Arizona’s Tuition Tax Credit Program’s Limited Impact on Private School Enrollment Full Report
For Fiscal Year 2008, after adjusting for savings for students switching from public to private schools, the individual and corporate tax credit private school scholarship programs cost the general fund between $42 and $54 million.
Executive Summary:
In 1997 Governor Fife Symington signed into law allowing individual taxpayers the opportunity to deduct from their state income tax donations to Student Tuition Organizations (STOs) whose purpose was to use at least 90 percent of their funds to support scholarships to students attending private school.
Since its inception, the individual income tax credit program has grown considerably from 3,365 scholarships in 1999 to 28,321 scholarships in 2008. Today, assuming students do not receive multiple scholarships, more than half of private school students receive monetary assistance through the program. It has been augmented in the last few years by the corporate tuition tax credit, which provides scholarships that are required to be awarded to students with family incomes of no higher than 185 percent of the income that qualifies for the free and reduced lunch program ($72,557 for a family of four in 2008).
Outside of arguments regarding whether the program has educational merit, given Arizona’s unprecedented budget shortfall, debate has raged over whether this program has been a net benefit or a net loss to taxpayers. Two reports have been released in recent months which purport to estimate the number of private school students who would be in public school if not for the private tuition tax credit scholarships and, hence, the cost of the program to taxpayers. Read the rest of this entry »