Sugar daddies at top of tuition tax credit reforms

• Tuition tax credits are the philosophical darling of the party in power, which may explain the benign neglect. It does not excuse it
• Arizona’s tuition tax credit program needs a serious overhaul
• It’s questionable whether the state should continue to pump out money through tuition-tax credits

Arizona’s school tuition tax-credit system needs a major overhaul.

That’s a tall order in a Legislature that considers tuition tax credits a philosophical darling. Bills to enact major reforms quickly slip off of desks and into trash cans.

So maybe the key is to start with modest reforms that line up with the conservative credos Republicans support. Here are four ideas:

1. Start with the Sugar Daddy provision.

One lawmaker, Republican Sen. Steve Yarbrough, gets more than $100,000 a year for running a private-school tuition organization.

The third-highest paid head of a tuition organization in the state, he has introduced bills to expand the program. Somehow, this isn’t considered a conflict of interest.

This program should be restructured so all the money goes to scholarships.

Current law requires private school tuition-tax organizations, like Yarbrough’s, to give at least 90 percent of annual contributions to scholarships. It should be 100 percent.

A tax credit provides a dollar for dollar benefit to taxpayers. Because that is extremely generous, it should be narrowly targeted. TSOs that administer the money should fund-raise for their costs. Lawmakers could consider a tax deduction for such donations. A credit is too much.

2. The program should be means-tested.

Allowing people to divert tax dollars to private schools was touted as a way to widen educational choices for low-income or special-needs students. It’s not happening.

In fiscal 2014, the private-school program received $84 million from individuals and $39 million from corporations. Only about 3 percent was designated for special-needs children. Just under one-third of the money from individuals went to low-income families, defined as earning up to $44,862 a year for a family of four.

The corporate tax-credit defines low-income to include up to $82,996 for a family of four. That’s low income? Heavens.

Even the program’s supporters admit many families who use the scholarship would likely send their children to private school without help from the state.

3. Don’t let donors name the recipient of their largesse.

That creates a shell game in which two families can agree to designate their donations to each others’ children. This fails to advance the goal of expanding opportunity.

4. While you’re at it, fix the public-school side of the program.

It was supposed to be a mechanism for people to help schools pay for extracurricular activities.

Reporting by The Arizona Republic’s Mary Beth Faller found that schools with high percentages of middle- and upper-income families collected the lion’s share of the nearly $51 million contributed to public schools in 2014.

The system disproportionately benefits schools in well-to-do neighborhoods, contributing to inequities in public education.

That’s not on anybody’s list of ways to improve public education.

Private and public school tax credits divert money from the general fund, making it unavailable to pay for the basics at public schools.

Public schools suffered deep cuts during the recession. They are still fighting for the $320 million a year in inflation funding a court says they are owed. Republican Gov. Doug Ducey recognizes the need for more school funding, and proposed temporarily raising distributions from the state land trust fund.

It’s questionable whether the state should continue to pump out money through tuition-tax credits. It is unconscionable to allow the program to continue without making changes to close the Sugar Daddy clause and correct other problems.

SCHOOLS WITH THE HIGHEST TAX CREDITS: