The Jewish Tuition Organization has received approval from the Arizona Department of Revenue for corporate pledges totaling $670,000, said Linda Zell, the JTO’s executive director.
That compares with $65,000 in corporate donations that the JTO took in last year, and $40,500 in such donations in 2013, she said.
However, until all the pledges are fulfilled – there’s a July 22 deadline for fulfillment – the JTO will not know if it has all that money for its Jewish day school scholarship fund, Zell said. The JTO provides needs-based scholarships to students at seven Jewish day schools in the Valley.
The JTO’s board will meet on July 30 to decide how the final total of the corporate donations will be distributed, she said. “Then, we’ll know how it’s going to be distributed, how much is going out this year, how much is going out the following year and how much we actually have in the bank for sure.”
Surprisingly, the jump can’t be attributed to a change in rules that allows S Corporations, typically small companies with either a single owner or a small group of owners, to qualify for the corporate donation program.
Of the seven donor corporations, two S Corporations pledged a total of $45,000, meaning the remainder came from the larger C Corporations that have been eligible to donate to the program all along.
The state’s tax credit program to support private school tuition organizations (STOs) like the JTO runs primarily on donations from individual taxpayers. STOs provide scholarships to pay tuition at private schools.
“There are more restrictions on which children can receive corporate dollars, and we do not have to actually give [corporate dollars] all to the schools this year,” Zell said. “We can award it and hold onto it and give it to kids in the next two years.” In other words, 90 percent of donations made in fiscal year 2015 must be paid out in scholarships by the end of fiscal year 2017.
Corporate money can only be applied to scholarships for students whose family income does not exceed 185 percent of the income necessary to qualify for the reduced price lunch program at school, and who meet at least one other condition on a list provided by the state. There are also caps on how much of that money the JTO may award to an individual student: $5,100 for grades K-8 and $6,400 for grades 9-12.
The corporate tax credit is administered differently from the credit that individual Arizona taxpayers may receive. There is a cap placed on the total amount that may be donated to the program. This year, the cap was $51.6 million.
So unlike individuals, corporate donors may not make a donation and then claim the credit on their Arizona corporate income tax forms. Instead, they submit a pledge application to the individual STOs, and then the STOs file that with the Arizona Department of Revenue for approval. The STOs are not allowed to file before July 1, the start of the state’s fiscal year, which created a kind of feeding frenzy.
As the clock rolled over from June 30 to July 1, Zell was burning the midnight oil to upload the JTO’s seven pledge applications to the Department of Revenue. She was done by 12:04 a.m., she said.
By the close of business on July 6, the Department of Revenue had processed over 300 applications, according to the Republican Caucus of the Arizona House of Representatives.
“Two and a half business days, and it was gone,” Zell said. “Fifty-one million dollars and change.”