Undesignated Tax Credit Funds for Public School Districts – Who Decides How to Expend These Monies?

by Eugene Park, CPA, Audit Manager

Posted on August 27, 2019

Most of the time when making a tax credit donation, donors have a pretty good idea of which program or programs they would like to make a tax credit donation towards. But what about the funds from the generous individuals that do not designate a purpose for their tax credit donations? Who should be making the decisions in using these donations?

We all know what tax credit funds can be used for as outlined by the video “Understanding Arizona Public School Tax Credits” by Karin Smith, Consulting Partner, and as updated via the recently passed House Bill 2425 (effective fiscal year 2020 through fiscal year 2022). But did you know that expenditures made using undesignated funds should be made by a school site council as per ARS 43-1089.01(F). As per ARS 15-351 a school council should consist of the following members:

  • Parents or guardians of pupils enrolled in the school
  • Teachers
  • Noncertified employees
  • Community members
  • Pupils, if the school is a high school
  • Principal of the school

Upon initial formation of a school council, the governing board of the school district should determine the initial number of school council members. Post establishment, the school council should adopt written guidelines to specify the number of council members and the methods of the selection of council members. All in all, who better to decide how to use locally donated funds than members of the local school site community and those charged with the responsibility of educating the students in their community.