SB 1726

REFERENCE TITLE: STOs; scholarship reporting; identification numbers
State of Arizona
Senate
Fifty-seventh Legislature
Second Regular Session
2026
SB 1726
Introduced by
Senator
  Epstein
AN
ACT
amending section 15-1041, Arizona
Revised Statutes; amending title 15, chapter 9, article 8, Arizona Revised
Statutes, by adding section 15-1047; amending sections 43-1503, 43-1506,
43-1603 and 43-1604, Arizona Revised Statutes; relating to school
tuition organizations.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 15-1041, Arizona Revised
Statutes, is amended to read:
START_STATUTE15-1041. Student accountability information system
The student accountability information system is established to
enable school districts, career technical education districts,
and charter schools and certified school
tuition organizations to transmit student level data and school finance
data electronically through the internet to the department of education for the
purposes of complying with the statutory obligations of the department of
education and the state board of education. END_STATUTE
Sec. 2. Title 15, chapter 9, article 8, Arizona
Revised Statutes, is amended by adding section 15-1047, to read:
START_STATUTE15-1047. Student data; school tuition organizations
The department shall assign a student identifier
to any student who is not already included in the student accountability
information system and who is identified by a certified school tuition
organization as a recipient of an educational scholarship or tuition grant
pursuant to section 43-1503 or 43-1603.END_STATUTE
Sec. 3. Section 43-1503, Arizona Revised
Statutes, is amended to read:
START_STATUTE43-1503. Operational requirements for school tuition organizations
A. A certified school tuition organization must be
established to receive contributions from taxpayers for the purposes of income
tax credits under sections 43-1183 and 43-1184 and insurance
premium tax credits under sections 20-224.06 and 20-224.07 and to
pay educational scholarships or tuition grants to allow students to attend any
qualified school of their parents' or custodians' choice.
B. To be eligible for certification and retain
certification, the school tuition organization:
1. Must allocate at least ninety percent of its
annual revenue from contributions made for the purposes of sections 20-224.06,
20-224.07, 43-1183 and 43-1184 for educational scholarships
or tuition grants.
2. Shall not limit the availability of educational
scholarships or tuition grants to only students of one school.
3. Must allow the department of revenue to verify
that the educational scholarships and tuition grants that are issued are
awarded to students who attend a qualified school.
4. Must not knowingly collude with any other school
tuition organization to circumvent the limits of section 43-1504,
subsection C.
5. Must not award
educational scholarships or tuition grants to students who are simultaneously
enrolled in a district school or charter school and a qualified school.
6. Shall include on the organization's website, if
one exists, the percentage and total dollar amount of educational scholarships
and tuition grants awarded during the previous fiscal year to:
(a) Students whose family income meets the economic
eligibility requirements established under the national school lunch and child
nutrition acts (42 United States Code sections 1751 through 1785
1793) for free or reduced-price lunches.
(b) Students whose
family income exceeds the threshold prescribed by subdivision (a) of this
paragraph but does not exceed one hundred eighty-five percent of the
economic eligibility requirements established under the national school lunch
and child nutrition acts (42 United States Code sections 1751 through 1785 1793) for free or reduced-price
lunches.
C. A certified school tuition
organization shall submit the following student data electronically to the
department of education on or BEFORE July 1 of each year:
1. The student's name.
2. The amount of any educational
scholarship or tuition grant the student received for the preceding fiscal
year.
3. The name of the qualified school
the student attends.END_STATUTE
Sec. 4. Section 43-1506, Arizona Revised
Statutes, is amended to read:
START_STATUTE43-1506. Annual report; posting
A. On or before September 30 of each year, each
school tuition organization shall report electronically to the department, in a
form prescribed by the department, the following information, separately
compiled and identified for the purposes of sections 20-224.06, 20-224.07,
43-1183 and 43-1184:
1. The name, address and contact person of the
school tuition organization.
2. The total number of contributions received during
the previous fiscal year.
3. The total dollar amount of contributions received
during the previous fiscal year.
4. The total number of children awarded educational
scholarships or tuition grants during the previous fiscal year.
5. The total dollar amount of:
(a) Educational scholarships and tuition grants
distributed during the previous fiscal year.
(b) Monies being held for identified students'
scholarships and tuition grants in future years.
6. The cost of audits pursuant to section 43-1507
paid during the fiscal year.
7. The percentage and
total dollar amount of educational scholarships and tuition grants awarded
during the previous fiscal year to:
(a) Students whose
family income meets the economic eligibility requirements established under the
national school lunch and child nutrition acts (42 United States Code sections
1751 through 1793) for free or reduced-price lunches.
(b) Students whose family income exceeds the
threshold prescribed by subdivision (a) of this paragraph but does not exceed
one hundred eighty-five percent of the economic eligibility requirements
established under the national school lunch and child nutrition acts (42 United
States Code sections 1751 through 1793) for free or reduced-price
lunches.
8. For each school to which educational scholarships
or tuition grants were awarded:
(a) The name and address of the school.
(b) The number of educational scholarships and
tuition grants awarded during the previous fiscal year, including the number of students who received an educational
scholarship and tuition grant in the amount of:
(i) Less than
$5,000.
(ii) $5,000 or
more but less than $10,000.
(iii) $10,000
or more but less than $20,000.
(iv) $20,000 or
more but less than $30,000.
(v) $30,000 or
more but less than $40,000.
(vi) $40,000 or
more but less than $50,000.
(vii) $50,000
or more but less than $60,000.
(viii) $60,000
or more.
(c) The total dollar amount of educational
scholarships and tuition grants awarded during the previous fiscal year.
(d) The mean
and median dollar amount of educational scholarships and tuition grants awarded
during the previous fiscal year.
9. The names, job titles and annual salaries of the
three employees who receive the highest annual salaries from the school tuition
organization.
10. The
name, student identifier assigned pursuant to section 15-1047 and
educational scholarship or tuition grant amount of each student who was awarded
an educational scholarship or tuition grant from the school tuition
organization during the previous fiscal year.� The department shall use the
information provided pursuant to this paragraph to determine the amount of
educational scholarship or tuition grant monies each student
receives. this paragraph does not authorize the department to
release information that would violate the family educational rights and
privacy act of 1974 (20 united states code section 1232g).
B. The department shall
post on its website a report of the information it receives pursuant to
subsection A of this section on or before March 31 of the calendar year
following the year in which the information is received.� The report must also include:
1. The
total dollar amount awarded to students from each school tuition organization.
2. The total dollar AMOUNT of educational scholarships and
tuition grants awarded to each individual student from school tuition
organizations as identified by the student identifier assigned pursuant to
section 15-1047.�
3. the
average dollar amount of educational scholarships and tuition grants awarded
per student from school tuition organizations compared to the average sum of
the charter additional assistance and base support level prescribed in sections
15-185 and 15-943, respectfully, per student by grade level.� Each year the department shall provide this information to the joint
legislative budget committee for inclusion in the historical spending reports
for K-12 education. �END_STATUTE
Sec. 5. Section 43-1603, Arizona Revised
Statutes, is amended to read:
START_STATUTE43-1603. Operational requirements for school tuition organizations;
notice; qualified schools
A. A certified school tuition organization must be
established to receive contributions from taxpayers for the purposes of income
tax credits under sections 43-1089 and 43-1089.03 and to pay
educational scholarships or tuition grants to allow students to attend any
qualified school of their parents' choice.
B. To be eligible for certification and retain
certification, the school tuition organization:
1. Must allocate at least ninety percent of its
annual revenue from contributions made for the purposes of sections 43-1089
and 43-1089.03 for educational scholarships or tuition grants.
2. Shall not limit the availability of educational
scholarships or tuition grants to only students of one school.
3. May allow donors to recommend student
beneficiaries, but shall not award, designate or reserve scholarships solely on
the basis of donor recommendations.
4. Shall not allow donors to designate student
beneficiaries as a condition of any contribution to the organization, or
facilitate, encourage or knowingly allow the exchange of beneficiary student
designations in violation of section 43-1089, subsection F, section 43-1089.03,
subsection F and section 43-1089.04, subsection E.
5. Shall include on the organization's website, if
one exists, the percentage and total dollar amount of educational scholarships
and tuition grants awarded during the previous fiscal year to:
(a) Students whose family income meets the economic
eligibility requirements established under the national school lunch and child
nutrition acts (42 United States Code sections 1751 through 1793) for free or
reduced-price lunches.
(b) Students whose family income exceeds the
threshold prescribed by subdivision (a) of this paragraph but does not exceed
one hundred eighty-five percent of the economic eligibility requirements
established under the national school lunch and child nutrition acts (42 United
States Code sections 1751 through 1793) for free or reduced-price
lunches.
6. Must not award educational scholarships or
tuition grants to students who are simultaneously enrolled in a district school
or charter school and a qualified school.
C. A school tuition organization shall include the
following notice in any printed materials soliciting donations, in applications
for scholarships and on its website, if one exists:
Notice
A school tuition
organization cannot award, restrict or reserve scholarships solely on the basis
of a donor's recommendation.
A taxpayer may not claim a tax credit
if the taxpayer agrees to swap donations with another taxpayer to benefit
either taxpayer's own dependent.
D. In evaluating applications and awarding,
designating or reserving scholarships, a school tuition organization:
1. Shall not award, designate or reserve a
scholarship solely on the recommendation of any person contributing money to
the organization, but may consider the recommendation among other factors.
2. Shall consider the financial need of applicants.
E. A taxpayer's contribution to a school tuition
organization that exceeds the amount of the credit allowed by section 43-1089
but does not exceed the amount of the credit allowed by section 43-1089.03
is considered a contribution pursuant to section 43-1089.03. A
school tuition organization must use at least ninety percent of contributions
made pursuant to section 43-1089.03 for educational scholarships or
tuition grants for students to whom any of the following applies:
1. Attended a governmental primary or secondary
school as a full-time student as defined in section 15-901 or
attended a preschool program that offers services to students with disabilities
at a governmental school for at least ninety days of the prior fiscal year and
transferred from a governmental school to a qualified school.
2. Enroll in a qualified school in a kindergarten
program or a preschool program that offers services to students with
disabilities.
3. Are the dependent of a member of the armed forces
of the United States who is stationed in this state pursuant to military
orders.
4. Are homeschooled before enrolling in a qualified
school.
5. Moved to this state from out of state before
enrolling in a qualified school.
6. Participated in an Arizona empowerment
scholarship account and did not renew the account or accept the scholarship in
order to accept a scholarship or tuition grant under this section.
7. Subject to subsection H of this section, are
placed in foster care pursuant to title 8, chapter 4 at any time before the
student graduates from high school or obtains a general equivalency diploma and
who meet all of the following criteria:
(a) Are unable to attend a governmental primary or
secondary school as a full-time student as defined in section 15-901. For
the purposes of this subdivision, "unable to attend" means the
student has been expelled or asked not to return due to the student's behavior
or the school is not able to provide necessary services to the student.
(b) Have not attended a governmental primary or
secondary school as a full-time student as defined in section 15-901
for at least ninety days of the prior fiscal year or one full semester before
enrolling in a qualified school.
(c) The qualified school in which the students are
enrolling is only considered because a governmental primary or secondary school
cannot meet the students' unique needs, such as severe medical or behavioral
needs that require specialized programs.
(d) Are unable to receive other scholarships or
tuition grants under this chapter or chapter 15 of this title in an amount that
is equal to the cost of tuition to attend the qualified school.
8. Received an educational scholarship or tuition
grant under paragraph 1, 2, 3, 4, 5, 6 or 7 of this subsection or under chapter
15 of this title if the student continues to attend a qualified school in a
subsequent year.
F. In awarding educational scholarships or tuition
grants from contributions made pursuant to section 43-1089.03, a school
tuition organization shall give priority to students and siblings of students
on a waiting list for scholarships if the school tuition organization maintains
a waiting list.
G. If an individual educational scholarship or
tuition grant exceeds the school's tuition, the amount in excess shall be
returned to the school tuition organization that made the award or
grant. The school tuition organization may allocate the returned
monies as a multiyear award for that student and report the award pursuant to
section 43-1604, subsection A, paragraph 5, subdivision (b) or may
allocate the returned monies for educational scholarships or tuition grants for
other students.
H. If a court of competent jurisdiction issues a
final judgment that the aggregate tax credit limit prescribed in section 43-1183,
subsection C, paragraph 1 is unenforceable and that judgment is no longer
subject to further appeal or review, a school tuition organization shall not
issue an educational scholarship or a tuition grant under subsection E,
paragraph 7 or 8 of this section for children who received an educational
scholarship or a tuition grant under subsection E, paragraph 7 of this section.
I. A certified school tuition
organization shall submit the following student data electronically to the
department of education on or BEFORE July 1 of each year:
1. The student's name and the student
identifier assigned to the student pursuant to section 15-1047.
2. The amount of any educational
scholarship or tuition grant the student received for the preceding fiscal
year.
3. The name of the qualified school
the student attends.END_STATUTE
Sec. 6. Section 43-1604, Arizona Revised Statutes, is amended to read:
START_STATUTE43-1604. Annual report; posting
A. On or before
September 30 of each year, each school tuition organization shall report
electronically to the department, in a form prescribed by the department, the
following information, separately compiled and identified for the purposes of
sections 43-1089 and 43-1089.03:
1. The name, address and contact person of the
school tuition organization.
2. The total number of contributions received during
the previous fiscal year.
3. The total dollar amount of contributions received
during the previous fiscal year.
4. The total number of children awarded educational
scholarships or tuition grants during the previous fiscal year.
5. The total dollar amount of:
(a) Educational scholarships and tuition grants
distributed during the previous fiscal year.
(b) Money Monies
being held for identified students' scholarships and tuition grants in future
years.
6. The cost of audits pursuant to section 43-1605
paid during the fiscal year.
7. The total dollar amount of educational
scholarships and tuition grants awarded during the previous fiscal year to:
(a) Students whose family income meets the economic
eligibility requirements established under the national school lunch and child
nutrition acts (42 United States Code sections 1751 through 1793) for free or
reduced-price lunches.
(b) Students whose family income exceeds the
threshold prescribed by subdivision (a) of this paragraph but does not exceed
one hundred eighty-five percent of the economic eligibility requirements
established under the national school lunch and child nutrition acts (42 United
States Code sections 1751 through 1793) for free or reduced-price
lunches.
8. For each school to
which educational scholarships or tuition grants were awarded:
(a) The name and
address of the school.
(b) The number of educational scholarships and
tuition grants awarded during the previous fiscal year,
including the number of students who received an educational scholarship and
tuition grant in the amount of:
(i) Less than
$5,000.
(ii) $5,000 or
more but less than $10,000.
(iii) $10,000
or more but less than $20,000.
(iv) $20,000 or
more but less than $30,000.
(v) $30,000 or
more but less than $40,000.
(vi) $40,000 or
more but less than $50,000.
(vii) $50,000
or more but less than $60,000.
(viii) $60,000
or more.
(c) The total dollar amount of educational
scholarships and tuition grants awarded during the previous fiscal year.
(d) The mean
and median dollar amount of educational scholarships and tuition grants awarded
during the previous fiscal year.
9. The names, job titles and annual salaries of the
three employees who receive the highest annual salaries from the school tuition
organization.
10. The name and educational
scholarship or tuition grant amount of each student who was awarded an
educational scholarship or tuition grant from the school tuition organization
during the previous fiscal year.� The department shall use the information
provided pursuant to this paragraph to determine how many students are
receiving more than one educational scholarship or tuition grant.� This
paragraph does not authorize the department to release INFORMATION that would
violate the family educational rights and privacy act of 1974 (20 United States
code section 1232g).
B. The department shall post on its website a report
of the information it receives pursuant to subsection A of this section on or
before March 31 of the calendar year following the year in which the
information is received.� The report must also include:
1. The
total dollar amount awarded to students from each school tuition organization.
2. The total dollar AMOUNT of educational scholarships and
tuition grants awarded to each individual student from school tuition
organizations as identified by the student identifier assigned pursuant to
section 15-1047.�
3. the
average dollar amount of educational scholarships and tuition grants awarded
per student from school tuition organizations compared to the average sum of
the charter additional assistance and base support level prescribed in sections
15-185 and 15-943, respectfully, per student by grade level. Each
year the department shall provide this information to the joint legislative
budget committee for inclusion in the historical spending reports for K-12
education. END_STATUTE