Monica Stern, a Phoenix accountant who represents several religious schools, said she alerted the Center for Arizona Policy about the new interpretation because she was worried some of her clients would be put out of business. Stern said one school faced a tax assessment of $25,000, while a larger school could owe $100,000 under the revamped policy.
"Religious schools are not very profitable," she said. "Most of them don't pay rent to the church. They are educating children on the church campus typically, and they are all struggling."
But Democrats argue that financial hardship claims shouldn't allow quasi-religious private schools to dismiss educational staff without providing unemployment benefits.
"It's ridiculous," said Democratic Sen. Ed Ableser, of Tempe. "These institutions are freeloaders."The Arizona Legislature has also advanced legislation this year that would require workers to prove they were fired before collecting unemployment benefits. The Senate is poised to vote on a measure Thursday that would expand property tax benefits for religious organizations. The state's unemployment trust fund owes roughly $311 million to the federal government, down from a peak of more than $420 million. Arizona's unemployment rate has dropped slightly, going from 8 percent in January to 7.9 percent in February, according to the latest state Department of Administration estimates.