REVISED

DINO HADZIAHMETOVIC

ASSISTANT RESEARCH ANALYST

 

LIAM MAHER

LEGISLATIVE RESEARCH ANALYST

APPROPRIATIONS COMMITTEE

Telephone: (602) 926-3171

ARIZONA STATE SENATE

RESEARCH STAFF

 

 

TO: MEMBERS OF THE SENATE

APPROPRIATIONS COMMITTEE

DATE: February 8, 2021

SUBJECT: Strike everything amendment to S.B. 1118, relating to technical correction; heritage fund; audit


 


Purpose

Expands eligibility for specified individual and low-income corporate scholarships or grants, adjusts 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 qualified private school; 2) are enrolled in a qualified 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 (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 preschool 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 for specified individual and low-income corporate STO scholarship and grant eligibility to include a student who:

a) is homeschooled before enrolling in a qualified school;

b) moved to Arizona from out of state before enrolling in a qualified school; or

c) 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.   Increases, beginning in 2021, the low-income scholarship or grant cap amount to $7,500, rather than $6,900, for students in grades 9-12.

3.   Conforms, beginning in 2021, the low-income scholarship or grant statutory cap amount to the current amount of $5,600 for K-8 students and preschool students with disabilities.

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.

Revisions

1.   Expands eligibility to specified individuals.

2.   States the K-8 cap change conforms to current level rather than increases cap.