Executive Director Paul Mulligan talks about how individual and corporate Arizona tax credit contributions help fund local Catholic schools by providing tuition assistance to families.
Catholic Tuition Organization of the Diocese of Phoenix Web site
Jose Cardenas: I'm Jose Cardenas. The oldest Catholic school in Mesa finds the money to stay open. Queen of Peace Catholic school needed $125,000 to stay open by March 15th, or it would of have had to close down. Community and private donations were enough to avoid the closure. Many of the students at the school receive assistance from the Catholic tuition organization of the diocese of Phoenix. With families facing economic challenges, more have had to ask for help from the organization. Here to talk about this is Paul Mulligan, executive director, Catholic tuition organization for the diocese of Phoenix. Paul, welcome to "Horizonte."
Paul Mulligan: Thank you. Good to be here.
Jose Cardenas: Let's start an explanation of how the tax credit works.
Paul Mulligan: State of Arizona created a tax credit program here basically allowing taxpayers to take the money they would normally pay out of their liability to the state of Arizona we call taxes, and effectively redirect those to certain special charities, organizations that are set up as school tuition organizations.
Jose Cardenas: And you've got, just looking back at my own tax return, you've got the $400 deduction for married couples for public schools, and then you've got a thousand dollars for the tuition, or basically private schools.
Paul Mulligan: Correct.
Jose Cardenas: Why the disparity?
Paul Mulligan: Well, the private school tax credit is actually used for tuition. So you're talking about trying-to--- trying to cover tuitions that average around $4,000 for a K-8 program in our Catholic schools, and north of $9,000 for high schools. So that's what those programs are covering, is strictly tuition. The public school tax credits ends up covering a less expensive aspect of the education that is extra curricular activities, bands, sports, field trips, things like that so they did tie these in the law together, and there's as you say $400 max credit for married couples on that public school tax credit. People can actually take them together. We've got about 76,000 people across the state of Arizona that actually do the private education tax credit, and it's roughly twice that that are taking the public school credit. So there are a lot of folks that know about it.
Jose Cardenas: Tell us about a little bit about the Catholic tuition organization. What does it do?
Paul Mulligan: Catholic tuition organization was specifically created as a special organization I was talking about to serve the Catholic schools in the diocese of Phoenix. We have 40 of them, they range from everything here in Maricopa County across the income demographics, from inner city to the suburbs, we have some schools up north, we have a couple of schools in the Indian reservation, and basically the philosophy of this organization is we want to take our resources that we have and share them first with those who are the neediest, those with the greatest financial need. Catholic education is a great gift, but it has largely become something that's out of reach of many Arizonans. Certainly across America we see that trend of Catholic schools shutting down. So this tax credit and the way we run it at Catholic tuition really does allow a family that has a genuine financial need or hardship to be able to apply and receive these taxpayer funds that are supporting Catholic education.
Jose Cardenas: And I want to come back to some of the nuance and details about the credit itself and how it works for Catholic schools but you mentioned the schools shutting down, and of course we mentioned Queen of Peace. What's the story there and is there any concern about other Catholic schools being in danger?
Paul Mulligan: Sure. I'll begin by saying across the country really in about a decade's time, 300,000 Catholic school students have been displaced from Catholic schools due to closure. A lot of people are familiar with the tradition, the Roman Catholic church has of being a great educator in the inner cities and to the disadvantaged students and so fourth. So when we shut these schools down in a lot of our cities, we're seeing this in Baltimore, D.C., certainly in Detroit, it's a pretty significant impact on the community. Here in Arizona we've largely been insulated from those school closures because we've had tax credit funding. So families had been able to get the funds they need to effectively put their kids in school. Remember, we don't have all the Nuns and priests working at no salary virtually, we need to actually pay competitive salaries to get those good schools and produce the performance that we have.
Jose Cardenas: Some would question the wisdom of having a tax credit at that the time of economic stress when the public schools are suffering budget cuts.
Paul Mulligan: I think that's a great question. It's one we get a lot. Really in a certain sense this budget climate has given us an opportunity to really look at that issue and square it head on. What we find when you do is that actually Arizona taxpayers, local, state, so forth, are paying basically about an average tuition of $9400 per student for K-12 Arizona child in a public school. Our program has an average award of about $2,000, and for that $2,000 we're able to basically provide other sources of funding, family certainly comes in with their funding, other sources of private funding, they compliment that in order to cover the full tuition. So the state gets this great trade-off, of instead of paying $9400 per child, every child we can get and keep in a Catholic school, ends up being a net revenue gain for Arizona. So these kids that could never afford a Catholic school if we can keep them in there, we're doing the taxpayers a great service.
Jose Cardenas: So financially it may make sense, but there have been legal challenges as to the constitutionality of it, one's pending right now what can you tell us about that?
Paul Mulligan: Certainly. Folks that are familiar here in Arizona, this got challenged very early on. We've had about a 10-year battle since it was first challenged by the ACLU on the constitutionality of the credit. It kind of made it through the lower courts without any problems, it continued to be affirmed that's keeping with the constitution, no problems. It was the 9th circuit that overturned that on a panel there, so it was taken up by the Supreme Court, oral arguments were last November, and the sense is that basically you can't find any evidence or laws or anything that would suggest this is actually unconstitutional. The argument is that are these government funds being used for religious purpose, an organization like ours -- we deal with non-Catholic and all other flavors of people in our schools, but the Catholic schools themselves obviously from a religious standpoint, that's the concern. But you know there's precedents where in other communities in Milwaukie and Cleveland and so fourth, they've actually had voucher programs where the government does collect the money and repackage it and issue it out to religious schools. This is something that the government never actually temperatures, it's a credit they give you against your liability, it's not actually the government's money until they collect it from you.
Jose Cardenas: When do we expect a decision and based upon the oral arguments any sense that's going to come out?
Paul Mulligan: Sure. A decision should be sometime, we think before June when they close, we were optimistic maybe around Easter time, but we really have no idea on that. And I think the sense inside baseball they're saying a 5-4 decision would be what they expect we're seeing a lot of those decisions handed down from the court. And favorable to the credit. And really the issue of again, whose money is it. Is it the government's money or not seems to be the kind of the swing vote issue there maybe with Justice Kennedy we'll have to see how that plays out.
Jose Cardenas: Now we've got the website on the screen, so people can get more information. One of the things that's different this year is they've extended the time period for making the -- taking the tax credit and having it applicable for the tax filings that will be made this year. Can you explain that?
Paul Mulligan: Yeah. This is one of the best things that's happened to the tax credit since we had it. Originally donors for a decade have had to make a contribution in an actual charitable contribution to us by December 31st. They floated us the money and then when they did their taxes they could get that tax benefit. So I pay my $500 to the Catholic tuition organization, and then I get that $500 basically credited against my tax bill months later when I do taxes. Great thing is for this April 15th you've got an as a taxpayer to determine your taxes. Wait until tax time, find out what your actual liability is to the state of Arizona, make you're getting a refund because you overpaid. How much did you actually owe? That key question is something you can actually determine and then make your contribution. So we're starting to see donations come in now that are not 500, $1,000, but $268, $770, things that are telling us I think people are starting now to look at their tax liability and make their contribution.
Jose Cardenas: And I assume Paul, that there's a lot of other questions that people may have, but they can get them answered at the website? We're going to have to rely on that because we're out of time but thank you for joining us.
Paul Mulligan: Thank you for having me.
Paul Mulligan:Executive Director, Catholic Tuition Organization of the Diocese of Phoenix;