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Arizona Tax Credit for Private Education Is Really Expensive

A program that the state in 1997 estimated would cost $4.5 million a year now costs $140 million.

Arizona created the nation’s first tax credit for private education 18 years ago in a move hailed by school-choice advocates and replicated across the country.

Its architects, who promised the program would primarily benefit special-needs and low-income students, have watched it grow far larger than they ever imagined.

A program that legislative budget staff in 1997 estimated would cost $4.5 million a year now tops $140 million. And that doesn’t include $50 million in tax credits handed out separately for public-school extracurricular activities.

“The impact has been substantial on the number of kids who are getting to go to the school of their parents’ choice,” said state Sen. Steve Yarbrough, R-Chandler.

Yarbrough is among the program’s biggest supporters and also executive director of one of the non-profit school-tuition organizations that under the law accept the tax-deductible donations and distribute the funds as scholarships to private K-12 students. Arizona now has four private-school tax credits, two for individuals and two for corporations.

“It’s been better and more successful than even those of us who were enthusiastic from the get-go imagined,” he said.

Despite its explosive growth, the program has failed to keep its promise of primarily aiding special-needs and low-income students, and of expanding school choice. Meanwhile, as it grows, critics say, it is further depleting funding for public schools.

 

Daniel Luzer is GOVERNING's news editor.
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