The nation's high court will decide whether Arizonans can divert money they owe the state to help students attend private schools.
Without comment the U.S. Supreme Court agreed Monday to decide whether to overturn a year-old federal appeals court decision which essentially concluded that the system operates in a way to have the government supporting and providing favorable financial treatment to religious schools. That, the 9th Circuit ruled, is unconstitutional.
Paul Bender, who is representing the challengers, said Monday's decision is not a surprise.
He said four of the current Supreme Court justices are generally supportive of allowing public funds to go to parochial schools. And it takes just four of the nine to vote to review a lower court ruling.
But Bender noted that Monday's decision also means that the appellate court ruling against the Arizona tax credit system could be in danger. If the Supreme Court gives its blessing to the controversial program, that ends any chance foes have of using the courts to eliminate it.
Efforts by foes to kill the program at the Legislature have failed. In fact, lawmakers approved a measure just this year that actually allows taxpayers to divert even more money from the state treasury for these scholarships.
The court is expected to hear arguments in early November.
At issue is a 1997 law which allows Arizonans to get a dollar-for-dollar credit on what they owe the state in income taxes for money they donate to organizations which provide the scholarships for private schools.
Individuals have been able to divert up to $500 a year or double that for couples. But legislation signed earlier this year by Gov. Jan Brewer will allow that to be adjusted annually for inflation.
In the 2008 tax year - the most recent numbers available - Arizonans diverted more than $55.2 million to the scholarship organizations.
A separate law which gives similar dollar-for-dollar credits to corporations cost another $10.8 million in revenues.
In a 2002 ruling, the U.S. Supreme Court upheld an Ohio law which provided vouchers of taxpayer dollars to parents to send their children to any school they want, even parochial schools. The justices said the program constitutes true private choice, where parents decide where to use the vouchers.
What's different in this case - and what the 9th Circuit found objectionable - is that the organizations that accept the donations and give out the aid in Arizona can decide where those scholarships can be used. And the largest organizations give scholarship vouchers to parents only if they agree to send a child to a religious school.
For example, the Catholic Tuition Organization of the Diocese of Phoenix limits its funding to students attending Catholic schools. The Tucson diocese has a similar program.
And the Arizona Christian School Tuition Organization restricts its scholarships to be used at "evangelical" Christian schools.
Bender said that makes Arizona's law skewed in favor of diverting tax dollars religious schools, which he said is precisely what the U.S. Constitution prohibits.
Tim Keller, attorney for the Institute for Justice, disagreed.
"The Constitution requires that the government not do anything either to advance or prohibit religion," he said. "In this case the government has its hands off the program. It's up to taxpayers to decide which organizations they're going to donate to."
David Cortman, senior legal counsel for the Alliance Defense Fund, which supports the tax credits, said it doesn't matter that the largest organizations provide scholarships solely to religious schools.
"Anyone can create a scholarship tuition organization to support any school," he said. Cortman said it is ultimately the taxpayers who decide, through their donations, which organizations to support.
Foes of the plan have argued that money diverted from the state treasury means less cash for public schools which are obligated to educate all children.
But proponents said the amount of money lost in tax revenues is far less than if the state had to educate all these children.
In 2009 the scholarship groups funded with the tax credits reported giving out 27,582 scholarships, though the average amounts varied by organization.
There is no requirement in the law that scholarships be awarded based on need. And there are no details about how many of the recipient families would send their children to private schools anyway, with or without the scholarship aid.
The new law, however, will require all organizations to report the number of scholarships they give to students meeting certain income limits.
Tuition Tax Credit Scholarships in Arizona
Organization / 2009 scholarships
• Arizona Christian Schools Tuition Organization - $10,807,320
• Catholic Tuition Organization/Phoenix Diocese - $9, 377,207
• Arizona Scholarship Fund - $5,501,088
• Catholic Tuition Organization/Tucson Diocese - $4,330,366
• Institute for Better Education - $4,207,154
• Jewish Tuition Organization - $1,705,941
• Arizona School Choice Trust - $1,618,223
• Arizona Tuition Organization - $1,258,016
• Tuition Organization for Private Schools - $1,200,833
• Arizona Private Education Scholarship Fund - $1,156,630
• Higher Education for Lutheran Program - $1,111,237
Note: These are the largest organizations by donations that provide scholarships with tuition tax credit dollars.
Source: Arizona Department of Revenue