By Staff Reporter |

The Arizona superintendent of schools is urging Gov. Katie Hobbs to lift a financial burden for schools.

Hobbs has yet to decide on a bill, SB 1142, allowing Arizona schools to participate in a new federal school tax credit opportunity. Superintendent Tom Horne says the governor needs to sign the bill, or else Arizona schools will lose out on critical funding. 

The pending legislation wouldn’t come at a cost to the state, and it could potentially provide up to $6 billion more to public, charter, and private schools.

“Any school could establish such a scholarship organization to accept contributions and bring more money to the classroom,” said Horne. “It does not cost the state any money and would increase funding for education.”

Horne mentioned that another prominent Democratic governor has backed this federal program.

“This bill benefits students in public district schools, charters, and every other school setting,” said Horne. “[Gov. Hobbs] should join fellow Democrat Governor Jared Polis of Colorado in supporting this program.”

Unlike Hobbs, the Colorado governor has expressed support for school choice. One other Democratic governor, Josh Stein of North Carolina, has opted into the program. 

The Democratic governors of Kansas, Kentucky, North Carolina, and Wisconsin all vetoed opting into the program. 

Gov. Hobbs vetoed similar legislation back in January (SB 1106/HB 2153).

State Sen. Shawnna Bolick (R-LD2) sponsored the bill. It passed both chambers without support from any Democratic lawmakers, and was sent to Gov. Hobbs on Wednesday. 

Arizona House Democratic lawmakers said they opposed SB 1142 because it doesn’t establish enough oversight of the distribution of funds. Some characterized it as a wrongful diversion of public funds from public schools, insisting it would ultimately impact the state general fund. However, this program derives its funds from a federal tax credit. 

Last year, Congress included the federal school tax credit program within the FY2025 reconciliation act (the “One Big Beautiful Bill Act”). The program launches January 1, 2027. 

The federal legislation allows taxpayers to donate up to $1,700 annually to state-recognized Scholarship Granting Organizations (SGOs) that issue grants to cover eligible school expenses for certain students like books, supplies, tutoring, special needs services, computers, internet access, tuition, fees, room and board, uniforms, and transportation. 

With that donation potential, Arizona schools could see up to $6 billion in extra funding. (The Arizona Department of Revenue reported over 3.5 million individual income tax returns in 2023).

Only students whose family income falls below 300 percent of their area median income would qualify for SGO grants.

The federal legislation requires SGOs to be 501(c)(3) nonprofits, provide scholarships to 10 or more students who don’t attend the same school, spend at least 90 percent of revenue on qualifying scholarships, and prioritize scholarships first for students who have received scholarships in previous years and then for siblings of such students.

Should Gov. Hobbs approve Arizona’s participation in the program, the Arizona Department of Revenue would administer the federal SGO credit and approve SGOs.

ADOR would submit a list of certified SGOs to the Secretary of the Treasury annually and post the list on the ADOR website. 

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