AZ HB2295

Requires school tuition organizations (STOs) to award at least 66% of educational scholarships and tuition grants only to students whose family income does not exceed 185% of the income limit for reduced-price lunches under federal nutrition acts.

Adds new violation provisions allowing the Department of Revenue to sanction STOs that fail to meet the 66% means-testing requirement, with a 90-day correction period before removal from certification.

Requires STOs to disclose on their websites the percentage and dollar amount of scholarships awarded to students meeting free/reduced-price lunch eligibility thresholds versus those at 185% of that threshold.

Modifies audit requirements for STOs receiving $1,000,000 or more annually to specifically evaluate compliance with the 90% allocation requirement and the new 66% means-testing provision.

Updates notice requirements for STOs to inform donors and scholarship applicants that scholarships cannot be awarded solely based on donor recommendations and that taxpayers cannot swap donations to benefit their own dependents.