Thursday, February 11, 2010

Senate fails to include disclosures in student tuition organization tax credit bill

STATE CAPITOL, Phoenix – The Senate failed to amend a bill which extends the tax credit deadline for student tuition organizations (STOs), to include disclosures while in Committee of the Whole on Thursday.

SB 1274 extends the deadline for student tuition organizations for individuals to be eligible for existing income tax credits to the deadline for filing the applicable income tax return, which is April 15. Republicans, with few exceptions, voted against each amendment.

Jointly, Sen. Debbie McCune Davis and Sen. Ken Cheuvront offered six floor amendments to the bill.

“The amendments I offered were largely drawn from investigations by two Arizona newspapers, which pointed out the lack of information available about STO programs,” said McCune Davis referring to investigations by the East Valley Tribune and Arizona Republic, which were published in the summer of 2009. “STOs redirect money away from public schools. If STOs have value, the advocates should be willing to allow the public to have that information.”

“We should know whether the student tuition organization program is a net benefit or net cost to the state,” said Cheuvront. “Requiring private schools that receive scholarships or tuition grants to provide this data will help us determine whether the program is a cost or benefit to the state.”

McCune Davis Floor Amendment #1
Specifies that the individual income tax credit for STO contributions is not allowed if the contribution is directed to the benefit of any specific student.

McCune Davis Floor Amendment #2
· Adds requirements for STOs that receive dollars from the individual income tax credit use a certain amount of contributions each year to provide scholarships or tuition grants, and limits scholarships or tuition grants to pupils that meet income requirements.
· Requires STOs to use 90 percent of contributions annually to provide scholarships or tuition grants.
· Limits the scholarships provided with that money to students whose family income does not exceed 185 percent of the income required to qualify for free or reduced price lunches and who either:
· Attended a public school full-time for the first 100 days of the school year and transferred from a public school to a private school.
· Enroll in a private school kindergarten program.
· Received a scholarship or tuition grant in the previous year if the student continues to attend a qualifying school.

McCune Davis Floor Amendment #3
· Caps the amount of an educational scholarship or tuition grant for a single year at $4,700 for grades K-8 and $6,000 for grades 9-12.
· Requires the department of revenue to annually adjust the allowable amount for inflation according to rules adopted by the department.

McCune Davis Floor Amendment #4
· Requires STOs to provide monies awarded for scholarships or tuition grants directly to the school that the student will attend.
· Requires a school that receives monies on behalf of students for scholarships or tuition grants to report the following to the department of revenue:
· The total amount received from school tuition organizations for scholarships and grants.
· The number of pupils enrolled at the school receiving a scholarship or grant.
· The number of pupils enrolled at the school receiving a scholarship or grant from more than one school tuition organization.
· The tuition that the school charges for one full academic year.
· Prohibits a school that does not comply with the reporting requirements from receiving monies from a STO.

McCune Davis Floor Amendment #5
· Requires STOs to report the name of each officer of the STO and member of the organization’s board of directors and the amount of compensation paid by the STO to each officer and director the previous calendar year to the department of revenue.
· Allows the department of revenue, subject to rules adopted by the department and after notice to the STO and an opportunity for a hearing, to disallow individual income tax credits for contributions to an organization that provides excessive compensation to its officers or directors according to regulations prescribed for tax exempt non-profit status in the federal internal revenue code.

Cheuvront Floor Amendment #1
· Requires private school students who receive scholarships or tuition grants to be given a unique identifier in the Student Accountability Information System (SAIS) beginning July 1, 2011.
· Requires private schools that have students who receive scholarships or tuition grants to begin reporting student-level data to the department of education beginning July 1, 2011, except for data related to assessments that those students are not required to complete.

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