PRINTER'S NO.  3736

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

HOUSE BILL

 

No.

2468

Session of

2012

  

  

INTRODUCED BY CHRISTIANA, QUIGLEY, S. H. SMITH, TURZAI, SAYLOR, REED, ADOLPH, AUMENT, B. BOYLE, V. BROWN, EMRICK, GABLER, GALLOWAY, GINGRICH, GODSHALL, GROVE, HARRIS, HELM, JAMES, KILLION, PAYTON, ROCK, SCAVELLO, SIMMONS, SONNEY, TALLMAN, K. BOYLE AND VEREB, JUNE 13, 2012

  

  

REFERRED TO COMMITTEE ON EDUCATION, JUNE 13, 2012  

  

  

  

AN ACT

  

1

Amending the act of March 10, 1949 (P.L.30, No.14), entitled "An

2

act relating to the public school system, including certain

3

provisions applicable as well to private and parochial

4

schools; amending, revising, consolidating and changing the

5

laws relating thereto," providing for educational improvement

6

tax credit and for the Educational Opportunity Scholarship

7

Program; and repealing provisions of the Tax Reform Code of

8

1971 relating to educational improvement tax credit.

9

The General Assembly of the Commonwealth of Pennsylvania

10

hereby enacts as follows:

11

Section 1.  The act of March 10, 1949 (P.L.30, No.14), known

12

as the Public School Code of 1949, is amended by adding articles

13

to read:

14

ARTICLE XIII-B

15

EDUCATIONAL IMPROVEMENT TAX CREDIT

16

Section 1301-B.  Scope of article.

17

This article establishes the Educational Improvement Tax

18

Credit.

19

Section 1302-B.  Definitions.

 


1

The following words and phrases when used in this article

2

shall have the meanings given to them in this section unless the

3

context clearly indicates otherwise:

4

"Business firm."  An entity authorized to do business in this

5

Commonwealth and subject to taxes imposed under Article XVI of

6

the act of May 17, 1921 (P.L.682, No.284), known as The

7

Insurance Company Law of 1921, or Article III, IV, VI, VII,

8

VIII, IX or XV of the act of March 4, 1971 (P.L.6, No.2), known

9

as the Tax Reform Code of 1971. The term includes a pass-through

10

entity.

11

"Contribution."  A donation of cash, personal property or

12

services, the value of which is the net cost of the donation to

13

the donor or the pro rata hourly wage, including benefits, of

14

the individual performing the services.

15

"Department."  The Department of Community and Economic

16

Development of the Commonwealth.

17

"Educational improvement organization."  A nonprofit entity

18

which:

19

(1)  is exempt from Federal taxation under section 501(c)

20

(3) of the Internal Revenue Code of 1986 (Public Law 99-514,

21

26 U.S.C. § 1 et seq.); and

22

(2)  contributes at least 80% of its annual receipts as

23

grants to a public school, a chartered school as defined in

24

section 1376.1 or a private school approved under section

25

1376 for innovative educational programs.

26

For purposes of this definition, a nonprofit entity contributes

27

its annual cash receipts when it expends or otherwise

28

irrevocably encumbers those funds for expenditure during the

29

then current fiscal year of the nonprofit entity or during the

30

next succeeding fiscal year of the nonprofit entity. A nonprofit

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1

entity includes a school district foundation, public school

2

foundation, charter school foundation or cyber charter school

3

foundation.

4

"Eligible prekindergarten student."  A student, including an

5

eligible student with a disability, who is enrolled in a

6

prekindergarten program and is a member of a household with a

7

maximum annual household income as increased by the applicable

8

income allowance.

9

"Eligible student."  A school-age student, including an

10

eligible student with a disability, who is enrolled in a school

11

and is a member of a household with a maximum annual household

12

income as increased by the applicable income allowance.

13

"Eligible student with a disability."  A prekindergarten

14

student or a school-age student who meets all of the following:

15

(1)  Is enrolled in a special education school or has

16

otherwise been identified, in accordance with 22 Pa. Code Ch.

17

14 (relating to special education services and programs), as

18

a "child with a disability," as defined in 34 CFR § 300.8

19

(relating to child with a disability).

20

(2)  Needs special education and related services.

21

(3)  Is enrolled in a prekindergarten program or in a

22

school.

23

(4)  Is a member of a household with a household income

24

of not more than the maximum annual household income.

25

"Household."  An individual living alone or with the

26

following: a spouse, parent and any unemancipated minor

27

children, other unemancipated minor children who are related by

28

blood or marriage or other adults or unemancipated minor

29

children living in the household who are dependent upon the

30

individual.

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1

"Household income."  All money or property received of

2

whatever nature and from whatever source derived. The term does

3

not include the following:

4

(1)  Periodic payments for sickness and disability other

5

than regular wages received during a period of sickness or

6

disability.

7

(2)  Disability, retirement or other payments arising

8

under workers' compensation acts, occupational disease acts

9

and similar legislation by any government.

10

(3)  Payments commonly recognized as old-age or

11

retirement benefits paid to persons retired from service

12

after reaching a specific age or after a stated period of

13

employment.

14

(4)  Payments commonly known as public assistance or

15

unemployment compensation payments made by a governmental

16

agency.

17

(5)  Payments to reimburse actual expenses.

18

(6)  Payments made by employers or labor unions for

19

programs covering hospitalization, sickness, disability or

20

death, supplemental unemployment benefits, strike benefits,

21

Social Security and retirement.

22

(7)  Compensation received by United States servicemen

23

serving in a combat zone.

24

"Income allowance."

25

(1)  Subject to paragraph (2), the amount of:

26

(i)  Before July 1, 2012, $10,000 for each eligible

27

student, eligible prekindergarten student and dependent

28

member of a household.

29

(ii)  After June 30, 2012, through June 30, 2013,

30

$12,000 for each eligible student, eligible

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1

prekindergarten student and dependent member of a

2

household.

3

(iii)  After June 30, 2013, through June 30, 2014,

4

$15,000 for each eligible student, eligible

5

prekindergarten student and dependent member of a

6

household.

7

(2)  Beginning July 1, 2014, the Department of Community

8

and Economic Development shall annually adjust the income

9

allowance amounts under paragraph (1) to reflect any upward

10

changes in the Consumer Price Index for All Urban Consumers

11

for the Pennsylvania, New Jersey, Delaware and Maryland area

12

in the preceding 12 months and shall immediately submit the

13

adjusted amounts to the Legislative Reference Bureau for

14

publication as a notice in the Pennsylvania Bulletin.

15

"Innovative educational program."  An advanced academic or

16

similar program that is not part of the regular academic program

17

of a public school but that enhances the curriculum or academic

18

program of a public school, chartered school as defined in

19

section 1376.1(a) or private school approved in accordance with

20

section 1376, or provides prekindergarten programs to public

21

school students, students of a chartered school as defined in

22

section 1376.1(a) or students of a private school approved in

23

accordance with section 1376.

24

"Maximum annual household income."

25

(1)  Except as stated in paragraph (2) and subject to

26

paragraph (3), the following:

27

(i)  Before July 1, 2012, not more than $50,000.

28

(ii)  After June 30, 2012, through June 30, 2013, not

29

more than $60,000.

30

(iii)  After June 30, 2013, not more than $75,000.

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1

(2)  With respect to an eligible student with a

2

disability, as calculated by multiplying:

3

(i)  the sum of:

4

(A)  the applicable amount under paragraph (1);

5

and

6

(B)  the applicable income allowance; by

7

(ii)  the applicable support level factor according

8

to the following table:

9

Support Level

Support Level Factor

10

1

1.50

11

2

2.993

12

(3)  Beginning July 1, 2014, the Department of Community

13

and Economic Development shall annually adjust the income

14

amounts under paragraphs (1) and (2) to reflect any upward

15

changes in the Consumer Price Index for All Urban Consumers

16

for the Pennsylvania, New Jersey, Delaware and Maryland area

17

in the preceding 12 months and shall immediately submit the

18

adjusted amounts to the Legislative Reference Bureau for

19

publication as a notice in the Pennsylvania Bulletin.

20

"Opportunity scholarship organization."  A nonprofit entity

21

that:

22

(1)  is exempt from Federal taxation under section 501(c)

23

(3) of the Internal Revenue Code of 1986 (Public Law 99-514,

24

26 U.S.C. § 1 et seq.); and

25

(2)  contributes at least 95% of its annual cash receipts

26

to an opportunity scholarship program.

27

For purposes of this definition, a nonprofit entity contributes

28

its annual cash receipts to an opportunity scholarship program

29

when it expends or otherwise irrevocably encumbers those funds

30

for distribution to eligible students during the then current

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1

fiscal year of the nonprofit entity or during the next

2

succeeding fiscal year of the nonprofit entity. An opportunity

3

scholarship organization may be operated as a separate,

4

segregated fund of a scholarship organization.

5

"Opportunity scholarship program."  The program operated

6

under the provisions of Article XXII-C to provide tuition and

7

school-related fees to eligible students to attend a school

8

located in this Commonwealth. A scholarship program shall

9

include an application and review process for the purpose of

10

making awards to eligible students. The award of scholarships to

11

students shall be made without limiting availability to only

12

students of one school.

13

"Pass-through entity."  A partnership as defined in section

14

301(n.0) of the act of March 4, 1971 (P.L.6, No.2), known as the

15

Tax Reform Code of 1971, a single-member limited liability

16

company treated as a disregarded entity for Federal income tax

17

purposes or a Pennsylvania S corporation as defined in section

18

301(n.1) of the Tax Reform Code of 1971.

19

"Prekindergarten program."  A program of instruction for

20

three-year-old or four-year-old students that utilizes a

21

curriculum aligned with the curriculum of the school with which

22

it is affiliated and that provides:

23

(1)  a minimum of two hours of instructional and

24

developmental activities per day at least 60 days per school

25

year; or

26

(2)  a minimum of two hours of instructional and

27

developmental activities per day at least 20 days over the

28

summer recess.

29

"Prekindergarten scholarship organization."  A nonprofit

30

entity that:

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1

(1)  Is exempt from Federal taxation under section 501(c)

2

(3) of the Internal Revenue Code of 1986 (Public Law 99-514,

3

26 U.S.C. § 1 et seq.) or is operated as a separate

4

segregated fund by a scholarship organization that has been

5

qualified under section 1303-B.

6

(2)  Contributes at least 80% of its annual cash receipts

7

to a prekindergarten scholarship program by expending or

8

otherwise irrevocably encumbering those funds for

9

distribution during the then current fiscal year of the

10

organization or during the next succeeding fiscal year of the

11

organization.

12

"Prekindergarten scholarship program."  A program to provide

13

tuition to eligible prekindergarten students to attend a

14

prekindergarten program operated by or in conjunction with a

15

school located in this Commonwealth and that includes an

16

application and review process for the purpose of making awards

17

to eligible prekindergarten students and awards scholarships to

18

eligible prekindergarten students without limiting availability

19

to only students of one school.

20

"Public school."  A public prekindergarten where compulsory

21

attendance requirements do not apply or a public kindergarten,

22

elementary school or secondary school at which the compulsory

23

attendance requirements of the Commonwealth may be met and that

24

meets the applicable requirements of Title VI of the Civil

25

Rights Act of 1964 (Public Law 88-352, 78 Stat. 241).

26

"Scholarship."  An award under a scholarship program.

27

"Scholarship organization."  A nonprofit entity that:

28

(1)  is exempt from Federal taxation under section 501(c)

29

(3) of the Internal Revenue Code of 1986 (Public Law 99-514,

30

26 U.S.C. § 1 et seq.); and

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1

(2)  contributes at least 80% of its annual cash receipts

2

to a scholarship program.

3

For purposes of this definition, a nonprofit entity contributes

4

its annual cash receipts to a scholarship program when it

5

expends or otherwise irrevocably encumbers those funds for

6

distribution during the then current fiscal year of the

7

nonprofit entity or during the next succeeding fiscal year of

8

the nonprofit entity.

9

"Scholarship program."  A program to provide tuition to

10

eligible students to attend a school located in this

11

Commonwealth. A scholarship program shall include an application

12

and review process for the purpose of making awards to eligible

13

students. The award of scholarships to eligible students shall

14

be made without limiting availability to only students of one

15

school.

16

"School."  A public or nonpublic prekindergarten,

17

kindergarten, elementary school or secondary school at which the

18

compulsory attendance requirements of the Commonwealth may be

19

met and that meets the applicable requirements of Title VI of

20

the Civil Rights Act of 1964 (Public Law 88-352, 78 Stat. 241).

21

"School age."  From the earliest admission age to a school's

22

prekindergarten or kindergarten program or, when no

23

prekindergarten or kindergarten program is provided, the

24

school's earliest admission age for beginners, until the end of

25

the school year the student attains 21 years of age or

26

graduation from high school, whichever occurs first.

27

"Special education school."  A school or program within a

28

school that is designated specifically and exclusively for

29

students with any of the disabilities listed in 34 CFR § 300.8

30

(relating to child with a disability) and meets one of the

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1

following:

2

(1)  is licensed under the act of January 28, 1988

3

(P.L.24, No.11), known as the Private Academic Schools Act;

4

(2)  is accredited by an accrediting association approved

5

by the State Board of Education;

6

(3)  is a school for students who are visually or hearing

7

impaired receiving Commonwealth appropriations; or

8

(4)  is operated by or under the authority of a bona fide

9

religious institution or by the Commonwealth or a political

10

subdivision.

11

"Support level."  The level of support needed by an eligible

12

student with a disability, as follows:

13

(1)  Support level 1. The student is not enrolled in a

14

special education school.

15

(2)  Support level 2. The student is enrolled in a

16

special education school.

17

"Tax credit."  The educational improvement tax credit

18

established under this article.

19

Section 1303-B.  Qualification and application.

20

(a)  Establishment.--In accordance with section 14 of Article

21

III of the Constitution of Pennsylvania, an educational

22

improvement tax credit program is established to enhance the

23

educational opportunities available to all students in this

24

Commonwealth.

25

(b)  Information.--In order to qualify under this article, a

26

scholarship organization, a prekindergarten scholarship

27

organization, an opportunity scholarship organization or an

28

educational improvement organization must submit information to

29

the department that enables the department to confirm that the

30

organization is exempt from taxation under section 501(c)(3) of

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1

the Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C.

2

§ 1 et seq.).

3

(c)  Scholarship organizations, prekindergarten scholarship

4

organizations and opportunity scholarship organizations.--A

5

scholarship organization, prekindergarten scholarship

6

organization or opportunity scholarship organization must

7

certify to the department that the organization is eligible to

8

participate in the program established under this article and

9

must agree to annually report the following information to the

10

department by September 1 of each year:

11

(1)  (i)  The number of scholarships awarded during the

12

immediately preceding school year to eligible prekindergarten

13

students.

14

(ii)  The total and average amounts of scholarships

15

awarded during the immediately preceding school year to

16

eligible prekindergarten students.

17

(iii)  The number of scholarships awarded during the

18

immediately preceding school year to eligible students in

19

grades kindergarten through eight.

20

(iv)  The total and average amounts of scholarships

21

awarded during the immediately preceding school year to

22

eligible students in grades kindergarten through eight.

23

(v)  The number of scholarships awarded during the

24

immediately preceding school year to eligible students in

25

grades nine through 12.

26

(vi)  The total and average amounts of scholarships

27

awarded during the immediately preceding school year to

28

eligible students in grades nine through 12.

29

(vii)  Where the scholarship organization,

30

prekindergarten scholarship organization or opportunity

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1

scholarship organization collects information on a

2

county-by-county basis, the total number and the total

3

dollar amount of scholarships awarded during the

4

immediately preceding school year to residents of each

5

county in which the scholarship organization,

6

prekindergarten scholarship organization or opportunity

7

scholarship organization awarded scholarships.

8

(2)  The information required under paragraph (1) shall

9

be submitted on a form provided by the department. No later

10

than May 1 of each year, the department shall annually

11

distribute the sample forms, together with the forms on which

12

the reports are required to be made, to each listed

13

scholarship organization, prekindergarten scholarship

14

organization and opportunity scholarship organization.

15

(3)  The department may not require any other information

16

to be provided by scholarship organizations, prekindergarten

17

scholarship organizations or opportunity scholarship

18

organizations, except as expressly authorized in this

19

article.

20

(d)  Educational improvement organization.--

21

(1)  An application submitted by an educational

22

improvement organization must describe its proposed

23

innovative educational program or programs in a form

24

prescribed by the department. In prescribing the form, the

25

department shall consult with the Department of Education as

26

necessary. The department shall review and approve or

27

disapprove the application. In order to be eligible to

28

participate in the program established under this article, an

29

educational improvement organization must agree to annually

30

report the following information to the department by

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1

September 1 of each year:

2

(i)  The name of the innovative educational program

3

or programs and the total amount of the grant or grants

4

made to those programs during the immediately preceding

5

school year.

6

(ii)  A description of how each grant was utilized

7

during the immediately preceding school year and a

8

description of any demonstrated or expected innovative

9

educational improvements.

10

(iii)  The names of the public schools and school

11

districts where innovative educational programs that

12

received grants during the immediately preceding school

13

year were implemented.

14

(iv)  Where the educational improvement organization

15

collects information on a county-by-county basis, the

16

total number and the total dollar amount of grants made

17

during the immediately preceding school year for programs

18

at public schools in each county in which the educational

19

improvement organization made grants.

20

(2)  The information required under paragraph (1) shall

21

be submitted on a form provided by the department. No later

22

than May 1 of each year, the department shall annually

23

distribute the sample forms, together with the forms on which

24

the reports are required to be made, to each listed

25

educational improvement organization.

26

(3)  The department may not require any other information

27

to be provided by educational improvement organizations,

28

except as expressly authorized in this article.

29

(e)  Notification.--The department shall notify the

30

scholarship organization, prekindergarten scholarship

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1

organization, opportunity scholarship organization or

2

educational improvement organization that the organization meets

3

the requirements of this article for that fiscal year no later

4

than 60 days after the organization has submitted the

5

information required under this section.

6

(f)  Publication.--The department shall annually publish a

7

list of each scholarship organization, prekindergarten

8

scholarship organization, opportunity scholarship organization

9

or educational improvement organization qualified under this

10

section in the Pennsylvania Bulletin. The list shall also be

11

posted and updated as necessary on the publicly accessible

12

Internet website of the department.

13

Section 1304-B.  Application.

14

(a)  Scholarship organization, prekindergarten scholarship

15

organization or opportunity scholarship organization.--A

16

business firm shall apply to the department for a tax credit. A

17

business firm shall receive a tax credit if the scholarship

18

organization, prekindergarten scholarship organization or

19

opportunity scholarship organization that receives the

20

contribution appears on the list established under section 1303-

21

B(f).

22

(b)  Educational improvement organization.--A business firm

23

must apply to the department for a tax credit. A business firm

24

shall receive a tax credit if the department has approved the

25

program provided by the educational improvement organization

26

that receives the contribution.

27

(c)  Availability of tax credits.--Tax credits shall be made

28

available by the department on a first-come-first-served basis

29

within the limitations established under section 1306-B(a).

30

(d)  Contributions.--A contribution by a business firm to a

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1

scholarship organization, prekindergarten scholarship

2

organization, opportunity scholarship organization or

3

educational improvement organization shall be made no later than

4

60 days following the approval of an application under

5

subsection (a) or (b).

6

Section 1305-B.  Tax credit.

7

(a)  Scholarship organizations, educational improvement

8

organizations or opportunity scholarship organizations.--In

9

accordance with section 1306-B(a), the Department of Revenue

10

shall grant a tax credit against any tax due under Article XVI

11

of the act of May 17, 1921 (P.L.682, No.284), known as The

12

Insurance Company Law of 1921, or Article III, IV, VI, VII,

13

VIII, IX or XV of the act of March 4, 1971 (P.L.6, No.2), known

14

as the Tax Reform Code of 1971, to a business firm providing

15

proof of a contribution to a scholarship organization,

16

opportunity scholarship organization or educational improvement

17

organization in the taxable year in which the contribution is

18

made which shall not exceed 75% of the total amount contributed

19

during the taxable year by the business firm. For the fiscal

20

year 2012-2013, the tax credit shall not exceed $400,000

21

annually per business firm for contributions made to scholarship

22

organizations, educational improvement organizations or

23

opportunity scholarship organizations. For the fiscal year

24

2013-2014 and each fiscal year thereafter, the tax credit shall

25

not exceed $750,000 annually per business firm for contributions

26

made to scholarship organizations, educational improvement

27

organizations or opportunity scholarship organization.

28

(b)  Additional amount.--The Department of Revenue shall

29

grant a tax credit of up to 90% of the total amount contributed

30

during the taxable year if the business firm provides a written

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1

commitment to provide the scholarship organization, opportunity

2

scholarship organization or educational improvement organization

3

with the same amount of contribution for two consecutive tax 

4

years. The business firm must provide the written commitment

5

under this subsection to the department at the time of

6

application.

7

(c)  Prekindergarten scholarship organizations.--In

8

accordance with section 1306-B(a), the Department of Revenue

9

shall grant a tax credit against any tax due under Article XVI

10

of the act of May 17, 1921 (P.L.682, No.284), known as The

11

Insurance Company Law of 1921, or Article III, IV, VI, VII,

12

VIII, IX or XV of the Tax Reform Code of 1971 to a business firm

13

providing proof of a contribution to a prekindergarten

14

scholarship organization in the taxable year in which the

15

contribution is made which shall be equal to 100% of the first

16

$10,000 contributed during the taxable year by the business

17

firm, and which shall not exceed 90% of the remaining amount

18

contributed during the taxable year by the business firm. For

19

the fiscal year such tax credit shall not exceed $150,000

20

annually per business firm for contributions made to

21

prekindergarten scholarship organizations.

22

(d)  Combination of tax credits.--A business firm may receive

23

tax credits from the Department of Revenue in any tax year for

24

any combination of contributions under subsection (a), (b) or

25

(c). In no case may a business firm receive tax credits in any

26

tax year in excess of $400,000 for contributions under

27

subsections (a) and (b) made during fiscal year 2012-2013, or in

28

excess of $750,000 for contributions under subsections (a) and

29

(b) made during any fiscal year thereafter. In no case shall a

30

business firm receive tax credits in any tax year in excess of

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1

$150,000 for contributions under subsection (c).

2

(e)  Pass-through entity.--

3

(1)  If a pass-through entity does not intend to use all

4

approved tax credits under this section, it may elect in

5

writing to transfer all or a portion of the tax credit to

6

shareholders, members or partners in proportion to the share

7

of the entity's distributive income to which the shareholder,

8

member or partner is entitled for use in the taxable year in

9

which the contribution is made or in the taxable year

10

immediately following the year in which the contribution is

11

made. The election shall designate the year in which the

12

transferred tax credits are to be used and shall be made

13

according to procedures established by the Department of

14

Revenue.

15

(2)  A pass-through entity and a shareholder, member or

16

partner of a pass-through entity shall not claim the tax

17

credit under this section for the same contribution.

18

(3)  The shareholder, member or partner may not carry

19

forward, carry back, obtain a refund of or sell or assign the

20

tax credit.

21

(4)  The shareholder, member or partner may claim the

22

credit on a joint return, but the tax credit may not exceed

23

the separate income of that shareholder, member or partner.

24

(f)  Restriction on applicability of credits.--No tax credits

25

shall be applied against any tax withheld by an employer from an

26

employee under Article III of the Tax Reform Code of 1971.

27

(g)  Time of application for credits.--

28

(1)  Except as provided in paragraph (2), the department

29

may accept applications for tax credits available during a

30

fiscal year no earlier than July 1 of each fiscal year.

- 17 -

 


1

(2)  The application of any business firm for tax credits

2

available during a fiscal year as part of the second year of

3

a two-year commitment or as a renewal of a two-year

4

commitment that was fulfilled in the previous fiscal year may

5

be accepted no earlier than May 15 preceding the fiscal year.

6

Section 1306-B.  Limitations.

7

(a)  Amount.--

8

(1)  (i)  For the fiscal year 2012-2013, the total

9

aggregate amount of all tax credits approved shall not

10

exceed $200,000,000.

11

(ii)  Not more than $62,000,000 of the total

12

aggregate amount of all tax credits approved shall be

13

used to provide tax credits for contributions from

14

business firms to scholarship organizations.

15

(iii)  Not more than $30,000,000 of the total

16

aggregate amount of all tax credits approved shall be

17

used to provide tax credits for contributions from

18

business firms to educational improvement organizations.

19

(iv)  Not more than $8,000,000 of the total aggregate

20

amount of all tax credits approved shall be used to

21

provide tax credits for contributions from business firms

22

to prekindergarten scholarship organizations.

23

(v)  Not more than $100,000,000 of the total amount

24

of all tax credits approved shall be used to provide tax

25

credits for contributions from business firms to

26

opportunity scholarship organizations.

27

(2)  (i)  For the fiscal year 2013-2014, the total

28

aggregate amount of all tax credits approved shall not

29

exceed $250,000,000.

30

(ii)  Not more than $62,000,000 of the total

- 18 -

 


1

aggregate amount of all tax credits approved shall be

2

used to provide tax credits for contributions from

3

business firms to scholarship organizations.

4

(iii)  Not more than $30,000,000 of the total

5

aggregate amount of all tax credits approved shall be

6

used to provide tax credits for contributions from

7

business firms to educational improvement organizations.

8

(iv)  Not more than $8,000,000 of the total aggregate

9

amount of all tax credits approved shall be used to

10

provide tax credits for contributions from business firms

11

to prekindergarten scholarship organizations.

12

(v)  Not more than $150,000,000 of the total amount

13

of all tax credits approved shall be used to provide tax

14

credits for contributions from business firms to

15

opportunity scholarship organizations.

16

(3)  (i)  Subject to the annual adjustment provided for

17

in paragraph (4), in the fiscal year 2014-2015 and each

18

fiscal year thereafter, the total aggregate amount of all

19

tax credits approved shall not exceed $300,000,000.

20

(ii)  Not more than $62,000,000 of the total

21

aggregate amount of all tax credits approved shall be

22

used to provide tax credits for contributions from

23

business firms to scholarship organizations.

24

(iii)  Not more than $30,000,000 of the total

25

aggregate amount of all tax credits approved shall be

26

used to provide tax credits for contributions from

27

business firms to educational improvement organizations.

28

(iv)  Not more than $8,000,000 of the total aggregate

29

amount of all tax credits approved shall be used to

30

provide tax credits for contributions from business firms

- 19 -

 


1

to prekindergarten scholarship organizations.

2

(v)  Not more than $200,000,000 of the total amount

3

of all tax credits approved shall be used to provide tax

4

credits for contributions from business firms to

5

opportunity scholarship organizations.

6

(4)  Beginning in the fiscal year 2015-2016, in any

7

fiscal year in which the total aggregate amount of all tax

8

credits approved for the prior fiscal year is equal to or

9

greater than 90% of the total aggregate amount of all tax

10

credits available for the prior fiscal year, the total

11

aggregate amount of all tax credits available and the amounts

12

specified in subparagraphs (3)(ii), (iii), (iv) and (v) shall

13

each increase by 5%. The department shall publish on its

14

Internet website the total aggregate amount of all tax

15

credits available when the amount is increased under this

16

paragraph.

17

(b)  Activities.--No tax credit shall be approved for

18

activities that are a part of a business firm's normal course of

19

business.

20

(c)  Tax liability.--

21

(1)  Except as provided in paragraph (2), a tax credit

22

granted for any one taxable year may not exceed the tax

23

liability of a business firm.

24

(2)  In the case of a credit granted to a pass-through

25

entity which elects to transfer the credit according to

26

section 1305-B(e), a tax credit granted for any one taxable

27

year and transferred to a shareholder, member or partner may

28

not exceed the tax liability of the shareholder, member or

29

partner.

30

(d)  Use.--A tax credit not used by the applicant in the

- 20 -

 


1

taxable year the contribution was made or in the year designated

2

by the shareholder, member or partner to whom the credit was

3

transferred under section 1305-B(e) may not be carried forward

4

or carried back and is not refundable or transferable.

5

(e)  Nontaxable income.--A scholarship received by an

6

eligible student or eligible prekindergarten student shall not

7

be considered to be taxable income for the purposes of Article

8

III of the act of March 4, 1971 (P.L.6, No.2), known as the Tax

9

Reform Code of 1971.

10

Section 1307-B.  Lists.

11

The Department of Revenue shall provide to the General

12

Assembly by June 30 of each year a list of all scholarship

13

organizations, prekindergarten scholarship organizations,

14

opportunity scholarship organizations and educational

15

improvement organizations that receive contributions from

16

business firms granted a tax credit.

17

Section 1308-B.  Guidelines.

18

The department, in consultation with the Department of

19

Education, shall develop guidelines to determine the eligibility

20

of an innovative educational program.

21

ARTICLE XIII-C

22

EDUCATIONAL OPPORTUNITY SCHOLARSHIP PROGRAM

23

Section 1301-C.  Scope of article.

24

This article relates to the Educational Opportunity

25

Scholarship Program.

26

Section 1302-C.  Legislative findings.

27

The General Assembly finds that:

28

(1)  Parents are best suited to choose the most

29

appropriate means of education for their school-age children.

30

(2)  Providing diverse educational opportunities for the

- 21 -

 


1

children of this Commonwealth is a civic imperative and a

2

matter of serious concern.

3

(3)  The importance of quality education and the need to

4

maintain and operate an effective system of education make it

5

imperative to provide for the increased availability of

6

diverse opportunities, including both public and nonpublic

7

programs of education, to benefit all citizens of this

8

Commonwealth.

9

(4)  Public schools are the foundation of the system of

10

education in this Commonwealth. Further, Pennsylvania's

11

longstanding tradition of local control of public education

12

allows communities to adapt their public school programs to

13

meet local needs. For these reasons, providing the

14

opportunity for interdistrict school choice is a critical

15

means of providing families with increased educational

16

options within the traditional public school system.

17

(5)  It is the long-term goal of the General Assembly to

18

offer assistance to all families in this Commonwealth, to

19

provide every child in this Commonwealth with diverse

20

educational opportunities and options.

21

(6)  As an initial step toward the long-term goal of

22

offering assistance to all Pennsylvania families, this

23

article provides assistance to disadvantaged school-age

24

children in this Commonwealth who would otherwise attend

25

persistently low-achieving schools.

26

(7)  Many disadvantaged school-age residents of this

27

Commonwealth enjoy comparatively fewer educational

28

opportunities or options than school-age residents who

29

possess greater economic means.

30

(8)  The accessibility to families of nonpublic

- 22 -

 


1

educational alternatives decreases the burdens on the

2

Commonwealth and local school districts and increases the

3

range of educational choices available to Pennsylvania

4

families, thus providing a benefit to all citizens of this

5

Commonwealth.

6

(9)  The General Assembly intends the program of

7

educational choice provided in this article to be but one

8

element of its overall program of providing funds to assure

9

the availability of educational opportunities for students

10

enrolled in the schools of this Commonwealth. A comparatively

11

far greater proportion of public funds are and, upon

12

implementation of an educational choice program, will

13

continue to be devoted to the benefit of students enrolled in

14

the public schools of this Commonwealth. Therefore, the

15

General Assembly intends that an educational choice program

16

be viewed as an integral part of its overall program of

17

educational funding, and not as an isolated individual

18

program.

19

(10)  A program of financial assistance to enhance

20

educational choice in this Commonwealth, as one element of

21

the Commonwealth's plan for funding diverse educational

22

opportunities, will greatly aid efforts to equalize

23

educational opportunities for the citizens of this

24

Commonwealth, will better prepare Commonwealth citizens to

25

compete for employment opportunities, will foster development

26

of a more capable and better-educated work force and will

27

better enable the Commonwealth to fulfill its obligation of

28

providing children the opportunity of receiving a quality

29

education.

30

Section 1303-C.  Definitions.

- 23 -

 


1

The following words and phrases, when used in this article,

2

shall have the meanings given to them in this section unless the

3

context clearly indicates otherwise:

4

"Attendance boundary."  A geographic area of residence used

5

by a school district to assign a student to a public school.

6

"Average daily membership."  As defined in section 2501(3).

7

"Business firm."  An entity authorized to do business in this

8

Commonwealth and subject to taxes imposed under Article XVI of

9

the act of May 17, 1921 (P.L.682, No.284), known as The

10

Insurance Company Law of 1921, or Article III, IV, VI, VII,

11

VIII, IX or XV of the act of March 4, 1971 (P.L.6, No.2), known

12

as the Tax Reform Code of 1971. The term includes a pass-through

13

entity.

14

"Department."  The Department of Education of the

15

Commonwealth.

16

"Eligible student."  A student who meets the eligibility

17

requirements established in section 1304-C.

18

"Household income."  As defined in section 1302-B.

19

"Kindergarten."  A one-year formal kindergarten program that

20

occurs during the school year immediately prior to first grade.

21

"Low-achieving school."  A public elementary or secondary

22

school within this Commonwealth that ranked in the lowest 15% of

23

its designation as elementary or secondary for the previous

24

school year based on combined mathematics and reading scores

25

from the annual assessment administered in the previous school

26

year. The term shall not include a charter school, cyber charter

27

school or area vocational-technical school.

28

"Nonpublic school."  A nonprofit school, other than a public

29

school:

30

(1)  which is located in this Commonwealth;

- 24 -

 


1

(2)  in which a Commonwealth resident may legally fulfill

2

the compulsory school attendance requirements of this act;

3

and

4

(3)  which meets the applicable requirements of Title VI

5

of the Civil Rights Act of 1964 (Public Law 88-352, 78 Stat.

6

241).

7

The term includes a full-time or part-time kindergarten program

8

operated by a nonpublic school.

9

"Opportunity scholarship organization."  An organization that

10

has been qualified to distribute opportunity scholarships under

11

section 1303-B.

12

"Parent."  A Commonwealth resident who is a parent having

13

legal custody or guardianship of a school-age child. The term

14

shall also include any Commonwealth resident who keeps in his

15

home a child of school age and supports the child gratis as if

16

the child were his own.

17

"Participating nonpublic school."  A nonpublic school which

18

notifies the department under section 1306-C that it wishes to

19

participate in the program established in this article.

20

"Participating nonresident school district."  A school

21

district which notifies the department under section 1306-C that

22

it wishes to participate in the program established in this

23

article.

24

"Program."  The Educational Opportunity Scholarship Program

25

established under this article.

26

"Recipient."  An Educational Opportunity Scholarship

27

recipient.

28

"Scholarship."  An Educational Opportunity Scholarship

29

awarded to a scholarship recipient under this article to pay

30

tuition and school-related fees for the recipient to attend a

- 25 -

 


1

participating nonresident school district school or

2

participating nonpublic school.

3

"School-age student."  A child enrolling in kindergarten or

4

in grades one through 12.

5

"School district of residence."  The school district in which

6

a school-age student resides.

7

"School-related fees."  Fees charged by a school to all

8

students for books, instructional materials, technology

9

equipment and services, transportation, uniforms and activities.

10

"Student."  A school-age resident who attends or is about to

11

attend a full-time kindergarten, a part-time kindergarten, an

12

elementary school or a secondary school within this

13

Commonwealth.

14

"Student with a disability."  As defined in 22 Pa. Code §

15

14.101 (relating to definitions).

16

Section 1304-C.  Educational Opportunity Scholarship Program.

17

(a)  Establishment.--Beginning with the 2012-2013 school

18

year, the Educational Opportunity Scholarship Program is

19

established to provide scholarships to eligible students who

20

reside within the attendance areas of low-achieving schools to

21

pay tuition and school-related fees to attend a school within a

22

participating nonresident school district or participating

23

nonpublic school selected by the student's parents.

24

(b)  Eligibility.--The Educational Opportunity Scholarship

25

Program shall be available to all students who reside within the

26

attendance boundary of a low-achieving school as of the first

27

day of classes of the school year for which the educational

28

opportunity scholarship is to be awarded, and whose household

29

income does not exceed $75,000. Notwithstanding the fact that a

30

school may be removed from the list of low-achieving schools,

- 26 -

 


1

any child enrolled in a nonresident public school or a

2

participating nonpublic school who received an educational

3

opportunity scholarship under this article in the prior school

4

year shall receive an educational opportunity scholarship in

5

each school year of enrollment under the educational opportunity

6

scholarship program, provided that the child remain eligible.

7

For purposes of this subsection, the residence of a child shall

8

be determined under section 1302.

9

(c)  List of low-achieving schools to be published.--By July

10

15, 2012, and by February 1 of each year thereafter, the

11

department shall publish on the department's publicly accessible

12

Internet website and in the Pennsylvania Bulletin a list of low-

13

achieving schools that will be in effect for purposes of this

14

article for the following school year. The department shall

15

publish the list based upon results from the annual assessment

16

administered in the previous school year.

17

(d)  Notice.--

18

(1)  For each school year, by a date established by the

19

department, each school district that receives a notification

20

from the department under section 1307-C that it has at least

21

one low-achieving school shall post on its publicly

22

accessible Internet website notice of all of the following:

23

(i)  A description of the Educational Opportunity

24

Scholarship Program.

25

(ii)  Instructions for applying for an Educational

26

Opportunity Scholarship.

27

(iii)  A list of schools in the school district that

28

have been designated by the department as low-achieving 

29

schools.

30

(iv)  Notice that a parent must contact directly the

- 27 -

 


1

participating nonresident school district or

2

participating nonpublic school in which the parent's

3

child seeks to enroll for application instructions.

4

(2)  The notice shall be in a form provided by the

5

department.

6

Section 1305-C.  Educational Opportunity Scholarships.

7

(a)  Funding.--The total amount of Educational Opportunity

8

Scholarships provided for shall be limited to the funds

9

accumulated as a result of contributions made by business firms

10

to opportunity scholarship organizations.

11

(b)  Amount.--The maximum amount of a scholarship awarded to

12

a student without a disability shall be $8,500. The maximum

13

amount of a scholarship awarded to a student with a disability

14

shall be $15,000. In no case shall the combined amount of the

15

scholarship awarded to a scholarship recipient and any

16

additional financial assistance provided to a recipient exceed

17

the tuition rate and school-related fees for the participating

18

nonpublic school or nonresident public school district.

19

(c)  Tuition rates.--No participating nonresident school

20

district or participating nonpublic school may charge an

21

eligible recipient a higher tuition rate or school-related fee

22

than the participating nonresident school district or

23

participating nonpublic school would have charged to a similarly

24

situated student who had not received an opportunity

25

scholarship. Notwithstanding the provisions of section 2561, a

26

participating nonresident school district may charge scholarship

27

recipients a tuition rate that is lower than that charged to

28

students who are not recipients of scholarships.

29

(d)  Home schooling.--A scholarship shall not be awarded for

30

enrollment in a home education program under section 1327.1.

- 28 -

 


1

(e)  Taxation.--A scholarship shall not be considered taxable

2

income for purposes of Article III of the act of March 4, 1971

3

(P.L.6, No.2), known as the Tax Reform Code of 1971, or a local

4

taxing ordinance.

5

(f)  Financial assistance.--A scholarship shall not

6

constitute financial assistance or an appropriation to the

7

participating nonpublic school attended by a scholarship

8

recipient.

9

Section 1306-C.  Participation in the program.

10

(a)  Voluntary.--The determination by a participating

11

nonresident school district or participating nonpublic school to

12

enroll students as part of the program is voluntary.

13

(b)  Notice.--

14

(1)  By August 1, 2012, and by February 1 of each year

15

thereafter, a school district or nonpublic school that wishes

16

to enroll scholarship recipients as part of the program must

17

notify the department of its intent to participate.

18

(2)  For a school district, the notice under paragraph

19

(1) must be submitted on a form developed by the department

20

immediately upon the effective date of this article and shall

21

specify all of the following:

22

(i)  The schools within the school district which

23

eligible scholarship recipients may attend.

24

(ii)  The amount of tuition attributable to each

25

available seat. The amount under this subparagraph shall

26

not exceed the amount calculated under section 2561.

27

(3)  For a nonpublic school, the notice under paragraph

28

(1) must be submitted on a form developed by the department

29

immediately upon the effective date of this article and shall

30

specify the amount of tuition attributable to an available

- 29 -

 


1

seat.

2

(c)  School district criteria.--For a school district which

3

intends to enroll students as part of the program, the following

4

criteria apply:

5

(1)  Except as hereinafter provided, the school district

6

shall enroll students in participating schools on a lottery

7

basis from a pool of applicants who meet the application

8

deadline set by the department until the school fills its

9

available seats. The pool may not include a student who:

10

(i)  has been expelled or is in the process of being

11

expelled under section 1317.2 or 1318 and applicable

12

regulations of the State Board of Education; or

13

(ii)  has been recruited by the school district or

14

its representatives for athletic purposes.

15

(2)  The enrollment of scholarship recipients may not

16

place the participating nonresident school district in

17

violation of a valid and binding desegregation order.

18

(3)  Priority shall be given to:

19

(i)  Existing scholarship recipients.

20

(ii)  A scholarship applicant who is a sibling of a

21

student currently enrolled in the school district.

22

(d)  Nonpublic school criteria.--For a nonpublic school which

23

intends to participate in the program, the following criteria

24

shall apply:

25

(1)  The nonpublic school may not discriminate on a basis

26

which is illegal under Federal or State laws applicable to

27

nonpublic schools prior to the effective date of this

28

article.

29

(2)  The nonpublic school shall comply with section 1521.

30

(3)  The nonpublic school may not recruit a public school

- 30 -

 


1

student who receives an scholarship to enroll for athletic

2

purposes.

3

(e)  Construction.--Nothing in this article shall be

4

construed to:

5

(1)  Prohibit a participating nonpublic school from

6

limiting admission to a particular grade level, a single

7

gender or to areas of concentration of the participating

8

nonpublic school, including, but not limited to, mathematics,

9

science and the arts.

10

(2)  Empower the Commonwealth or any of its agencies or

11

officers or political subdivisions to impose any additional

12

requirements on any participating nonpublic school which are

13

not otherwise authorized under the laws of this Commonwealth

14

or to require any participating nonpublic school to enroll

15

any opportunity scholarship recipient if the participating

16

nonpublic school does not offer appropriate programs or is

17

not structured or equipped with the necessary facilities to

18

meet the special needs of the opportunity scholarship

19

recipient or does not offer a particular program requested.

20

Section 1307-C.  Procedures.

21

(a)  Notification to school district and to opportunity

22

scholarship organizations.--By July 15, 2012, and by February 1

23

of each year, the department shall notify every school district

24

identified as having at least one low-achieving school of its

25

designation and shall furnish the school district and all

26

qualified opportunity scholarship organizations with a list of

27

all low-achieving schools located within the school district.

28

(b)  Notification to parents.--

29

(1)  Within 15 days of receipt of the notification under

30

subsection (a), the school district shall notify the parents

- 31 -

 


1

of each student currently attending a low-achieving school or

2

who would be a kindergarten student assigned to a low-

3

achieving school during the school year of the school's

4

designation and shall provide information regarding the

5

program established under this article, including:

6

(i)  A description of the program.

7

(ii)  Instructions for obtaining information about

8

applying for a scholarship under the program.

9

(iii)  Notice of the parent's responsibilities with

10

regard to applying to a participating nonresident school

11

district or participating nonpublic school for

12

enrollment. Notification to the parents shall be in a

13

form provided by the department.

14

(2)  The notification required under this subsection

15

shall also be posted on the school district's publicly

16

accessible Internet website.

17

(3)  The notification required under this subsection

18

shall also be provided to students who reside within the

19

attendance area of a low-achieving school.

20

(c)  Rules, policies and procedures.--Prior to enrollment,

21

the parent of a recipient shall be informed of any and all

22

rules, policies and procedures of the school within a

23

participating nonresident school district or participating

24

nonpublic school which the recipient will be attending,

25

including academic policies, disciplinary rules and

26

administrative procedures of the school. Enrollment of a

27

recipient in a school in a participating nonresident school

28

district or participating nonpublic school shall constitute

29

acceptance of any rules, policies and procedures of the school.

30

Section 1308-C.  Transportation.

- 32 -

 


1

(a)  Provision.--Transportation shall be provided under

2

section 1361.

3

(b)  Reimbursement.--Reimbursement shall be as follows:

4

(1)  Transportation of a scholarship recipient attending

5

a participating nonresident school district shall be subject

6

to reimbursement under section 2541.

7

(2)  Transportation of a scholarship recipient attending

8

a participating nonpublic school shall be subject to

9

reimbursement under sections 2509.3 and 2541.

10

Section 1309-C.  Subsidy continuation.

11

Notwithstanding any other provision of law to the contrary,

12

an educational opportunity scholarship recipient who was

13

enrolled in the recipient's resident school district or in a

14

charter school or cyber charter school when the recipient first

15

received an Educational Opportunity Scholarship under this

16

article shall continue to be counted in the average daily

17

membership of the resident school district for a period of one

18

year after enrolling in a participating nonresident public

19

school or a participating nonpublic school. During that same

20

period, a nonresident school district in which the recipient is

21

enrolled shall not include the recipient in the nonresident

22

school district's average daily membership.

23

Section 1310-C.  Tuition grants by school districts.

24

(a)  General rule.--The board of school directors of any

25

school district may use funds received from the Commonwealth for

26

educational purposes to establish a program of tuition grants to

27

provide for the education of school-age children who reside in

28

that district and who attend or will attend a public or

29

nonpublic school on a tuition-paying basis.

30

(b)  Nonpublic school grant amount.--For students who attend

- 33 -

 


1

or will attend a nonpublic school, the grant amount for each

2

student shall not exceed the amount of the per pupil State

3

subsidy for basic education funding that would be paid to the

4

district if the student would be enrolled in the public schools

5

of that district.

6

(c)  Average daily membership.--A student who receives a

7

tuition grant shall be included in the average daily membership

8

for purposes of determining the district's basic education

9

funding. A student who receives a grant to attend a public

10

school outside the district shall not be included in the average

11

daily membership of the receiving school district.

12

(d)  Guidelines.--The board of school directors of a school

13

district shall prepare guidelines establishing an application

14

form and approval process, standards for verification as to the

15

accuracy of application information, confirmation of attendance

16

by grant recipients, restrictive endorsement of grant checks by

17

parents to the school chosen by the parents, pro rata refunds of

18

grants for students who withdraw during the school year,

19

repayment of refunded grants to the school district and

20

reasonable deadline dates for submission of grant applications.

21

The board of school directors of a school shall announce the

22

award of grants no later than August 1 of the school year in

23

which the grants will be utilized. Upon receipt of written

24

confirmation of enrollment from the recipient's school of

25

choice, grants shall be paid to the parents of an eligible grant

26

recipient by a check that may only be endorsed to the selected

27

school. In the event a grant recipient is no longer enrolled

28

prior to the completion of the school term, the school shall

29

send written notice thereof to the school district.

30

(f)  Nontaxable.--Grants awarded to eligible recipients under

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1

this section shall not be considered taxable income for purposes

2

of any local taxing ordinance or for purposes of Article III of

3

the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform

4

Code of 1971, nor shall such grants constitute financial

5

assistance or appropriations to the school attended by the grant

6

recipient.

7

(g)  Construction.--Nothing in this section shall be

8

construed to empower the Commonwealth or any school district or

9

any of their agencies or officers to prescribe the course

10

content or admissions criteria for any religiously affiliated

11

school, to compel any private school to accept or enroll the

12

children of eligible grant recipients, to impose any additional

13

requirements on any private school that are not otherwise

14

authorized under this act or to require any school to accept or

15

retain the children of any eligible grant recipient if the

16

school does not offer programs or is not structured or equipped

17

with the necessary facilities to meet the special needs of the

18

student or does not offer a particular program requested.

19

(h)  Definition.--For purposes of this section, the term

20

"school" shall mean a public or nonpublic kindergarten,

21

elementary school or secondary school at which the compulsory

22

attendance requirements of the Commonwealth may be met and which

23

meets the applicable requirements of Title VI of the Civil

24

Rights Act of 1964 (Public Law 88-352, 78 Stat. 241).

25

Section 1311-C.  Exclusive jurisdiction.

26

The Pennsylvania Supreme Court shall have exclusive

27

jurisdiction to hear any challenge or to render a declaratory

28

judgment concerning the constitutionality of this article. The

29

Supreme Court may take such action as it deems appropriate,

30

consistent with the Supreme Court's retaining jurisdiction over

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1

such a matter, to find facts or to expedite a final judgment in

2

connection with such a challenge or request for declaratory

3

relief.

4

Section 2.  Repeals are as follows:

5

(1)  The General Assembly declares that the repeal under

6

paragraph (2) is necessary to effectuate the addition of

7

Article XIII-B of the act.

8

(2)  Article XVII-F and section 2902-E(b) of the act of

9

March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of

10

1971, are repealed.

11

Section 3.  The provisions of Articles XIII-B and XIII-C of

12

the act are severable. If any provision of those articles or

13

their application to any person or circumstance is held invalid,

14

the invalidity shall not affect other provisions or applications

15

of those articles which can be given effect without the invalid 

16

provision or application.

17

Section 4.  This act shall take effect as follows:

18

(1)  The following provisions shall take effect July 1,

19

2012, or immediately, whichever is later:

20

(i)  The addition of Article XIII-B of the act.

21

(ii)  Section 2 of this act.

22

(2)  The remainder of this act shall take effect

23

immediately.

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