Today's meeting on STOs at the State Capitol

The Bipartisan Task Force on Private School Tuition Tax Credits (STO) Program met on Monday for nearly two hours.

They were beginning their research into the background of the STO program. While this meeting was open to the public, no public testimony was solicited today. That will happen at future meetings.

After opening with brief statements from the chair, Rep. David Schapira (D-LD17), and the other members present (Reps. Nancy Young-Wright (D), Rich Crandall (R), Tom Chabin (D), Cloves Campbell (D), and Chad Campbell (D) ).

They started with an overview of the history of the STO tax credits and program, presented by Mark Bogart, Senior Economist with the House Democratic staff. That presentation isn't available online, though its sources can all be found online. The compilation may be posted at a later time (I suggested doing so anyway.) I have the handout from the meeting. Where practicable and relevent, I'll link to the original source.

Later presenters included a representative from the Arizona Department of Revenue (ADOR).

Professor Larry Mohrweis, PhD, an Accounting professor from NAU and volunteer head of a northern AZ STO, spoke at length on the oversight issue. He wrote about it in 2002 and 2005 and was so prescient that Rep. Schapira called him the "Nostradamus of STOs." He doesn't seem to have an axe to grind and he knows his stuff (see list of sources of info below).

I won't try to recap their entire presentations here (when the video of the meeting is posted on the lege's website, you can watch them there).

EV Tribune coverage here.

There were a couple of things to take away from today's meeting -

- One of the biggest problems with the STO program, and this is an observation that cuts across partisan lines, is the lack of oversight and accountability. (The AZ Republic agrees. Witness this story in today's paper.) The closest thing to oversight and penalties for non-compliance that seems to exist is the fact that ADOR can disallow a credit taken by a taxpayer for a donation to a non-compliant STO. There's really nothing that ADOR can do to keep STOs in line. Unless they run afoul of 501c3 rules from the IRS, STOs can continue to siphon tax revenue away from the state and public education without any way to compel them to actually use the funds for the purpose originally intended by the writers of the original tax credit legislation.


- The meeting was informative, cordial, and utterly lacking in partisan posturing. It was unlike any other committee meeting that I've seen at the lege.

In other words, bipartisanship *is* possible.

Wonder if the Republican leadership and their rank-and-file members will remember that when it comes time to balance this year's budget and start working on next year's.


Some of the sources of their info can be found at:

AZ Department of Revenue's Corporate School Tax Credit Reports

ADOR's Private School Contributions and Fees

ADOR's Public School Contributions and Fees

ADOR's list of STOs, with caveats

ADOR's Private and Public School Tax Credit Information Publication

An August 2008 Issue Brief from the Arizona State Senate Research Staff, pertaining the school tax credits

Dr. Mohrweis' 2005 article from the trade journal AZCPA is here. His 2002 article, "Private School Tax Credits: What CPAs Should Know" doesn't seem to be available online. A 2000 piece, written for the Journal of Accountancy, is here.

Later...