in grades 9-12.
4. Increases the low-income scholarship or grant limit annual increase to $200, rather than $100.
5. Makes technical and conforming changes.
6. Becomes effective on the general effective date.
