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ARIZONA STATE SENATE
Fifty-Sixth Legislature, First Regular Session
postsecondary education; residents; financial aid
Purpose
Directs the Arizona Board of Regents (ABOR) to establish the Arizona Higher Education Financial Aid Program (Financial Aid Program) to cover qualifying public students' university or community college tuition and fees beginning in 2028. Requires, beginning July 1, 2024, each county treasurer to hold all collected property taxes in an interest-bearing account for 15 days and transfer the interest earned for deposit in the funds established to administer the Financial Aid Program. Contains requirements for enactment and becomes effective on signature of the Governor (Proposition 108).
Background
ABOR fixes public university tuition and fees, differentiating between institutions and between residents, nonresidents, undergraduate students, graduate students and students from foreign countries. Public universities must establish scholarship policies and selection criteria that ensure Arizona students fair and equitable access to academic merit-based scholarships, including tuition waivers. Public universities must annually report to ABOR and publish information on merit-based scholarships issued the prior year (A.R.S. §§ 15-1626 and 15-1646).
Subject to statutorily outlined exemptions, all real property and personal property in Arizona is categorized into one of nine property classes for taxation. Most property tax revenues are retained locally (JLBC Tax Handbook, 2022). The county treasurer is responsible for collecting property taxes and apportioning the taxes to respective taxing districts by the end of the month. Property taxes belonging to the state must be remitted by the 15th day of the month following collection (A.R.S. §§ 35-145 and 41-18001).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
Arizona Higher Education Financial Aid Program
1. Requires ABOR to establish the Financial Aid Program.
2. Establishes the Arizona Higher Education Financial Aid Program Distribution Fund (Distribution Fund), administered by ABOR and consisting of monies deposited by the State Treasurer from the Arizona Higher Education Financial Aid Program Fund (Financial Aid Program Fund).
3. Requires ABOR, beginning in 2028, to annually distribute Distribution Fund monies by August 1 to qualifying students to cover the full amount of each student's tuition and fees at the university or community college where the student is enrolled.
4. Requires ABOR, if there are insufficient monies available in the Distribution Fund during any fiscal year to cover the tuition and fees of each qualifying student, to distribute monies on a first-come, first-serve basis.
5. Requires, to qualify for distributions from the Distribution Fund, an individual to:
a) be an Arizona resident;
b) be currently enrolled or accepted for enrollment in an Arizona public university or community college; and
c) maintain a grade point average (GPA) of at least 2.5 on a 4.0 scale, or the equivalent, at the university or community college in which the individual is enrolled.
6. Requires ABOR to:
a) establish application, evaluation and approval procedures and criteria for individuals to apply to participate in the Financial Aid Program; and
b) adopt Financial Aid Program rules.
7. Specifies that a student is no longer eligible for a distribution from the Distribution Fund if the student's GPA falls below 2.5 until the student meets the required GPA.
8. Allows ABOR to annually retain up to five percent of Distribution Fund monies for administrative purposes.
9. Specifies that Distribution Fund monies are continuously appropriated.
Property Tax Interest Collection
10. Establishes the Financial Aid Program Fund, administered by the State Treasurer.
11. Requires, beginning July 1, 2024, each county treasurer to:
a) hold all collected property taxes in an interest-bearing account for 15 calendar days; and
b) by June 30, annually transfer the total amount of interest earned on property taxes during the 15-day period to the State Treasurer for deposit in the Financial Aid Program Fund.
12. Requires the State Treasurer, beginning in 2028, to annually transfer, by August 1, the monies in the Financial Aid Program Fund to ABOR for deposit in the Distribution Fund.
13. Specifies that the Financial Aid Program Fund consists of monies transferred by each county treasurer from the interest earned on collected property taxes held in an interest-bearing account for 15 days and that Financial Aid Program Fund monies are continuously appropriated.
14. Directs the State Treasurer to invest and divest monies in the Financial Aid Program Fund and credit monies earned from investment to the Financial Aid Program Fund.
Miscellaneous
15. Requires for enactment the affirmative vote of at least two-thirds of the members of each house of the Legislature (Proposition 108).
16. Becomes effective on signature of the Governor.
Prepared by Senate Research
February 6, 2023
LB/MH/slp