Arizona Tax Credit Provides New Hope for Parents … and for School Choice

August 23, 2001 • Commentary
By Carrie Lips
This article was first published in USA Today, August 23, 2001.

Tinika Malone is a 31‐​year‐​old single mother with four beautiful daughters. Unbeknownst to her, she’s also on the front lines of a national debate over the future of public education.

Two years ago Tinika had little control over her girls’ education. She wasn’t happy with the education at her local public school, Larry C. Kennedy Elementary. But Tinika and her girls had no practical options. At the time, she had only temporary employment and her modest salary wasn’t enough to relocate or pay private school tuition on top of necessities like food and rent.

All of that changed when a friend gave her an application for the Arizona School Choice Trust. Tinika applied and received private scholarships that allowed her to send her children to a school of her choice.

Tinika’s story may represent the future of school choice. The role of tuition vouchers is in doubt. Major voucher initiatives were defeated last fall in Michigan and California, and a modest voucher component was cut from President Bush’s education package. The tax credit in Arizona that helped Tinika may now be the best hope for families seeking parental school choice.

The program lets taxpayers donate up to $500 to non‐​profit scholarship groups and at tax time receive the money back, dollar for dollar. The scholarship organizations pool the donations and award them to needy students. Arizona’s scholarship credit has raised over $32 million and funded more than 19,000 scholarships since its 1997 inception.

Under the law, each organization sets the size of the scholarship and eligibility standards. Some provide scholarships for use at schools affiliated with particular religions or instructional methods, such as the Jewish Community Day School Scholarship Fund and the Foundation for Montessori Scholarships. Others, like Arizona School Choice Trust, give scholarships for use at any school in the state.

That diversity highlights an important benefit of the tax credit. Unlike vouchers, which rightly or wrongly are seen by critics as using public funds to support private religious schools, the tax credit is immune to such charges. Donations are private and voluntary, similar to the federal deduction for charitable giving to groups like the Ronald McDonald House or a local parish.

Although Arizona law doesn’t stipulate how organizations must distribute their money, representatives of the organizations report awarding scholarships overwhelmingly based on financial need. An estimated 80 percent of scholarships went to children from families experiencing financial need, and 20 percent of scholarship recipients would have been unable to attend private school without this tuition assistance.

The tax credit is also good for taxpayers. When a student uses a scholarship to transfer from public to private school, the money that would have been spent on that student’s public education is freed up. Those resources can then be reinvested in public education, for instance, or returned to taxpayers as tax cuts. The savings from student transfers have already offset the credit’s cost, and projections show the credit should save Arizona’s taxpayers millions more over time.

But Tinika will tell you the real effect of the program. Her girls, who struggled in Arizona’s public schools, are now thriving at a local private school. Tinika explains: “It’s changed my girls tremendously. Kiara had earned an F in spelling in her public school, and, by the end of the first year at the Academy, she got an A. Not only have her grades improved but her whole attitude is different.” Because the scholarships cover 75 percent of tuition, Tinika still makes a financial sacrifice for private school, paying $150 per month to cover the remainder of the tuition. But she thinks it’s worth it.

Other kids are worth it, too. School choice supporters should renew their efforts to put choice back in the forefront of the education debate by highlighting the success of Arizona’s education tax credit.