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ARIZONA STATE SENATE

Fifty-Fifth Legislature, First Regular Session

 

REVISED

FACT SHEET FOR S.B. 1273

 

STOs; contributions; allowable uses

Purpose

Expands the permissible expenditures of a school tuition organization (STO) educational scholarship or tuition grant to include the cost of school registration and, as applicable, outlined costs relating to extracurricular activities and testing.

Background

An STO is a nonprofit organization exempt from federal taxation that allocates at least 90 percent of its revenue for educational scholarships or tuition grants. The amount of an STO educational scholarship or tuition grant may not exceed the cost of tuition for the student to attend the qualified school or 90 percent of the state funding that otherwise would be computed for that pupil had they remained in public school, whichever is less. If an individual educational scholarship or tuition grant exceeds the school's tuition, the amount in excess must be returned to the STO that made the award or grant (A.R.S. §§ 43-1505 and 43-1603).

The Joint Legislative Budget Committee states that S.B. 1273 does not adjust the level of STO tax credits available to individuals and corporations for donations to an STO and does not anticipate that S.B. 1273 would impact the level of donations to STOs or the corresponding level of tax credits (JLBC fiscal note).

Provisions

1.   Expands the permissible expenditures of an STO educational scholarship or tuition grant to include:

a)   school registration;

b)   additional costs for extracurricular activities; and

c)   standardized testing for college credit or readiness and career and technical education (CTE) industry certification assessments for the student while attending a qualified school.

2.   Requires, if an educational scholarship or tuition grant exceeds the school's cost of tuition, registration, extracurricular activities, standardized testing and CTE industry certification assessments, the amount in excess to be returned to the STO.

3.   Defines extracurricular activities as school-sponsored activities that may require a fee for participation, including fees for:

a)   band uniforms;

b)   equipment or uniforms for varsity athletic activities;

c)   scientific laboratory materials; and

d)   in-state or out-of-state trips solely for competitive events.

4.   Defines terms.

5.   Makes technical and conforming changes.

6.   Becomes effective on the general effective date.

Revised

· Updates the fiscal impact statement.

Prepared by Senate Research

February 11, 2021

MG/gs