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ARIZONA STATE SENATE
Fifty-Sixth Legislature, Second Regular Session
scholarships; requirements; foster care students
Purpose
Expands eligibility for educational scholarships and tuition grants awarded through the Credit for Contributions to Certified School Tuition Organizations (Switcher Credit) or the Credit for Contributions to School Tuition Organizations for Low-Income Students (Low-Income Credit) by including students who are placed in foster care before graduating from high school or obtaining a general equivalency diploma (GED).
Background
A school tuition
organization (STO) is a nonprofit organization exempt from federal taxation
that allocates at least 90 percent of its revenue for educational scholarships
or tuition grants (scholarships or grants) for students to attend
nongovernmental elementary or secondary schools. Subject to specified
limitations, there are four credits a corporation, insurer or individual may
receive against income tax liability for contributions made to an STO: 1) the
corporate and insurer Low-Income Credit; 2) the corporate and insurer Credit
for Contributions to STOs for Displaced Students or Students with Disabilities;
3) the individual Credit for Contributions to STOs; and 4) the individual
Switcher Credit. An STO that receives contributions for the purposes of the
Low-Income Credit must only provide scholarships and grants to children whose
family income does not exceed 185 percent of the income limit required to
qualify for the
Free-and-Reduced-Price Lunch Program. A student who has been placed in foster
care is eligible to receive a scholarship or grant awarded through the Credit
for Contributions to STOs for Displaced Students or Students with Disabilities.
A student receiving a scholarship or grant awarded through the Low-Income Credit or Switcher Credit must: 1) have transferred to a nongovernmental school after attending a governmental school full-time for at least 90 days of the prior fiscal year; 2) enroll in a kindergarten program in a qualified school or a preschool program for students with disabilities; 3) be a dependent of a U.S. Armed Forces member stationed in Arizona; 4) be homeschooled; 5) have moved to Arizona from out of state; 6) have participated in an empowerment scholarship account (ESA) and did not renew the account or accept the ESA; or 7) have previously received specified STO scholarships and continued to attend a qualified school. A student who transfers to a qualified school after one full semester is eligible to receive a scholarship or grant awarded through the Low-Income Credit in the same academic year.
For school year
2023-2024, a scholarship or grant awarded through the Low-Income Credit is
subject to a cap of: 1) $6,100 for students in a preschool program for students
with disabilities, a kindergarten program or grades 1 through 8; or 2) $7,900
for students in grades 9 through 12. The cap is annually increased by $200
(A.R.S. §§ 43-1089;
43-1089.03;
43-1183;
43-1184;
43-1504;
43-1505;
and 43-1603;
ADOR).
If adding students who are placed in foster care to the student population that is eligible to receive a scholarship or grant awarded through the Switcher Credit or Low-Income Credit generates additional donations to individual STO scholarship programs, there may be an impact to the state General Fund.
Provisions
1. Adds students who are placed in Arizona foster care before graduating from high school or obtaining a GED to the student population that is eligible to receive a scholarship or grant awarded through the Switcher Credit or the Low-Income Credit.
2. Makes conforming changes.
3. Becomes effective on the general effective date.
House Action
ED 1/16/24 DP 6-4-0-0
3rd Read 2/22/24 33-26-0-0-1
Prepared by Senate Research
March 18, 2024
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