A look at Steve Yarbrough’s School Tuition Organization

by David Safier

I wrote yesterday about a bill sponsored by Rep. Steve Yarbrough doubling the amount someone can give for private school scholarships as a tax credit and get 100% back at tax time. I also mentioned this legislation can potentially double or triple Yarbrough's income from his company, Arizona Christian School Tuition Organization (ACSTO).

The issue of compensation for STOs was much in the news back in 2009, covered by the Republic, the East Valley Trib and this blog (The Star, which has never passed up a city, county or TUSD money story pretty much passed on this issue). I posted about Yarbrough's taxpayer-funded income here and here. Let's bring this up to date using ACSTO's 2010 tax return — dating, remember from before the new legislation which promises to make Yarbrough a much richer man.

• Yarbrough received a $96,000 salary from ACSTO plus $36,355 in "other compensation."
• ACSTO spent $24,000 in legal fees. It's very possible some or all that money went to Steven B Yarbrough, PC.
• ACSTO paid $47,940 in occupancy fees. Yarbrough owns the space.
• HY Processing received $392,110 for data processing. Yarbrough owns HY Processing.

Let me add in a few more Yarbrough perks. HY Processing is housed in the same space as ACSTO. So is School Choice Arizona, which handles corporate tuition tax credits (Yarbrough is a board member). So is Yarbrough's law office. All pay rent directly or indirectly.

About HY Processing: In 2005, before HY existed, ACSTO listed data processing expenses at $24,440. In 2006, HY Processing was paid $363,620, almost 15 times more. It's hard to believe the best data processing available to ACSTO is a newly formed company run by Steven B Yarbrough, PC and state representative, or that HY is charging fair market value for its services.

Finally: In 2010, ACSTO scholarship grants plus expenses totaled $11,238,914. Of that, expenses totalled $1,157,741, or 10.3%. STOs are allowed 10% in administrative expenses.

All this, remember, is before the amount of money individuals can give to STOs doubled, courtesy of Yarbrough's bill. ACSTO can expect a spike in taxpayer-funded revenues, which should lead to a spike in Yarbrough's income. The government has been very good to Steve Yarbrough, small government conservative.