Ariz. school tax credit benefits mostly well off, newspaper reports

Church & State, Jun 2000

Arizona's new tax credit for education has proved to be a boon to wealthy parents who already have their children enrolled in exclusive private schools or well funded public schools, in some cases helping those parents take tax write-offs for sending their children on class trips.

The Arizona Republic reported last month that the law, which was upheld by the Arizona Supreme Court in 1999, is widely used by well-off parents who "then claim it as a tax credit, disappointing schools hoping for a new source of cash."

The law allows parents to donate $200 to public schools or $500 to private schools and take the same amount off their taxes. It does not permit parents to donate money on behalf of their own children, but does allow them to earmark the money for another specific child. In the April 9 story, the Phoenix newspaper reported that many parents simply write checks earmarked for a friend's child, and then that child's parents return the favor.

The result is that some parents are sending their children to religious and other private schools at essentially state expense - the operational equivalent of a voucher program. In 1999, private schools took in $13,315,172.

"This has turned into something so close to vouchers you almost can't tell the difference," admits Sen. John Huppenthal, a Republican and voucher supporter.

Meanwhile, public schools are finding that the program has not been the windfall they were led to believe it would be. While some poor districts have received donations, many others find that parents write checks to cover the cost of extra-curricular activities and then demand a receipt from the school. The school ends up with no extra money in its coffers and more administrative work to handle.

For example, Superintendent of Public Instruction Lisa Graham Keegan used her $200 credit to pay for the bulk of a $300 trip for her son to Catalina Island off the coast of California.

In Scottsdale, one school collected $150,242 in donations, but 98 percent of the money was claimed by parents as tax deductions. In Paradise Valley, assistant superintendent James DiCello noted that his district received $770,000 in donations - but only on paper. $587,000 was quickly eaten up as tax credits, and the rest was nearly consumed by administrative costs. Said DiCello, "We're not any better off then we were before this legislation."

State officials have also admitted that they have no mechanism for tracking the program and making sure that money people claim was donated to schools actually ended up there. The newspaper reported that, "[F]ar more people claim they wrote checks to public schools than the schools actually report."