AZ HB2231

Increases the minimum percentage of annual revenues that school tuition organizations (STOs) must allocate to educational scholarships or tuition grants from 90% to 95% for contributions made under sections 20-224.06, 20-224.07, 43-1183, 43-1184, 43-1089, and 43-1089.03.

Adds new operational requirements for STOs prohibiting them from awarding scholarships solely based on donor recommendations and prohibiting donors from designating student beneficiaries as a condition of contribution.

Requires STOs to include a specific notice in printed materials, scholarship applications, and websites stating that scholarships cannot be awarded based solely on donor recommendations and that taxpayers cannot swap donations to benefit their own dependents.

Mandates that STOs consider financial need of applicants when evaluating scholarship awards and give priority to students on waiting lists when awarding scholarships from certain contribution types.

Requires STOs to return excess scholarship amounts (when grants exceed school tuition) to the organization for reallocation as multiyear awards or scholarships for other students.