School officials oppose corporate tax credit bill - Tucson Local Media: Import

School officials oppose corporate tax credit bill

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Posted: Thursday, April 15, 2004 11:00 pm | Updated: 7:48 am, Thu Mar 24, 2011.

Arizona was the first state to let citizens designate some of their tax money for providing scholarships to private school students.

Now, some local school officials are opposing a bill that would let corporations do the same.

House Bill 2623 would let corporations designate 10 percent of their taxes or $1,000, whichever is greater, to the private school of their choice for use as scholarships. At least 90 percent of the money must go to low-income families.

While supporters of the bill say it would give more students a choice about where they attend school, critics say it would funnel tax money away from the state's general fund, which pays for public education.

"We have so little money coming in, anyway, and this will be putting money into just private schools," said Judy Bartley, president of the Marana Education Association. "If somebody wants to donate money via the tax credit to an organization, the state has to pay them back that money."

The bill passed narrowly through the House, 31-29, March 15, and has been through two Senate readings. A spokesperson for Gov. Janet Napolitano said the governor would not say whether she would sign the bill if it comes before her.

Sen. Toni Hellon, R-Dist. 26, chairwoman of the Senate education committee, said she will not support the bill, even if it gets tied to legislation she supports.

"I hate it," she said. "I made it clear that I don't support any aspect of it. It takes money that would go directly into the general fund and gives it only to private schools."

Hellon predicted the Senate would not pass the bill, saying she and a handful of moderate Republicans and nearly every Senate Democrats would vote against it.

Bartley said the corporate tax credit is "a voucher in disguise," and said that with the support some key legislators have shown for public education, she had hoped the bill wouldn't be an issue this late in the legislative session.

"Frankly, we hoped that these would be thrown out right away at the beginning," she said.

Rick Belding, the head of Green Fields Country Day School at 6000 North Camino de la Tierra, said that while he welcomes tax credit money from consenting individuals, he's less supportive of giving companies with stockholders the right to direct tax dollars to a specific private school.

"I'm not sure whether it's even appropriate for states to grant corporations tax credits," he said.

Green Fields Country Day School received $160,000 for scholarships in tax credit money in 2003. Green Fields is one of the most expensive private schools in Pima County, with annual tuition for high school students of $11,900 a year.

Belding said the bill's stipulations mean that the low-income students it is supposed to help, could not afford to attend Green Fields.

The bill requires that scholarships can't exceed 80 percent of the amount of the school's expenditure per student.

"It's not fair to families to say you could possibly get financial aid when in fact the financial aid that would be available to you wouldn't provide a real opportunity," he said.

Patty Clymer, an Amphitheater Public Schools board member who is active on legislative issues, said she is against the corporate tax credit, and others as well.

"In general, tax credits are a bad idea because they basically take money that would normally go out of the general revenue to pay for education," she said.

In 1997, Arizona became the first state to offer taxpayers a credit for donating scholarship money to private schools. Qualifying schools are those that allocate at least 90 percent of their revenue for scholarships. A single taxpayer can give up to $500, and a couple can give up to $625.

Public schools can receive $200 in tax credit money from single tax payers and $250 from couples for extra-curricular activities and character education.

The imbalance means that many taxpayers choose donations to private schools over ones to public schools, said Deanna Day, a registered lobbyist for Amphitheater Public Schools.

"When somebody can give $250 for public schools and $625 for the other ones, what does somebody take?" Day said. "Again, it's just drying up a revenue source for us."

Some supporters of the bill predict that it wouldn't drain money from public education in the long run, and may even save public schools money.

According to a recent report by the Goldwater Institute, a conservative research organization in Phoenix that favors limited government, Arizona's general fund lost $26.3 million through the scholarship credit in 2002, but saved up to half of that because the scholarships allowed many students to transfer out of public schools.

Between 2,000 and 4,000 scholarships are used by transferring students now, the report states, adding that transferring students must use about 7,350 scholarships for the state to break even.

In six years, Arizona taxpayers have donated $83.5 million to 47 organizations that disseminate scholarships to private schools, the report states. The number of donors has increased steadily from about 4,000 in 1998 to about 50,000 in 2002 - 2.5 percent of all taxpayers.

Florida and Pennsylvania also have laws that allow companies to designate some of their taxes for private school scholarships - up to $50 million of state taxes in Florida, and up to $20 million in Pennsylvania.

According to the Goldwater Institute's report, more than 900 Arizona businesses have pledged donations totaling about $19,000.

The largest recipient of Arizona's current scholarship tax credits is Catholic Tuition Organizations of the Diocese of Phoenix, and the second largest is the Arizona Christian School Tuition Organization.

"How some of those people try to explain it to you is that these people are already paying for public school through taxes," Day said. "We need to just make sure we do not diminish support for public schools."

The Arizona School Board Association has taken a firm stand against the bill, and argues that the corporate tax credit money is not adequately regulated.

"The whole point is that public schools have a whole system of accountability that is in place," said Chris Thomas, a spokesperson for the association. "We have to follow Title 15 public statutes, and private schools don't have to follow any of those."

Title 15 is the compendium of state education laws which include statutes governing financial accountability of public schools.

The association's Web site provides links to numerous news articles about illegal uses of school choice money in other states, including a principal's purchase of two Mercedes-Benz cars.

"You don't know whether (schools) are accountable, and that's the reason we oppose these kinds of tax credits," Thomas said.

On May 5, Gov. Janet Napolitano signed a law that requires private schools to report the number and amount of tax credit contributions they receive, the number of children they award scholarships to, and the amounts of the scholarships.

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