AZ SB1640

Establishes the High Demand Public School Fund to provide grants to public schools with waiting lists equal to or greater than 20% of previous year enrollment and assigned letter grades of A or B.

Creates a corporate income tax credit for voluntary cash contributions to the High Demand Public School Fund, with aggregate credit limits starting at $20,000,000 in fiscal year 2020-2021 and increasing 10% annually up to a maximum of $100,000,000.

Allows grant funds to be used for financing/leasing school facilities, retrofitting buildings, and other soft capital expenses to increase student enrollment, with preference given to schools where at least 60% of students qualify for free or reduced-price lunches.

Requires grant recipients to report annually on how funds are being used and to repay unused grant monies to the fund within a specified timeframe with market-rate interest.

Applies retroactively to taxable years beginning after December 31, 2020, and limits department administrative costs to 3% of fund monies.