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ARIZONA STATE SENATE
Fifty-Sixth Legislature, Second Regular Session
AMENDED
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) and meet specified requirements.
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).
The Joint Legislative Budget Committee (JLBC) fiscal note estimates that STO donations to the Switcher Credit program may increase by less than one percent, which would decrease state General Fund revenues by $400,000 annually. The JLBC notes that the magnitude of the impact is difficult to predict with certainty (JLBC fiscal note).
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. Requires, for a student who is placed in Arizona foster care to be eligible to receive a scholarship or grant awarded through the Switcher Credit or the Low-Income Credit, the student to:
a) be unable to attend a governmental school as a full-time student;
b) not have attended a governmental school as a full-time student for at least 90 days of the prior fiscal year or one full semester before enrolling in a qualified school;
c) be unable to receive other STO scholarships or grants in an amount equal to the qualified school's cost of tuition; and
d) only consider the qualified school in which the student enrolls because a governmental school cannot meet the student's unique needs, such as medical or behavioral needs that require specialized programs.
3. Defines unable to attend to mean that:
a) the student has been expelled or asked not to return due to the student's behavior; or
b) the school is not able to provide necessary services to the student.
4. Makes conforming changes.
5. Becomes effective on the general effective date.
Amendments Adopted by Committee of the Whole
· Adds requirements to the eligibility criteria for a student who is placed in foster care to receive scholarships or grants through the Switcher Credit or the Low-Income Credit.
Amendments Adopted by Additional Committee of the Whole
· Defines unable to attend.
House Action Senate Action
ED 1/16/24 DP 6-4-0-0 ED 3/20/24 DP 4-2-1
3rd Read 2/22/24 33-26-0-0-1
Prepared by Senate Research
May 1, 2024
MH/slp