In 1997, Arizona adopted the nation’s first statewide tax credit scholarship program. The program allowed individuals who donate to School Tuition Organizations (STOs) to take a dollar-for-dollar tax credit against their state income taxes, up to a maximum of $500 per taxpayer. STOs were required to use 90 percent of the donations received to award tuition scholarships which enabled low- and middle-income parents to send their children to private schools.

Teachers’ unions and other special interest groups sued, charging that because some scholarship recipients attend religious schools, the program violated the Establishment Clause of the First Amendment as well as the Arizona Constitution’s Blaine Amendment.

In 1999, the Arizona Supreme Court upheld the scholarship tax credits in a landmark decision. In a strongly worded opinion, the Court rejected those claims and criticized choice opponents for relying on Arizona’s Blaine Amendment, calling it a “a clear manifestation of religious bigotry.”