SB 1657 — ESAs; STOs; student empowerment fund

(ix) A child who is the sibling of a current or previous Arizona empowerment scholarship account recipient or of an eligible qualified student who accepts the terms of and enrolls in an Arizona empowerment scholarship account.

(x) A child who resides within the boundaries of an Indian reservation in this state as determined by the department of education or a tribal government.

(xi) A child of a parent who is legally blind or deaf or hard of hearing as defined in section 36-1941.

(xii) A CHILD WHO MEETS THE INCOME ELIGIBILITY REQUIREMENTS UNDER THE NATIONAL SCHOOL LUNCH AND CHILD NUTRITION ACTS (42 UNITED STATES CODE SECTIONS 1751 THROUGH 1793) FOR FREE OR REDUCED-PRICE LUNCHES, OR AN EQUIVALENT MEASURE RECOGNIZED FOR PARTICIPATING IN THE FEDERAL FREE AND REDUCED-PRICE LUNCH PROGRAM AND OTHER SCHOOL PROGRAMS DEPENDENT ON A POVERTY MEASURE, INCLUDING AN INCOMING KINDERGARTENER OR ANY OTHER STUDENT WHO MEETS THE 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, OR AN EQUIVALENT MEASURE RECOGNIZED FOR PARTICIPATING IN THE FEDERAL FREE AND REDUCED-PRICE LUNCH PROGRAM AND OTHER SCHOOL PROGRAMS DEPENDENT ON A POVERTY MEASURE.

(xiii) A CHILD WHOSE HOUSEHOLD RECEIVES BENEFITS UNDER THE SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM ESTABLISHED BY THE FOOD AND NUTRITION ACT OF 2008 (P.L.

88-525;

78 STAT.

703;

7 UNITED STATES CODE SECTIONS 2011 THROUGH 2036d), TEMPORARY ASSISTANCE FOR NEEDY FAMILIES PURSUANT TO SECTION 46-292 OR SECTION 8 PUBLIC HOUSING ASSISTANCE.

- 2 - S.B.

1657 (xiv) A CHILD WHO RECEIVES TARGETED ASSISTANCE SERVICES OR WHO RESIDES WITHIN THE ATTENDANCE BOUNDARY OF A SCHOOL THAT QUALIFIES FOR SCHOOLWIDE TITLE I PROGRAM FUNDING FOR LOW-INCOME STUDENTS PURSUANT TO TITLE I, PART A, SUBPART 1, SECTION 1114 OR 1115 OF THE ELEMENTARY AND SECONDARY EDUCATION ACT OF 1965 (P.L.

1802), OR ITS SUCCESSOR LEGISLATION, ORAND AWHO CHILDATTENDS WHOTHE SCHOOL OR IS ELIGIBLE TO ATTEND A KINDERGARTEN PROGRAM AT AND WOULD RECEIVE TARGETED ASSISTANCE SERVICES AT THE SCHOOL.

(xiv)(xv) A CHILD WHO RESIDESPARTICIPATES WITHININ THEOR ATTENDANCEPREVIOUSLY BOUNDARYPARTICIPATED OFIN ATHE SCHOOLEDUCATIONAL THATRECOVERY QUALIFIESBENEFIT PROGRAM, THE OPEN FOR SCHOOLWIDELEARNING TITLERECOVERY IBENEFIT PROGRAM FUNDINGOR FORANY LOW-INCOMESUCCESSOR STUDENTSGRANT PURSUANTPROGRAM TOESTABLISHED TITLEBY I,THIS PARTSTATE A,THAT SUBPARTPROVIDES 1,EDUCATIONAL SECTIONSERVICES 1114TO OFSTUDENTS THEATTENDING ELEMENTARYA ANDPRIMARY OR SECONDARY EDUCATIONSCHOOL ACTIN A SCHOOL DISTRICT THAT CEASES TO PROVIDE IN-PERSON INSTRUCTION DURING A SCHOOL YEAR OR IMPLEMENTS ANY STUDENT MANDATE IN VIOLATION OF 1965STATE (P.L.LAW.

89-10;(xvi) A CHILD WHO RESIDES WITHIN THE ATTENDANCE BOUNDARY OF A SCHOOL DISTRICT WHOSE GOVERNING BOARD SUBMITTED A PLAN WITHIN THE PRECEDING TWO YEARS TO THE SCHOOL FACILITIES OVERSIGHT BOARD PURSUANT TO SECTION 41-5741 REQUESTING MONIES FOR NEW CONSTRUCTION OR AN ADDITION TO AN EXISTING SCHOOL DUE TO ENROLLMENT PROJECTIONS EXCEEDING EXISTING CAPACITY ACCORDING TO THE BUILDING ADEQUACY STANDARDS PRESCRIBED IN SECTION 41-5711.

79(xvii) STAT.A CHILD OF A PARENT WHO IS A FIRST RESPONDER.

27),FOR ASTHE AMENDEDPURPOSES BYOF THETHIS EVERYITEM, STUDENT"FIRST SUCCEEDSRESPONDER" ACTMEANS (P.LA 114-95;PEACE OFFICER, A FIREFIGHTER OF A CITY, TOWN, FIRE DISTRICT OR VOLUNTEER FIRE DEPARTMENT OR AN EMERGENCY MEDICAL TECHNICIAN OR PARAMEDIC.

129(xviii) STAT.A CHILD OF A HEALTH PROFESSIONAL AS DEFINED IN SECTION 32-3201 WHO IS EMPLOYED FULL TIME AND WHO PROVIDES DIRECT PATIENT CARE.

1802),(b) ORAnd, ITSexcept SUCCESSORas LEGISLATION,provided ANDin WHOsubdivision ATTENDS(a), THEitems SCHOOL(iv) ORand IS(vi) ELIGIBLEof TOthis ATTENDparagraph, Awho KINDERGARTENmeets PROGRAMany ATof THEthe SCHOOL."following Amendrequirements: title to conform SHAWNNA LM BOLICK 1657BOLICK 03/22/2022 11:32 AM C:

HN(i) Attended a governmental primary or secondary school as a full-time student as defined in section 15-901 for at least forty-five days of the current or prior fiscal year and who transferred from a governmental primary or secondary school under a contract to participate in an Arizona empowerment scholarship account.

Kindergarten students who are enrolled in Arizona online instruction must receive two ONE hundred hours of logged instruction to be eligible pursuant to this item.

First, second and third grade students who are enrolled in Arizona online instruction must receive four TWO hundred hours of logged instruction to be eligible pursuant to this item.

Fourth, fifth and sixth grade students who are enrolled in Arizona online instruction must receive five TWO hundred FIFTY hours of logged instruction to be eligible pursuant to this item.

Seventh and eighth grade students who are enrolled in Arizona online instruction must receive five TWO hundred fifty SEVENTY-FIVE hours of logged instruction to be eligible pursuant to this item.

High school - 3 - S.B.

1657 students who are enrolled in Arizona online instruction must receive five TWO hundred FIFTY hours of logged instruction to be eligible pursuant to this item.

(ii) Previously participated in an Arizona empowerment scholarship account.

(iii) Received a scholarship under section 43-1505 and who continues to attend a qualified school if the student 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 attending a qualified school.

(iv) Was eligible for an Arizona scholarship for pupils with disabilities and received monies from a school tuition organization pursuant to section 43-1505 or received an Arizona scholarship for pupils with disabilities but did not receive monies from a school tuition organization pursuant to section 43-1505 and who continues to attend a qualified school if the student 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 attending a qualified school.

(v) ATTENDED A NONPUBLIC SCHOOL FOR PUPILS WITH DISABILITIES IN THE PRIOR YEAR IF PLACEMENT AT THE SCHOOL WAS APPROVED BY THE DEPARTMENT OF EDUCATION AND CONTRACTED FOR BY A PUBLIC SCHOOL DISTRICT.

(v) (vi) Has not previously attended a governmental primary or secondary school but is currently eligible to enroll in a kindergarten program in a school district or charter school in this state or attended a program for preschool children with disabilities.

FOR THE PURPOSES OF THIS ITEM, A CHILD IS ELIGIBLE TO ENROLL IN A KINDERGARTEN PROGRAM IF THE CHILD IS AT LEAST FIVE YEARS OF AGE ON JANUARY 1 OF THE CURRENT SCHOOL YEAR, IS UNDER SEVEN YEARS OF AGE, HAS NOT ALREADY COMPLETED A KINDERGARTEN PROGRAM AND IS NOT ENROLLED IN GRADE ONE OF A PRIVATE OR GOVERNMENTAL SCHOOL IN THE CURRENT YEAR.

(vi) (vii) Has not previously attended a governmental primary or secondary school but is currently eligible to enroll in a program for preschool children with disabilities in this state.

8.

"Treasurer" means the office of the state treasurer.

Sec.

2.

Section 15-2402, Arizona Revised Statutes, is amended to read:

15-2402.

Arizona empowerment scholarship accounts;

funds A.

Arizona empowerment scholarship accounts are established to provide options for the education of students in this state.

B.

To enroll a qualified student for an Arizona empowerment scholarship account, the parent of the qualified student must sign an agreement to do all of the following:

1.

Use a portion of the Arizona empowerment scholarship account monies allocated annually to provide an education for the qualified - 4 - S.B.

1657 student in at least the subjects of reading, grammar, mathematics, social studies and science, unless the Arizona empowerment scholarship account is allocated monies according to a transfer schedule other than quarterly transfers pursuant to section 15-2403, subsection F G.

2.

Not enroll the qualified student in a school district or charter school and release the school district from all obligations to educate the qualified student.

This paragraph does not:

(a) Relieve the school district or charter school that the qualified student previously attended from the obligation to conduct an evaluation pursuant to section 15-766.

(b) REQUIRE A QUALIFIED STUDENT TO WITHDRAW FROM A SCHOOL DISTRICT OR CHARTER SCHOOL BEFORE ENROLLING FOR AN ARIZONA EMPOWERMENT SCHOLARSHIP ACCOUNT IF THE QUALIFIED STUDENT WITHDRAWS FROM THE SCHOOL DISTRICT OR CHARTER SCHOOL BEFORE RECEIVING ANY MONIES IN THE QUALIFIED STUDENT'S ARIZONA EMPOWERMENT SCHOLARSHIP ACCOUNT.

(c) PREVENT A QUALIFIED STUDENT FROM APPLYING IN ADVANCE FOR AN ARIZONA EMPOWERMENT SCHOLARSHIP ACCOUNT TO BE FUNDED BEGINNING THE FOLLOWING SCHOOL YEAR.

3.

Not accept a scholarship from a school tuition organization pursuant to title 43 concurrently with an Arizona empowerment scholarship account for the qualified student in the same year a parent signs the agreement pursuant to this section.

4.

Use monies deposited in the qualified student's Arizona empowerment scholarship account only for the following expenses of the qualified student:

(a) Tuition or fees at a qualified school.

(b) Textbooks required by a qualified school.

(c) If the qualified student meets any of the criteria specified in section 15-2401, paragraph 7, subdivision (a), item (i), (ii) or (iii) as determined by a school district or by an independent third party pursuant to section 15-2403, subsection I J, the qualified student may use the following additional services:

(i) Educational therapies from a licensed or accredited practitioner or provider, including and up to any amount not covered by insurance if the expense is partially paid by a health insurance policy for the qualified student.

(ii) A licensed or accredited paraprofessional or educational aide.

(iii) Tuition for vocational and life skills education approved by the department.

(iv) Associated goods and services that include educational and psychological evaluations, assistive technology rentals and braille translation goods and services approved by the department.

(d) Tutoring or teaching services provided by an individual or facility accredited by a state, regional or national accrediting organization.

- 5 - S.B.

1657 (e) Curricula and supplementary materials.

(f) Tuition or fees for a nonpublic online learning program.

(g) Fees for a nationally standardized norm-referenced achievement test, an advanced placement examination or any exams related to college or university admission.

(h) Tuition or fees at an eligible postsecondary institution.

(i) Textbooks required by an eligible postsecondary institution.

(j) Fees to manage the Arizona empowerment scholarship account.

(k) Services provided by a public school, including individual classes and extracurricular programs.

(l) Insurance or surety bond payments.

(m) Uniforms purchased from or through a qualified school.

(n) If the qualified student meets the criteria specified in section 15-2401, paragraph 7, subdivision (a), item (i), (ii) or (iii) and if the qualified student is in the second year prior to the final year of a contract executed pursuant to this article, costs associated with an annual education plan conducted by an independent evaluation team.

The department shall prescribe minimum qualifications for independent evaluation teams pursuant to this subdivision and factors that teams must use to determine whether the qualified student shall be eligible to continue to receive monies pursuant to this article through the school year in which the qualified student reaches twenty-two years of age.

An independent evaluation team that provides an annual education plan pursuant to this subdivision shall submit a written report that summarizes the results of the evaluation to the parent of the qualified student and to the department on or before July 31.

The written report submitted by the independent evaluation team is valid for one year.

If the department determines that the qualified student meets the eligibility criteria prescribed in the annual education plan, the qualified student is eligible to continue to receive monies pursuant to this article until the qualified student reaches twenty-two years of age, subject to annual review.

A parent may appeal the department's decision pursuant to title 41, chapter 6, article 10.

As an addendum to a qualified student's final-year contract, the department shall provide the following written information to the parent of the qualified student:

(i) That the qualified student will not be eligible to continue to receive monies pursuant to this article unless the results of an annual education plan conducted pursuant to this subdivision demonstrate that the qualified student meets the eligibility criteria prescribed in the annual education plan.

(ii) That the parent is entitled to obtain an annual education plan pursuant to this subdivision to determine whether the qualified student meets the eligibility criteria prescribed in the annual education plan.

(iii) A list of independent evaluation teams that meet the minimum qualifications prescribed by the department pursuant to this subdivision.

- 6 - S.B.

1657 (o) PUBLIC TRANSPORTATION SERVICES IN THIS STATE, INCLUDING A COMMUTER PASS FOR THE QUALIFIED STUDENT, OR TRANSPORTATION NETWORK SERVICES AS DEFINED IN SECTION 28-9551 BETWEEN THE QUALIFIED STUDENT'S RESIDENCE AND A QUALIFIED SCHOOL IN WHICH THE QUALIFIED STUDENT IS ENROLLED.

(p) COMPUTER HARDWARE OR TECHNOLOGICAL DEVICES PRIMARILY USED FOR AN EDUCATIONAL PURPOSE.

FOR THE PURPOSES OF THIS SUBDIVISION, "COMPUTER HARDWARE OR TECHNOLOGICAL DEVICES":

(i) INCLUDES CALCULATORS, PERSONAL COMPUTERS, LAPTOPS, TABLET DEVICES, MICROSCOPES, TELESCOPES AND PRINTERS.

(ii) DOES NOT INCLUDE ENTERTAINMENT AND OTHER PRIMARILY NONEDUCATIONAL DEVICES, INCLUDING TELEVISIONS, TELEPHONES, VIDEO GAME CONSOLES AND ACCESSORIES, AND HOME THEATRE AND AUDIO EQUIPMENT.

5.

Not file an affidavit of intent to homeschool pursuant to section 15-802, subsection B, paragraph 2 or 3.

6.

Not use monies deposited in the qualified student's account for any of the following:

(a) Computer hardware or other technological devices, except as otherwise allowed under paragraph 4, subdivision (c) OR (p) of this subsection.

(b) Transportation of the pupil, EXCEPT FOR TRANSPORTATION SERVICES DESCRIBED IN PARAGRAPH 4, SUBDIVISION (o) OF THIS SUBSECTION.

(c) Consumable educational supplies, including paper, pens or markers.

C.

In exchange for the parent's agreement pursuant to subsection B of this section, the department shall transfer from the monies that would otherwise be allocated to a recipient's prior school district, or if the child is currently eligible to attend kindergarten, the monies that the department determines would otherwise be allocated to a recipient's expected school district of attendance, to the treasurer for deposit into an Arizona empowerment scholarship account an amount that is equivalent to ninety percent of the sum of the base support level and additional assistance prescribed in sections 15-185 and 15-943 for that particular student if that student were attending a charter school.

D.

A CHILD WHO PARTICIPATES IN AN ARIZONA EMPOWERMENT SCHOLARSHIP ACCOUNT CONTINUES TO BE ENTITLED TO AN EQUITABLE SHARE OF THE FUNDING THAT WOULD OTHERWISE BE ALLOCATED TO A CHARTER SCHOOL OR SCHOOL DISTRICT FOR THAT CHILD FROM THE CLASSROOM SITE FUND ESTABLISHED BY SECTION 15-977.

TO ENSURE THIS EQUITY, AND IN RECOGNITION OF THE FACT THAT A CHILD'S PRIMARY INSTRUCTION MAY TAKE PLACE IN A VARIETY OF SETTINGS:

1.

NOTWITHSTANDING ANY OTHER LAW, A CHILD WHO IS PARTICIPATING IN AN ARIZONA EMPOWERMENT SCHOLARSHIP ACCOUNT SHALL BE INCLUDED IN THE ESTIMATED STATEWIDE WEIGHTED STUDENT COUNT FOR THE PURPOSES OF CALCULATING THE PER PUPIL AMOUNT FROM THE CLASSROOM SITE FUND PURSUANT TO SECTION - 7 - S.B.

1657 15-977, SUBSECTION G, PARAGRAPH 1 AS LONG AS THAT STUDENT CONTINUES TO PARTICIPATE IN AN ARIZONA EMPOWERMENT SCHOLARSHIP ACCOUNT.

2.

IN ADDITION TO ANY AMOUNTS TRANSFERRED FROM THE CLASSROOM SITE FUND ESTABLISHED BY SECTION 15-977 TO A SCHOOL DISTRICT OR CHARTER SCHOOL, THE DEPARTMENT SHALL ANNUALLY TRANSFER FROM THE CLASSROOM SITE FUND TO THE TREASURER FOR DEPOSIT IN EACH ARIZONA EMPOWERMENT SCHOLARSHIP ACCOUNT AN AMOUNT THAT IS EQUIVALENT TO THE PER PUPIL AMOUNT CALCULATED PURSUANT TO SECTION 15-977, SUBSECTION G, PARAGRAPH 1 MULTIPLIED BY THE STUDENT'S WEIGHTED COUNT THAT WOULD BE CALCULATED IF THAT STUDENT WERE ATTENDING THE STUDENT'S PRIOR SCHOOL DISTRICT OR CHARTER SCHOOL OR, IF THE CHILD IS AN INCOMING KINDERGARTENER, THE CHILD'S EXPECTED SCHOOL DISTRICT OF ATTENDANCE.

3.

NOTWITHSTANDING ANY OTHER LAW, THE AMOUNT TRANSFERRED TO EACH ARIZONA EMPOWERMENT SCHOLARSHIP ACCOUNT PURSUANT TO PARAGRAPH 2 OF THIS SUBSECTION COUNTS TOWARD THE TOTAL AMOUNT THE DEPARTMENT IS REQUIRED TO ALLOCATE AND TRANSFER TO EACH ACCOUNT AND MAY BE USED FOR ANY ARIZONA EMPOWERMENT SCHOLARSHIP ACCOUNT EXPENDITURE ALLOWED PURSUANT TO SUBSECTION B OF THIS SECTION.

4.

TO PROVIDE FOR THE FUNDING OF ARIZONA EMPOWERMENT SCHOLARSHIP ACCOUNTS FROM THE CLASSROOM SITE FUND PURSUANT TO PARAGRAPH 2 OF THIS SUBSECTION, THE DEPARTMENT SHALL DEPOSIT A SUFFICIENT PORTION OF THE REVENUES TRANSFERRED TO THE CLASSROOM SITE FUND IN EACH FISCAL YEAR PURSUANT TO SECTION 42-5029.02 INTO A CLASSROOM SITE FUND SUBACCOUNT.

MONIES IN THE SUBACCOUNT MAY BE USED TO FUND THE TRANSFER OF CLASSROOM SITE FUND MONIES FOR SCHOOL DISTRICTS, CHARTER SCHOOLS OR ARIZONA EMPOWERMENT SCHOLARSHIP ACCOUNTS MADE PURSUANT TO PARAGRAPH 2 OF THIS SUBSECTION AND SECTION 15-977.

D.

E.

The department of education empowerment scholarship account fund is established consisting of monies appropriated by the legislature.

The department shall administer the fund.

Monies in the fund are subject to legislative appropriation.

Monies in the fund shall be used for the department's costs in administering Arizona empowerment scholarship accounts under this chapter.

Monies in the fund are exempt from the provisions of section 35-190 relating to lapsing of appropriations.

If the number of Arizona empowerment scholarship accounts significantly increases after fiscal year 2020-2021, the department may request an increase in the amount appropriated to the fund in any subsequent fiscal year in the budget estimate submitted pursuant to section 35-113.

The department shall list monies in the fund as a separate line item in its budget estimate.

E.

F.

The state treasurer empowerment scholarship account fund is established consisting of monies appropriated by the legislature.

The state treasurer shall administer the fund.

Monies in the fund shall be used for the state treasurer's costs in administering the Arizona empowerment scholarship accounts under this chapter.

If the number of - 8 - S.B.

1657 Arizona empowerment scholarship accounts significantly increases after fiscal year 2020-2021, the state treasurer may request an increase in the amount appropriated to the fund in any subsequent fiscal year in the budget estimate submitted pursuant to section 35-113.

Monies in the fund are subject to legislative appropriation.

Monies in the fund are exempt from the provisions of section 35-190 relating to lapsing of appropriations.

The state treasurer shall list monies in the fund as a separate line item in its budget estimate.

F.

G.

A parent must renew the qualified student's Arizona empowerment scholarship account on an annual basis.

G.

H.

Notwithstanding any changes to the student's multidisciplinary evaluation team plan, a student who has previously qualified for an Arizona empowerment scholarship account remains eligible to apply for renewal until the student finishes high school.

H.

I.

If a parent does not renew the qualified student's Arizona empowerment scholarship account for a period of three academic years, the department shall notify the parent that the qualified student's account will be closed in sixty calendar days.

The notification must be sent through certified mail, email and telephone, if applicable.

The parent has sixty calendar days to renew the qualified student's Arizona empowerment scholarship account.

If the parent chooses not to renew or does not respond in sixty calendar days, the department shall close the account and any remaining monies shall be returned to the state.

I.

J.

A signed agreement under this section constitutes school attendance required by section 15-802.

J.

K.

A qualified school or a provider of services purchased pursuant to subsection B, paragraph 4 of this section may not share, refund or rebate any Arizona empowerment scholarship account monies with the parent or qualified student in any manner.

K.

L.

Notwithstanding subsection H I of this section, on the qualified student's graduation from a postsecondary institution or after any period of four consecutive years after high school graduation in which the student is not enrolled in an eligible postsecondary institution, but not before this time as long as the account holder continues using a portion of account monies for eligible expenses each year and is in good standing, the qualified student's Arizona empowerment scholarship account shall be closed and any remaining monies shall be returned to the state.

L.

M.

Monies received pursuant to this article do not constitute taxable income to the parent of the qualified student.

- 9 - S.B.

1657 Sec.

3.

Section 15-2403, Arizona Revised Statutes, is amended to read:

15-2403.

Arizona empowerment scholarship accounts;

administration;

appeals;

audit;

rules;

policy handbook A.

The treasurer may contract with private financial management firms to manage Arizona empowerment scholarship accounts.

B.

The department shall conduct or contract for annual audits of Arizona empowerment scholarship accounts to ensure compliance with section 15-2402, subsection B, paragraph 4.

The department shall also conduct or contract for random, quarterly and annual audits of Arizona empowerment scholarship accounts as needed to ensure compliance with section 15-2402, subsection B, paragraph 4.

C.

The department may remove any parent or qualified student from eligibility for an Arizona empowerment scholarship account if the parent or qualified student fails to comply with the terms of the contract or applicable laws, rules or orders or knowingly misuses monies or knowingly fails to comply with the terms of the contract with intent to defraud and shall notify the treasurer.

The department shall notify the treasurer to suspend the account of a parent or qualified student and shall notify the parent or qualified student in writing that the account has been suspended and that no further transactions will be allowed or disbursements made.

The notification shall specify the reason for the suspension and state that the parent or qualified student has ten FIFTEEN days, not including weekends, to respond and take corrective action.

If the parent or qualified student refuses or fails to contact the department, furnish any information or make any report that may be required for reinstatement within the ten-day FIFTEEN-DAY period, the department may remove the parent or qualified student pursuant to this subsection.

D.

A parent may appeal to the state board of education any administrative decision the department makes pursuant to this article, including determinations of allowable expenses, removal from the program or enrollment eligibility.

The department shall notify the parent in writing that the parent may appeal any administrative decision under this article and the process by which the parent may appeal at the same time the department notifies the parent of an administrative decision under this article.

The state board of education shall establish an appeals process, and the department shall post this information on the department's website in the same location as the policy handbook developed pursuant to subsection J K of this section.

E.

A PARENT MAY REPRESENT HIMSELF OR HERSELF OR DESIGNATE A REPRESENTATIVE, NOT NECESSARILY AN ATTORNEY, BEFORE ANY APPEALS HEARING HELD PURSUANT TO THIS SECTION.

ANY SUCH DESIGNATED REPRESENTATIVE WHO IS NOT AN ATTORNEY ADMITTED TO PRACTICE MAY NOT CHARGE FOR ANY SERVICES RENDERED IN CONNECTION WITH SUCH A HEARING.

THE FACT THAT A - 10 - S.B.

1657 REPRESENTATIVE PARTICIPATED IN THE HEARING OR ASSISTED THE ACCOUNT HOLDER IS NOT GROUNDS FOR REVERSING ANY ADMINISTRATIVE DECISION OR ORDER IF THE EVIDENCE SUPPORTING THE DECISION OR ORDER IS SUBSTANTIAL, RELIABLE AND PROBATIVE.

E.

F.

The state board of education may refer cases of substantial misuse of monies to the attorney general for the purpose of collection or for the purpose of a criminal investigation if the state board of education obtains evidence of fraudulent use of an account.

F.

G.

The department shall make quarterly transfers of the amount calculated pursuant to section 15-2402, subsection C to the treasurer for deposit in the Arizona empowerment scholarship account of each qualified student, except the department may make transfers according to another transfer schedule if the department determines a transfer schedule other than quarterly transfers is necessary to operate the Arizona empowerment scholarship account.

G.

H.

The department shall accept applications between July 1 and June 30 of each year.

The department shall enroll and issue an award letter to eligible applicants within thirty days after receipt of a completed application and all required documentation.

On or before May 30 of each year, the department shall furnish to the joint legislative budget committee an estimate of the amount required to fund Arizona empowerment scholarship accounts for the following fiscal year.

The department shall include in its budget request for the following fiscal year the amount estimated pursuant to section 15-2402, subsection C for each qualified student.

H.

I.

The state board of education may adopt rules and policies necessary to administer Arizona empowerment scholarship accounts, including rules and policies:

1.

For establishing an appeals process pursuant to subsection D of this section.

2.

For conducting or contracting for examinations of the use of account monies.

3.

For conducting or contracting for random, quarterly and annual reviews of accounts.

4.

For establishing or contracting for the establishment of an online anonymous fraud reporting service.

5.

For establishing an anonymous telephone hotline for fraud reporting.

6.

That require a surety bond or insurance for account holders.

I.

J.

The department shall contract with an independent third party for the purposes of determining whether a qualified student is eligible to receive educational therapies or services pursuant to section 15-2402, subsection B, paragraph 4, subdivision (c).

IF DURING ANY PERIOD ON OR AFTER JANUARY 1, 2023 THE DEPARTMENT FAILS TO ENSURE THAT A CONTRACT WITH AN INDEPENDENT THIRD PARTY IS IN EFFECT, DURING THAT PERIOD:

- 11 - S.B.

1657 1.

THE COUNTY SCHOOL SUPERINTENDENT OF EACH COUNTY MAY APPROVE A LIST OF INDEPENDENT THIRD PARTIES WITHIN THE COUNTY WHOSE EVALUATION MAY BE USED TO DETERMINE WHETHER A STUDENT WHO RESIDES WITHIN THE COUNTY IS ELIGIBLE TO RECEIVE EDUCATIONAL THERAPIES OR SERVICES PURSUANT TO SECTION 15-2402, SUBSECTION B, PARAGRAPH 4, SUBDIVISION (c).

2.

IF THE COUNTY SCHOOL SUPERINTENDENT OF A COUNTY DOES NOT PROVIDE A LIST OF APPROVED INDEPENDENT THIRD PARTIES WITHIN NINETY DAYS AFTER THE BEGINNING OF ANY PERIOD DURING WHICH THE DEPARTMENT DOES NOT HAVE A CONTRACT WITH AN INDEPENDENT THIRD PARTY IN EFFECT AS DESCRIBED IN THIS SUBSECTION, THE PARENT OF A STUDENT WHO RESIDES WITHIN THE COUNTY HAS THE RIGHT TO OBTAIN AN INDEPENDENT EDUCATIONAL EVALUATION FROM A QUALIFIED EXAMINER TO DETERMINE WHETHER THE STUDENT IS ELIGIBLE TO RECEIVE EDUCATIONAL THERAPIES OR SERVICES PURSUANT TO SECTION 15-2402, SUBSECTION B, PARAGRAPH 4, SUBDIVISION (c).

THE EXPENSE FOR AN EDUCATIONAL EVALUATION UNDERTAKEN PURSUANT TO THIS PARAGRAPH SHALL BE PROVIDED BY THE SCHOOL DISTRICT WITHIN WHICH THE STUDENT RESIDES AND THAT SERVES THE GRADE LEVEL OF THE STUDENT.

FOR THE PURPOSES OF THIS PARAGRAPH, "QUALIFIED EXAMINER" MEANS A LICENSED PHYSICIAN, PSYCHIATRIST OR PSYCHOLOGIST.

J.

K.

On or before July 1 of each year, the department shall develop an applicant and participant handbook that includes information relating to policies and processes of Arizona empowerment scholarship accounts.

The policy handbook shall comply with the rules adopted by the state board of education pursuant to this section.

The department shall post the handbook on its website.

K.

L.

Except for cases in which the attorney general determines that a parent or account holder has committed fraud, any expenditure from an Arizona empowerment scholarship account for a purchase that is deemed ineligible pursuant to section 15-2402 and that is subsequently repaid by the parent or account holder shall be credited back to the Arizona empowerment scholarship account balance within thirty days after the receipt of payment.

L.

M.

If, in response to an appeal of an administrative decision made by the department, the state board of education issues a stay of an Arizona empowerment scholarship account suspension pursuant to rules adopted by the board, the department may not withhold funding or contract renewal for the account holder on account of the appealed administrative decision during the stay unless directed by the board to do so.

Sec.

4.

Title 15, chapter 19, article 1, Arizona Revised Statutes, is amended by adding section 15-2405, to read:

15-2405.

Student empowerment fund;

definitions A.

THE STUDENT EMPOWERMENT FUND IS ESTABLISHED CONSISTING OF MONIES TRANSFERRED TO THE FUND PURSUANT TO SECTION 42-5029.02, SUBSECTION A AND ANY OTHER TRANSFERS OR APPROPRIATIONS TO THE FUND DETERMINED BY THE LEGISLATURE.

THE DEPARTMENT SHALL ADMINISTER THE FUND.

MONIES IN THE - 12 - S.B.

1657 FUND ARE CONTINUOUSLY APPROPRIATED AND ARE EXEMPT FROM THE PROVISIONS OF SECTION 35-190 RELATING TO THE LAPSING OF APPROPRIATIONS.

B.

NOTWITHSTANDING SECTION 15-2401, PARAGRAPH 7, MONIES IN THE FUND SHALL BE USED TO PROVIDE ARIZONA EMPOWERMENT SCHOLARSHIP ACCOUNTS TO STUDENTS WHO RESIDE WITHIN THE BOUNDARIES OF ANY SCHOOL DISTRICT THAT EITHER:

1.

RECEIVES MORE IN ANNUAL FUNDING PER PUPIL THAN THE AMOUNT CHARGED FOR TUITION AND FEES PER STUDENT AT A UNIVERSITY UNDER THE JURISDICTION OF THE ARIZONA BOARD OF REGENTS.

2.

SPENDS LOCAL REVENUES IN EXCESS OF THE SCHOOL DISTRICT EXPENDITURE LIMITATION ESTABLISHED BY VOTERS IN THE CONSTITUTION OF ARIZONA.

C.

IN ADDITION TO ANY OTHER ARIZONA EMPOWERMENT SCHOLARSHIP ACCOUNT ELIGIBILITY CATEGORY THAT IS PRESCRIBED IN SECTION 15-2401, PARAGRAPH 7 OR THAT MAY OTHERWISE BE ESTABLISHED BY THE LEGISLATURE, A STUDENT IS CONSIDERED A QUALIFIED STUDENT FOR PURPOSES OF THIS CHAPTER IF THE STUDENT MEETS BOTH OF THE FOLLOWING REQUIREMENTS:

1.

RESIDES WITHIN A SCHOOL DISTRICT THAT MEETS AT LEAST ONE OF THE CRITERIA PRESCRIBED IN SUBSECTION B OF THIS SECTION.

2.

IS ELIGIBLE TO ATTEND A KINDERGARTEN PROGRAM OR HAS ATTENDED A SCHOOL WITHIN THE SCHOOL DISTRICT IN ANY OF GRADES ONE THROUGH TWELVE FOR FORTY-FIVE DAYS OF THE CURRENT OR PRIOR YEAR AND HAS NOT YET GRADUATED FROM HIGH SCHOOL.

ALL OTHER REQUIREMENTS AND PRIVILEGES PRESCRIBED IN THIS CHAPTER APPLY.

D.

THE DEPARTMENT SHALL ACCEPT APPLICATIONS FOR ARIZONA EMPOWERMENT SCHOLARSHIP ACCOUNTS FUNDED PURSUANT TO THIS SECTION ON A FIRST-COME, FIRST-SERVED BASIS EACH YEAR UNTIL THE CUMULATIVE CONTRACTED AWARD AMOUNTS EXHAUST THE MONIES IN THE STUDENT EMPOWERMENT FUND EACH YEAR.

THE ARIZONA EMPOWERMENT SCHOLARSHIP ACCOUNT OF A STUDENT WHO RECEIVES AN ARIZONA EMPOWERMENT SCHOLARSHIP ACCOUNT PURSUANT TO THIS SECTION SHALL BE FUNDED IN THE FIRST YEAR EXCLUSIVELY THROUGH MONIES FROM THE STUDENT EMPOWERMENT FUND AND THE CLASSROOM SITE FUND IN LIEU OF, AND IN EQUAL AMOUNT TO, ANY OTHER MONIES THAT WOULD BE ALLOCATED TO THE STUDENT'S ARIZONA EMPOWERMENT SCHOLARSHIP ACCOUNT PURSUANT TO SECTION 15-2402, SUBSECTION C.

E.

A STUDENT WHO RECEIVES AN ARIZONA EMPOWERMENT SCHOLARSHIP ACCOUNT PURSUANT TO THIS SECTION REMAINS A QUALIFIED STUDENT FOR THE PURPOSES OF THIS CHAPTER THROUGH GRADE TWELVE AS LONG AS THE STUDENT REMAINS IN GOOD STANDING, DOES NOT ENROLL IN A SCHOOL DISTRICT OR CHARTER SCHOOL AND HAS NOT BEEN REMOVED FROM ELIGIBILITY FOR THE ACCOUNT FOR FAILING TO COMPLY PURSUANT TO SECTION 15-2403, SUBSECTION C.

F.

MONIES FROM THE STUDENT EMPOWERMENT FUND SHALL BE RESERVED FOR STUDENTS WHO QUALIFY FOR AN ARIZONA EMPOWERMENT SCHOLARSHIP ACCOUNT PURSUANT TO SUBSECTION B OF THIS SECTION AND WHO DO NOT ALREADY MEET OTHER ELIGIBILITY CRITERIA FOR A QUALIFIED STUDENT AS PRESCRIBED IN SECTION 15-2401, PARAGRAPH 7.

- 13 - S.B.

1657 G.

FOR THE PURPOSES OF THIS SECTION:

1.

"AMOUNT CHARGED FOR TUITION AND FEES PER STUDENT AT A UNIVERSITY UNDER THE JURISDICTION OF THE ARIZONA BOARD OF REGENTS" MEANS THE FULL ANNUAL RESIDENT UNDERGRADUATE BASE TUITION AND FEE RATE PER STUDENT, BEFORE THE APPLICATION OF ANY SCHOLARSHIP, GRANT OR TUITION WAIVER, AS REPORTED BY THE JOINT LEGISLATIVE BUDGET COMMITTEE FOR A UNIVERSITY UNDER THE JURISDICTION OF THE ARIZONA BOARD OF REGENTS FOR THE YEAR CORRESPONDING TO THE MOST RECENTLY ISSUED AUDITOR GENERAL DISTRICT SPENDING REPORT DATA.

2.

"ANNUAL FUNDING PER PUPIL" MEANS THE GREATER OF THE SCHOOL DISTRICT'S TOTAL PER PUPIL REVENUE OR SPENDING FROM ALL SOURCES AS REPORTED BY THE AUDITOR GENERAL IN ITS MOST RECENTLY ISSUED ARIZONA SCHOOL DISTRICT SPENDING REPORT.

3.

"LOCAL REVENUES" HAS THE SAME MEANING PRESCRIBED IN ARTICLE IX, SECTION 21, CONSTITUTION OF ARIZONA.

4.

"SCHOOL DISTRICT EXPENDITURE LIMITATION" MEANS THE AMOUNT THAT EACH SCHOOL DISTRICT WOULD BE LIMITED TO PURSUANT TO SECTION 15-911, SUBSECTION E IN THE ABSENCE OF AUTHORIZATION BY THE LEGISLATURE OF EXPENDITURES IN EXCESS OF THE EXPENDITURE LIMITATION FOR ALL SCHOOL DISTRICTS PRESCRIBED PURSUANT TO ARTICLE IX, SECTION 21, CONSTITUTION OF ARIZONA.

Sec.

5.

Section 42-5029.02, Arizona Revised Statutes, is amended to read:

42-5029.02.

Distribution of revenues for education;

definitions A.

All monies collected pursuant to section 42-5010.01 and section 42-5155, subsection E shall be distributed each fiscal year pursuant to this subsection.

The monies distributed pursuant to this subsection are in addition to any other appropriation, transfer or other allocation of public or private monies from any other source and may not supplant, replace or cause a reduction in other school district, charter school, university or community college funding sources.

The monies shall be distributed as follows:

1.

$64,100,000 is appropriated each fiscal year, to be paid in monthly installments, to the superintendent of public instruction for basic state aid.

2.

After any transfer of monies pursuant to paragraph 1 of this subsection, twelve percent of the remaining monies collected during the preceding month shall be transferred to the technology and research initiative fund established by section 15-1648 to be distributed among the universities under the jurisdiction of the Arizona board of regents for the purpose of investment in technology and research-based initiatives.

3.

After the transfer of monies pursuant to paragraph 1 of this subsection, three percent of the remaining monies collected during the preceding month shall be transferred to the workforce development account - 14 - S.B.

1657 established in each community college district pursuant to section 15-1472 for the purpose of investment in workforce development programs.

4.

After the transfer of monies pursuant to paragraphs 1, 2 and 3 of this subsection, one-twelfth of the amount a community college that is owned, operated or chartered by a qualifying Indian tribe on its own Indian reservation would receive pursuant to section 15-1472, subsection D, paragraph 2 if it were a community college district shall be distributed each month to the treasurer or other designated depository of the qualifying Indian tribe.

Monies distributed pursuant to this paragraph are for the exclusive purpose of providing support to one or more community colleges that are owned, operated or chartered by a qualifying Indian tribe and shall be used in a manner consistent with section 15-1472, subsection B.

5.

After the transfer of monies pursuant to paragraphs 1, 2 and 3 of this subsection, one-twelfth of $86,280,500 shall be transferred each month to the department of education for the increased cost of basic state aid under section 15-971 due to added school days and associated teacher salary increases that were enacted in 2000.

6.

After the transfer of monies pursuant to paragraphs 1, 2 and 3 of this subsection, $7,800,000 is appropriated each fiscal year, to be paid in monthly installments, to the department of education to be used for school safety as provided in section 15-154 and $200,000 is appropriated each fiscal year, to be paid in monthly installments, to the department of education to be used for the character education matching grant program as provided in section 15-154.01.

7.

After the transfer of monies pursuant to paragraphs 1, 2 and 3 of this subsection, the legislature may not appropriate more than $7,000,000 each fiscal year to the department of education to be used for accountability purposes as described in section 15-241.02 and title 15, chapter 9, article 8.

8.

After the transfer of monies pursuant to paragraphs 1, 2 and 3 of this subsection, $1,500,000 is appropriated each fiscal year, to be paid in monthly installments, to the failing schools tutoring fund established by section 15-241.

9.

After the transfer of monies pursuant to paragraphs 1, 2 and 3 of this subsection, $25,000,000 shall be transferred each fiscal year to the state general fund to reimburse the state general fund for the cost of the income tax credit allowed by section 43-1072.02.

10.

BEGINNING IN FISCAL YEAR 2022-2023, AFTER THE TRANSFER OF MONIES PURSUANT TO PARAGRAPHS 1 THROUGH 9 OF THIS SUBSECTION, $25,000,000 SHALL BE TRANSFERRED EACH FISCAL YEAR TO THE STUDENT EMPOWERMENT FUND ESTABLISHED BY SECTION 15-2405.

10.

11.

After the transfer of monies pursuant to paragraphs 1 through 9 10 of this subsection, the remaining monies collected during the preceding month shall be transferred to the classroom site fund - 15 - S.B.

1657 established by section 15-977.

The monies shall be allocated in the manner prescribed by section 15-977.

B.

For the purposes of this section:

1.

"Community college district" means a community college district that is established pursuant to sections 15-1402 and 15-1403 and that is a political subdivision of this state and, unless otherwise specified, includes a community college tuition financing district established pursuant to section 15-1409.

2.

"Qualifying Indian tribe" has the same meaning as defined in section 42-5031.01.

Sec.

6.

Section 43-222, Arizona Revised Statutes, is amended to read:

43-222.

Income tax credit review schedule The joint legislative income tax credit review committee shall review the following income tax credits:

1.

For years ending in 0 and 5, sections 43-1079.01, 43-1088, 43-1089.04, 43-1167.01 and 43-1175.

2.

For years ending in 1 and 6, sections 43-1072.02, 43-1074.02, 43-1075, 43-1076.01, 43-1077, 43-1078, 43-1083, 43-1083.02, 43-1162, 43-1164.03 and 43-1183.

3.

For years ending in 2 and 7, sections 43-1073, 43-1085, 43-1086, 43-1089, 43-1089.01, 43-1089.02, 43-1089.03, 43-1164, 43-1169 and 43-1181.

4.

For years ending in 3 and 8, sections 43-1074.01, 43-1081, 43-1168, 43-1170 and 43-1178.

5.

For years ending in 4 and 9, sections 43-1073.01, 43-1076, 43-1081.01, 43-1083.03, 43-1084, 43-1164.04, 43-1164.05 and 43-1184.

Sec.

7.

Section 43-401, Arizona Revised Statutes, is amended to read:

43-401.

Withholding tax;

rates;

election by employee A.

Except as provided by subsections B and H of this section, every employer at the time of the payment of PAYING wages, salary, bonus or other emolument to any employee whose compensation is for services performed within this state shall deduct and retain from the compensation an amount prescribed by tables adopted by the department.

B.

An employer may voluntarily elect to not withhold tax during December by notifying:

1.

The department on a form prescribed by the department.

2.

The employer's employees in writing in a manner prescribed by the department.

C.

If the amount collected and payable by the employer to the department in each of the preceding four calendar quarters did not exceed an average of one thousand five hundred dollars $1,500, the amount collected shall be paid to the department on or before April 30, July 31, October 31 and January 31 for the preceding calendar quarter.

If the amount exceeded one thousand five hundred dollars $1,500 in each of the - 16 - S.B.

1657 preceding four calendar quarters, the employer shall pay to the department the amount the employer deducts and retains pursuant to this section at the same time as the employer is required to make deposits of DEPOSIT federal tax pursuant to section 6302 of the internal revenue code.

On or before April 30, July 31, October 31 and January 31 each year, the employer shall reconcile the amounts payable during the preceding calendar quarter in a manner prescribed by the department, except that if the full amount collected and payable is paid timely to the department under this subsection, the employer may reconcile the amounts on or before May 10, August 10, November 10 and February 10 each year.

The department by rule may allow and determine which employers qualify for annual payments of withholding taxes, with an annual report by the employer pursuant to section 43-412, subsection B, if the qualifying employer has established sufficient payment history to indicate that the employer is current and in good standing pursuant to standards established by rule.

For any business that has not had a withholding certificate for the four preceding consecutive quarters, the quarterly average shall be computed in a manner prescribed by the department.

D.

If an employer fails to make a timely monthly payment because prior to BEFORE that reporting period it reported on a quarterly basis instead of on a monthly basis, the department shall notify the employer that it is out of compliance with this section.

Notwithstanding section 42-1125, the department shall not assess a penalty against an employer for failing to make a timely monthly payment if the employer had filed and remitted all taxes due on a quarterly basis and brings all filings and payments into current compliance within thirty days after being notified by the department.

E.

Each employee shall elect the amount authorized by subsection A of this section to be withheld for application TO APPLY toward the employee's state income tax liability.

The election provided under this subsection shall be exercised by each employee, in writing on a form prescribed by the department.

The election shall be made within five days of AFTER STARTING employment.

Each employer shall notify the employees of the election made available under this subsection and shall have election forms available at all times.

Each form shall be completed in triplicate, with one copy each for the department, the employer and the employee.

The employer shall file a copy of each completed form with the department.

Any employee failing to complete an election form as prescribed shall be IS deemed to have elected the withholding percentage prescribed by the department.

F.

Before July 1 of each year, each employer who chooses to not withhold tax pursuant to subsection B of this section shall notify each employee that:

1.

State income taxes will not be withheld from compensation in December.

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1657 2.

The employee may elect to change the rate of withholding tax prescribed by this section to compensate for the resulting change in annual withholdings from the employee's compensation.

G.

At an employee's written request, the employer may agree to reduce the amount withheld under this section by the amount of credit that the employee represents to the employer that the employee will qualify for and be entitled to under sections 43-1088, 43-1089, AND 43-1089.01 and 43-1089.03.

The employee's request must include the name and address of the qualifying charitable organization, qualified school tuition organization or public school.

Within thirty days after agreeing to the employee's request, the employer shall reduce the withholding amount by the amount of the credit, but not below zero, prorated for the number of pay periods remaining in the employee's taxable year after the employee makes the request.

If an employer agrees to reduce the withholding amount pursuant to this subsection, the following apply:

1.

Within fifteen days after the end of each calendar quarter, the employer must pay the entire amount of the reduction in withholding tax for that quarter to the designated charitable organization, school tuition organization or public school.

These payments are considered to be on the employee's behalf, and not the employer's, for the purposes of qualifying for the income tax credits under sections 43-1088, 43-1089, AND 43-1089.01 and 43-1089.03.

2.

The employee is responsible and accountable for the accuracy and the amount of reduction in withholding tax and the payments to the charitable organization, school tuition organization or public school.

3.

The employer is responsible and accountable to the charitable organization, school tuition organization or public school, to the employee and to the department for actually making the required payments.

4.

Within thirty days after the end of each calendar year, or within fifteen days after the termination of TERMINATING employment, the employer must furnish to each electing employee a statement of the amount withheld and paid on behalf of the employee during that year.

H.

An employer shall not withhold tax on the wages of the employer's nonresident employees who are in this state on a temporary basis for the purpose of performing disaster recovery from a declared disaster during a disaster period as defined in section 42-1130.

Sec.

8.

Section 43-1089, Arizona Revised Statutes, is amended to read:

43-1089.

Credit for contributions to school tuition organization A.

A credit is allowed against the taxes imposed by this title for the amount of voluntary cash contributions by the taxpayer or on the taxpayer's behalf pursuant to section 43-401, subsection G during the taxable year to a school tuition organization that is certified pursuant to chapter 16 of this title at the time of donation.

Except as provided - 18 - S.B.

1657 by subsection C of this section, the amount of the credit shall not exceed:

1.

Five hundred dollars $1,243 in any taxable year for a single individual or a head of household.

2.

One thousand dollars $2,483 in any taxable year for a married couple filing a joint return.

B.

A husband and wife who file separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the tax credit that would have been allowed for a joint return.

C.

For each taxable year beginning on or after January 1 FROM AND AFTER DECEMBER 31, 2022, the department shall adjust the dollar amounts prescribed by subsection A, paragraphs 1 and 2 of this section according to BY THE GREATER OF EITHER:

1.

The average annual change in the metropolitan Phoenix consumer price index published by the United States DEPARTMENT OF LABOR, bureau of labor statistics, except that the dollar amounts shall not be revised downward below the amounts allowed in the prior taxable year.

The revised dollar amounts shall be raised to the nearest whole dollar.

2.

$250 FOR THE DOLLAR AMOUNT PRESCRIBED BY SUBSECTION A, PARAGRAPH 1 OF THIS SECTION AND $500 FOR THE DOLLAR AMOUNT PRESCRIBED BY SUBSECTION A, PARAGRAPH 2 OF THIS SECTION.

D.

If the allowable tax credit exceeds the taxes otherwise due under this title on the claimant's income, or if there are no taxes due under this title, the taxpayer may carry the amount of the claim not used to offset the taxes under this title forward for not more than five consecutive taxable years' income tax liability.

E.

The credit allowed by this section is in lieu of any deduction pursuant to section 170 of the internal revenue code and taken for state tax purposes.

F.

The tax credit is not allowed if the taxpayer designates the taxpayer's contribution to the school tuition organization for the direct benefit of any dependent of the taxpayer or if the taxpayer designates a student beneficiary as a condition of the taxpayer's contribution to the school tuition organization.

The tax credit is not allowed if the taxpayer, with the intent to benefit the taxpayer's dependent, agrees with one or more other taxpayers to designate each taxpayer's contribution to the school tuition organization for the direct benefit of the other taxpayer's dependent.

G.

For the purposes of this section, a contribution, for which a credit is claimed, that is made on or before the fifteenth day of the fourth month following the close of the taxable year may be applied to either the current or preceding taxable year and is considered to have been made on the last day of that taxable year.

Sec.

9.

Repeal Section 43-1089.03, Arizona Revised Statutes, is repealed.

- 19 - S.B.

1657 Sec.

10.

Section 43-1184, Arizona Revised Statutes, is amended to read:

43-1184.

Credit for contributions to school tuition organization;

displaced students;

students with disabilities A.

Beginning from and after June 30, 2009, a credit is allowed against the taxes imposed by this title for the amount of voluntary cash contributions made by the taxpayer during the taxable year to a school tuition organization that is certified pursuant to chapter 15 of this title at the time of donation.

B.

The amount of the credit is the total amount of the taxpayer's contributions for the taxable year under subsection A of this section and is preapproved by the department of revenue pursuant to subsection D of this section.

C.

The department of revenue:

1.

Shall not allow tax credits under this section and section 20-224.07 that exceed in the aggregate a combined total of $5,000,000 $6,000,000 in any fiscal year through fiscal year 2020-2021 2021-2022 AND $10,000,000 IN FISCAL YEAR 2022-2023.

Beginning in fiscal year 2021-2022, the aggregate dollar amount of the tax credits allowed is $6,000,000 in any fiscal year.

BEGINNING IN FISCAL YEAR 2023-2024 AND EACH FISCAL YEAR THEREAFTER, THE AGGREGATE DOLLAR AMOUNT OF THE TAX CREDIT CAP FROM THE PREVIOUS FISCAL YEAR SHALL BE INCREASED BY THE GREATER OF:

(a) THE PERCENTAGE OF THE ANNUAL INCREASE, IF ANY, IN THE METROPOLITAN PHOENIX CONSUMER PRICE INDEX PUBLISHED BY THE UNITED STATES DEPARTMENT OF LABOR, BUREAU OF LABOR STATISTICS.

(b) TWO PERCENT.

2.

Shall preapprove tax credits under this section and section 20-224.07 subject to subsection D of this section.

3.

Shall allow the tax credits under this section and section 20-224.07 on a first-come, first-served basis.

D.

For the purposes of subsection C, paragraph 2 of this section, before making a contribution to a school tuition organization, the taxpayer under this title or title 20 must notify the school tuition organization of the total amount of contributions that the taxpayer intends to make to the school tuition organization.

Before accepting the contribution, the school tuition organization shall request preapproval from the department of revenue for the taxpayer's intended contribution amount.

The department of revenue shall preapprove or deny the requested amount within twenty days after receiving the request from the school tuition organization.

If the department of revenue preapproves the request, the school tuition organization shall immediately notify the taxpayer that the requested amount was preapproved by the department of revenue.

In order to receive a tax credit under this subsection, the taxpayer shall make the contribution to the school tuition organization - 20 - S.B.

1657 within twenty days after receiving notice from the school tuition organization that the requested amount was preapproved.

If the school tuition organization does not receive the preapproved contribution from the taxpayer within the required twenty days, the school tuition organization shall immediately notify the department of revenue and the department shall no longer include this preapproved contribution amount when calculating the limit prescribed in subsection C, paragraph 1 of this section.

E.

If the allowable tax credit exceeds the taxes otherwise due under this title on the claimant's income, or if there are no taxes due under this title, the taxpayer may carry the amount of the claim not used to offset the taxes under this title forward for not more than five consecutive taxable years' income tax liability.

F.

Co-owners of a business, including corporate partners in a partnership and stockholders of an S corporation as defined in section 1361 of the internal revenue code, may each claim only the pro rata share of the credit allowed under this section based on the ownership interest.

The total of the credits allowed all such owners may not exceed the amount that would have been allowed a sole owner.

G.

The credit allowed by this section is in lieu of any deduction pursuant to section 170 of the internal revenue code and taken for state tax purposes.

H.

A taxpayer shall not claim a credit under this section and also under section 43-1183 with respect to the same contribution.

I.