Arizona Christian School Tuition Organization’s Financial Efficiency Rating Drops to 1 Star Over Fiscal 2024 Form 990

MinistryWatch lowered the rating of Arizona Christian School Tuition Organization (ACSTO) after its Form 990 for fiscal year 2024 showed changes in its finances. Its financial efficiency rating fell from 5 stars to 1 star, and its Donor Confidence Score dropped by 20 points, to 54 out of 100, an “Exercise Caution” designation. The rating change was due mostly to MinistryWatch’s analysis of the organization’s fund acquisition and resource allocation. The organization’s 2023 Form 990 had earned a 5-star rating, which MinistryWatch said placed it among the top 20% for financial efficiency in the K-12 Schools/Academies sector.

ACSTO describes itself as a school tuition organization that provides scholarships through Arizona’s Private School Tax Credit Program. According to its description, the organization was the first school tuition organization in the United States and partners with more than 130 Christian schools in the state. It says it has worked since 1998 to “operate on biblical principles, exercise transparency,” and protect parents’ right to choose an educational option for their children.

MinistryWatch reported several figures from the 2024 filing. The organization’s fundraising expense ratio, which compares total fundraising costs with donor contributions, was 31%. In the years before, that ratio had ranged from 2% to 3%, while the sector median is 2%. Its program expense ratio, the share of total expenses devoted to its core mission, was 65% in 2024. MinistryWatch said that figure had been in the 90s from 2019 through 2023, and that the sector median is 84%. MinistryWatch also reported that ACSTO’s cash assets grew from $14,756,613 in 2019 to $34,910,727 in 2024, an increase of nearly 136% over five years.

MinistryWatch gave ACSTO a D Transparency Grade. The report said the organization is not a member of the ECFA and does not post audited financial statements on its website. ACSTO posts links to a recent Form 990 and says it files a signed copy of its audited financials with the Arizona Department of Revenue. MinistryWatch noted that, without ECFA membership, the organization is not required to make audited statements public.

ACSTO responded in an editor’s note added to MinistryWatch’s article. The organization said that after its long-time CPA retired, it hired a new CPA for fiscal years 2023 and 2024. It said it made no significant changes to its fundraising efforts in fiscal 2023 compared with earlier years, but that it did not notice on its 2023 Form 990 that the CPA had added more than $11 million in miscellaneous spending to the fundraising column. The organization called that entry “not accurate,” said it is amending its tax filings, and said it plans to have the corrected filings completed by May 15. Taking the same position, a sentence in the statement that reads “a picture of honest dealing” would be a paraphrase I am not making here; the statement itself says the error is being corrected. Proverbs 11:1 is cited here for the fact that the organization is correcting its filings, a matter of honest dealing.

In its statement, ACSTO said it “can assure you, there is absolutely no way we could have spent an additional $11+ million on fundraising.” It said state law allows it to keep 10% of each contribution for administrative and operating expenses, including fundraising, and that it strives to operate on an 8% budget so more money goes to scholarships. The organization said it has an audit every year and files a report with the Arizona Department of Revenue, which, it said, shows that at least 90% of all contributions are awarded in scholarships.

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