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Fri, Oct. 18

Push continues for public funds for private, parochial schools

PHOENIX -- Stung by a gubernatorial veto, supporters of diverting more tax dollars into private and parochial school scholarships are pushing a last-minute bid to get at least some of what they want.

The new plan, like the original, would increase the amount that individual Arizonans could give to scholarship organizations and still get a dollar-for-dollar state tax credit to $750. The current limit is $500.

But anything raised from the additional $250 in tax credits could be used only to help children who meet certain income limits. There is no such restriction on how the proceeds of the $500 credits can be used.

Potentially more significant, new scholarships could be awarded only to students who switch from public schools. Only once they are found eligible, awarded funds and enrolled in a private or parochial school could they continue to get money from the new fund.

At the same time, backers have quietly scrapped provisions from the original bill which could have sharply expanded the amount of money that corporations can put into these scholarships instead of paying it in state income taxes.

Sen. Steve Yarbrough, R-Chandler, said Tuesday the changes, incorporated into legislation approved by a House-Senate conference committee, are designed to address the concerns Gov. Jan Brewer expressed last week when she vetoed the original plan.

In her message, the governor said the state just barely managed to bring expenses into line with anticipated revenues. She said the package that reached her desk "unbalances the budget.'

At the heart of the debate is a 1997 law that says individuals can give money they otherwise owe the state to instead help students go to private and parochial schools. Last year that reduced state tax collections by $43.2 million.

The law later was expanded to include most corporations.

Yarbrough, who runs one of the scholarship organizations, said he believes the credits really save money, reducing what Arizona needs to provide in state aid to public schools.

But Brewer said figures from the Department of Revenue said the major expansion of credits in the original bill could have reduced state income tax collections by $25 million. And she said a plan to let mining companies divert "severances taxes' would have cost state and local governments another $29 million.

The new version leaves corporate tax credits untouched, instead simply expanding what individuals can claim.

Even at that, legislative budget staffers predicted the loss of tax revenues at about $9 million a year. But Yarbrough said the other provisions ensure that is more than offset by lower costs.

First is that income limit, about $75,500 for a family of four.

He also cited figures which show that the average amount of state aid for a child in public school is about $5,200 a year. By contrast, the legislative staff report said the average scholarship awarded was about $1,900.

What that means is there would be no net loss to the state if at least 1,700 children can switch from public schools to private ones.

Whether Brewer can be convinced is another matter.

"We certainly can't be doing anything that blows a giant holes in the budget,' said gubernatorial press aide Matthew Benson.

He said Brewer has been supportive of various "school choice' proposals, including the system of tax credits.

That roundabout methodology is legally necessary in Arizona because the state constitution has a specific ban on the use of tax dollars to support private and parochial schools. But the Arizona Supreme Court has ruled that letting residents give their money instead to scholarship organizations does not run afoul of the constitutional ban.

And the U.S. Supreme Court earlier this month threw out challenges to the credits by those who said it amounts to an illegal subsidy of religion.

"We're going to have to see the bill, study it, figure out if it makes sense for Arizona,' Benson said of the new version. And he noted that the measure is likely to land on Brewer's desk after the legislative session ends, giving her 10 days to make a decision.

Rep. Tom Chabin, D-Flagstaff, said it is irrelevant whether this new version of the measure does or does not reduce state revenues. He said the bottom line is that there will be less money flowing into the state treasury for public schools, universities, community colleges and public safety.

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