ARIZONA HOUSE OF REPRESENTATIVES Fifty-sixth Legislature First Regular Session
	House: WM DPA 6-4-0-0

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HB 2014: STOs; scholarships; corporate tax credits

Sponsor: Representative Livingston, LD 28

Caucus & COW

Overview

Increases the aggregate corporate tax credit dollar amount and expands tax policy regarding school tuition organizations' scholarships and grants.

History

Corporations and other taxpayers can receive tax credits by making financial contributions to school tuition organizations (STO). STO's are nonprofit organizations that are exempt from federal taxation. However, STO's must allocate at least 90% of received contributions for educational scholarships or tuition grants for non-governmental or secondary schools.

Current legislation restricts the aggregate dollar amount of tax credits allowed in each year to $6,000,000. (A.R.S. § 43-1184) The Department of Revenue (DOR) is responsible for preapproving tax credits and distributing them on a first-come, first-served basis. Before making a contribution to a STO, the taxpayer must notify the STO of the total amount of contributions the taxpayer intends to make. Prior to accepting the contribution, the STO must request preapproval from the DOR for the intended contribution amount. The DOR must preapprove or deny the request within twenty days. In order for a taxpayer to receive tax credit for their contribution, the taxpayer must make their contribution within twenty days of receiving notice from the STO that the requested amount was preapproved.

Qualified school means a preschool that offers services to students with disabilities and nongovernmental primary school or secondary school. Qualified school does not include a charter school or programs operated by a charter school.

Qualified student means a student who has been either placed in foster care pursuant to title 8, chapter 4 at any time before the student graduates from high school or obtains a general equivalency diploma. Or identified as having a disability under section 504 of the rehabilitation act. Or identified by a school district as a child with a disability as defined in A.R.S. § 15-761 or a child with a disability who is eligible to receive services from a school district under A.R.S. § 15-763.

Provisions

1. Increases the aggregate dollar amount of tax credits allowed in each fiscal year. (Sec. 1)

a) For fiscal year 2021-2022, $6,000,000;

b) For fiscal year 2022-2023, $10,000,000;

c) For fiscal year 2023-2024, $15,000,000; and

d) For fiscal year 2024-2025 and each fiscal year thereafter, $20,000,000.

2. Defines inclusions within education scholarship and tuition. (Sec. 2, Sec. 5)

3. Strikes the requirement that school tuition organizations provide educational scholarships or tuition grants to students enrolled in full time governmental schools or preschool programs that offer disability services. (Sec. 3, Sec. 6)

4. Adds that the amount of low-income educational scholarships or tuition grants cannot exceed the amount of state aid for the student beginning in 2023 and each year afterwards. (Sec. 3)

5. Strikes the requirement that the educational scholarship or grant amount for displaced students and students with disabilities does not exceed the cost of tuition to attend the qualifying school. (Sec. 4)

6. Clarifies that if an educational scholarship or tuition grant exceeds the qualified school's cost of tuition, the excess amount will be returned to the school tuition organization that made the educational scholarship or tuition grant. (Sec. 6)

7. Makes technical changes. (Sec. 2, Sec. 3, Sec. 4, Sec. 5)

8. Makes conforming changes. (Sec. 2, Sec. 3, Sec. 5)

Amendments

Ways & Means Committee

1. Removes expenses from the included monies from corporate and individuals designated under "educational scholarship or tuition grant". (Sec. 2, Sec. 5)

a) Expenses removed from the included monies are as follows:

i. Children identified as having a disability who are eligible to receive services;

ii. Educational therapies;

iii. Educational aide services;

iv. Vocational and life skills tuition;

v. Educational and psych evaluations, assistive technologies;

vi. Tutoring and teaching services;

vii. Curricula and supplementary materials;

viii. Tuition for nonpublic online learning programs;

ix. Fees for standardized tests and other exams related to college or university admission;

x. Tuition at an eligible postsecondary institution;

xi. Individual classes and extracurricular programs at public schools; and

xii. Computer hardware and other technology.

2. Strikes special provisions for corporate donations for low-income scholarships:

a) Strikes qualifications for children to receive educational scholarships or tuition grants due to school tuition organizations contributions from corporations;

b) Strikes requirement that a child is eligible to receive an educational scholarship or tuition grant if they meet the criteria to have a reduced-price lunch but do not actually claim that benefit; 

c) Strikes requirements regarding the amount of money issued in educational scholarships or tuition grants for students;

d) Removes the requirement that students use the educational scholarships or tuition grants on a full-time basis; and

e) Removes the privilege that allows students who receive an educational scholarship or tuition grant to attend any qualified school of their parents' choice. (Sec. 3)

3. The following provisions are changed in the notice required by STO's which is to be included in any printed materials soliciting donations, in applications, or on its website:

a) Adds a school attendance requirement of at least 90 days to governmental preschool programs that offer services to students with disabilities as well as primary and secondary schools for students to receive educational scholarships or tuition grants; and

b) Removes grade 1 through 12 specification for students. (Sec. 6)

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                        HB 2014

Initials VP/AA  Page 0 Caucus & COW

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