KNAU and Arizona News
Fri December 11, 2009
Major changes to tuition tax credit program rejected
By Howard Fischer
Phoenix, AZ – A House panel voted Thursday to make some changes in laws
governing tuition tax credits. But what may be more significant are the changes they rejected.
State law lets individuals donate up to $500 -- $1,000 for
married couples -- to organizations that provide scholarships for
students to attend private and parochial schools. There is no
cost to contributors, as they can deduct the amount donated on a
dollar-for-dollar basis from their state income tax liability.
Last fiscal year, Arizona residents diverted about $55 million
that otherwise would go to the state treasury. A special panel
set up earlier this year to study the credits came up with some
recommendations Thursday on how the scholarship organizations
But they rejected a proposal by Democratic Rep. Tom
Chabin of Flagstaff to limit those scholarships to those who meet
certain income criteria -- even one that would have allowed a
family of three to earn up to $62,666 a year. Chabin said that
made no sense when lawmakers are being asked to cut state
spending because tax collections are down.
"Every tax dollar diverted from the general fund to benefit rich
kids to go to rich schools takes from every child that can't go
to a private school. The public schools, whether you are rich or
poor, are from everybody."
But Republican Rep. Rick Murphy said that putting an income
restriction on these scholarships is inappropriate.
"The program is intended to create an opportunity for parents to
exercise choice in where their child is educated. You may very
well have folks who don't meet this income guideline live in an
area that have chronically underperforming schools."
He said they need to be able to have the opportunity to make a
different choice for their children. And Rep. Debbie Lesko,
another Republican, said she has evidence that the state would
pay far more than that $55 million in tax credits if many of the
children who got the scholarships ended up in public schools
because they could no longer afford to go to a private or
Chabin shot back with his own estimate that $18
million of that cash went to what he called rich children.
"It is very, very clear, the articles that have been written,
that there is a great deal of concern that there are very wealthy
families who take advantage of this who can very well pay their
own child's tuition to go to these schools."
Murphy countered that two-thirds of the scholarships go to
families who meet the income guidelines Chabin proposed. And he
rejected Chabin's argument that the fact some people can afford
the tuition means they should pay it.
"If you follow that argument to its logical conclusion, then we
ought to establish these very same income criteria for public
schools and demand that public schools charge tuition of wealthy
families because, after all, taxpayer dollars that largely come
from people poorer than most people are paying for public
The committee did agree to require scholarship organizations to
make public what percentage of their funds were going to students
meeting certain income criteria. The panel also refused to halt
the practice of allowing people to make donations with
recommendations that the cash go to a specific child.
State law precludes a parent from earmarking a donation for his or her own
offspring. But that doesn't preclude a parent from getting
friends and family members to each make such a recommended
donation -- a donation that costs contributors nothing because
they get it back on their income tax.
While the Catholic school scholarship organizations don't allow such recommendations -- many of the others do.
The committees proposals now go to the full Legislature.