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Education Funding

Arizona Public Schools Share Tax-Credit Boon

By Darcia Harris Bowman — March 10, 2004 4 min read

A tax-credit program in Arizona that is best known for funneling tax dollars to private schools is also responsible for raising millions of dollars for public schools across the Grand Canyon State.

At its inception, the 1997 Arizona Scholarship Tax Credit law stirred controversy nationwide for allowing taxpayers to donate up to $625 to charitable organizations that help provide private-school-tuition aid to students in return for a state income-tax credit equal to their contributions.

Less divisive, for now, is a provision of the law that allows contributions to public schools in return for tax credits.

Though that part of the program was slower to catch on with taxpayers, public school officials say that with time and intense marketing efforts, many districts are now seeing significant increases in donations.

The 13,800-student Tempe elementary school system, for example, raked in $308,847 in tax-credit donations in 2003, up from $301,938 the previous year. The 27,000-student Chandler Unified district received $862,244 in 2003, up from $704,000 the previous tax year. And the Deer Valley Unified system saw a 15 percent increase in the donations from 2002, to $809,047 last year.

The tax-credit donations appear to be universally welcomed by Arizona public schools. But some observers and school leaders are critical of the law, noting that it was not designed to benefit public and private schools equally.

For starters, the cap on donations to public schools is lower than that allowed for contributions for private school scholarships. Married couples filing jointly can get tax credits of up to $625 for donations for private-school tuition, compared with $250 for gifts to public schools. Taxpayers filing as singles can receive credits up to $500 and $200, respectively.

“If a tax credit is offered, it should be equal between private and public schools while, at the same time, not providing de facto taxpayer support for nonpublic schools, said Timothy Tait, the spokesman for 31,650-student Deer Valley schools.

Flexibility Sought

Another complaint is the law’s stipulation that donations to public schools can be used only to finance extracurricular activities.

At a time when many of Arizona’s public schools are struggling to cover basic education needs amid state budget cuts and increasing costs, some district officials point out that although sports and after-school programs are important, their schools could probably find better uses for the money.

“There are inconsistencies in the law, and that certainly bothers the traditional public schools,” said Harold Porter, the executive director of Arizona School Administrators, an association of principals and superintendents. “There ought to be greater flexibility in the ways public schools can use that money.”

That’s not to say that schools aren’t finding ways to use the extra funds.

The tax-credit donations received by the Chandler district will help defray the costs of a high school chorale’s trip to Carnegie Hall in New York City, computer and environmental clubs in elementary schools, and a tutoring program aimed at helping high school students pass the state graduation test.

But the district has lost $4 million in state funding for building improvements over the past three years, and saw an additional $65,000 cut this school year in aid that helped cover overruns in utility costs, district spokesman Terry Locke said.

“It’s a funny position for us,” Mr. Locke said. “We’re really grateful for the money, and we try hard to get those donations.

“On the other hand,” he added, “our message to the legislature is, don’t cut our core funding, and if this is going to be another tough year, [the tax-credit program] wouldn’t be our priority.”

Some schools have no reservations about dedicating the tax credits to extracurriculars.

“When it comes to budget-crunch time, those optional, extra activities will be the first to feel the wrath of budget cuts,” Mr. Tait, of Deer Valley, said.

“Extracurricular opportunities are important for all students,” he said. “Tax credits help make those opportunities available; diverting those funds for operational or capital expenses would weaken those special student programs and dilute the extra support from taxpayers.”

Pickle Power

The Tempe K-8 district also wholeheartedly supports the tax-credit program. Wood Elementary School—where 65 percent of the pupils qualify for the federal government’s free- or reduced- price lunch program—received $11,828 for the current school year, up by more than $3,000 from a year ago.

Nearly $3,500 of this year’s contributions was earmarked by donors for a 5th grade trip to the Grand Canyon. By contrast, the school received less than $1,000 in tax-credit donations last year for the trip, so teacher Richard D. Shower and his students sold 700 gallons of pickles, at 50 cents a pickle, to help pay for the outing.

“What’s great about the tax-credit program,” Mr. Showers said, “is that it allows me to continue doing what I do in the classroom, and it doesn’t interfere with the educational process.”

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