Arizona's tax credit: A School-Choice Model

COMMENTARY Education

Arizona's tax credit: A School-Choice Model

Jul 19, 2000 3 min read
COMMENTARY BY

Senior Research Fellow

Like most parents, Henry Hoyer wanted the best education possible for his son. That meant sending Henry Jr. to Dove Christian Academy, a top private school in Tucson, Ariz. It also meant paying $2,500 a year in tuition - a seemingly unreachable goal for this divorced Hispanic truck driver.

Unreachable, that is, until the Arizona Scholarship Fund (ASF), a private, non-profit tuition assistance program, stepped in. With the help of five sponsors who contributed to the ASF, Hoyer was able to send Henry Jr. to Dove - where, Hoyer reports, "his vocabulary has flourished."

Hoyer considers the program a "dream come true." School-choice advocates see something more: a way to help low-income students get the education they need and a model for similar programs that could be replicated nationwide.

Arizona's school-choice program differs from other such programs. Rather than give students vouchers to attend the school their parents choose, it offers a $500, dollar-for-dollar tax credit to anyone who contributes to a private charity (such as ASF) that uses the money to pay tuition for eligible students at a private, or fee-based, school. Arizonans can also receive a $200 tax credit for donating money directly to public schools.

There are now 34 private-tuition charities in Arizona - up from two before the tax credit was enacted in 1997 - and each is required by law to spend at least 90 percent of the income they raise through contributions on tuition assistance. (The scholarships, incidentally, cannot be designated for the contributor's own children.)

Most of the tuition programs offer parents only a partial scholarship to cover the state's average private-school tuition. For instance, the Arizona School Choice Trust provides half-tuition grants of up to $800 to its recipients, all of whom are on the free- and reduced-lunch program. The Trust supported 100 students in 1998. Thanks to the tax credit, it served 380 children last year.

How popular is the credit? According to a recent state report, more than 30,000 people contributed to private scholarship plans last year, raising $13.2 million. As a result, nearly 7,000 students have benefited from the program during the 1999-2000 school year.

Most of the students come from low- to moderate-income families, according to ASF's Chambria Henderson. Her organization has raised more than $400,000 in scholarships for 300 students. "This plan allows us to put our money where our hearts are," Henderson says.

The growing demand for private education in Arizona has led to a school boom. For the first time in 30 years, the Catholic Church in Mesa is building a new school to address the rising demand for space. Anna Gamble, a single black grandmother, founded her own school, "Begin to Dream Christian Academy" in South Phoenix, with ASF's help. And the tax credit has helped several schools (such as Victory Ranch School and Dove Christian) stay in business.

The credit's benefits don't stop there. The Arizona Republic notes that Roosevelt Elementary in Phoenix, one of the poorest public schools in the state, received $102,000. The money was used for after-school programs, computer labs and assorted field trips. "It truly does make a difference in the inner-city districts," Roosevelt teacher Mary Miller Crews told the Republic. What's more, she says, her district gets checks from wealthy parents who live in districts that don't need additional funding. And the state's burgeoning charter schools got $80,000 last year.

Other states can learn from the Arizona model. The proposal, for example, attracted the votes of liberals like state Senator Linda Aguirre, who disliked vouchers but felt a tax credit for donations to public and private schools was a fair way to raise education funds. It also allayed the fears of conservatives and libertarians, who worry that vouchers will lead to government meddling and undermine private-school autonomy.

Not everyone is a fan. After the Arizona Supreme Court last year ruled in favor of the program (and the U.S. Supreme Court declined to hear an appeal), the American Civil Liberties Union filed a challenge in federal court, even though the U.S. Supreme Court has already deemed education tax credits constitutional.

According to state school superintendent Lisa Keegan, the education system "will not work well until all money follows children into schools of choice." In Arizona, at least, the system is taking some concrete steps to achieve this goal. Let's hope other states are watching - and learning.

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Nina Shokraii Rees is a senior education policy analyst with The Heritage Foundation (www.heritage.org), a Washington-based public policy institute.

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