PRINTER'S NO. 2634
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
2063
Session of
2024
INTRODUCED BY CIRESI, BURGOS, SANCHEZ, MADDEN, KHAN, PIELLI,
SCHLOSSBERG, DONAHUE, DELLOSO, PROBST, HILL-EVANS,
D. WILLIAMS, SHUSTERMAN, FRIEL, DALEY, SMITH-WADE-EL, CERRATO
AND FIEDLER, FEBRUARY 27, 2024
REFERRED TO COMMITTEE ON FINANCE, FEBRUARY 27, 2024
AN ACT
Amending the act of March 10, 1949 (P.L.30, No.14), entitled "An
act relating to the public school system, including certain
provisions applicable as well to private and parochial
schools; amending, revising, consolidating and changing the
laws relating thereto," in educational tax credits, further
providing for definitions and for qualification and
application by organizations.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The definitions of "educational improvement
organization," "eligible pre-kindergarten student," "eligible
student," "household income," "income allowance," "maximum
annual household income," "opportunity scholarship
organization," "pre-kindergarten scholarship organization" and
"scholarship organization" in section 2002-B of the act of March
10, 1949 (P.L.30, No.14), known as the Public School Code of
1949, amended July 8, 2022 (P.L.620, No.55), December 13, 2023
(P.L.187, No.33) and December 13, 2023 (P.L.311, No.35), are
amended to read:
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Section 2002-B. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
* * *
"Educational improvement organization." A nonprofit entity
which:
(1) is exempt from Federal taxation under section 501(c)
(3) of the Internal Revenue Code of 1986 (Public Law 99-514,
26 U.S.C. § 1 et seq.); and
(2) contributes at least 90% of its annual receipts as
grants to a public school, a chartered school as defined in
section 1376.1, or a private school approved under section
1376, for innovative educational programs. The following
apply:
(i) For purposes of this definition, a nonprofit
entity "contributes" its annual cash receipts when it
expends or otherwise irrevocably encumbers those funds
for expenditure during the then-current fiscal year of
the nonprofit entity or during the next succeeding fiscal
year of the nonprofit entity. A nonprofit entity shall
include a school district foundation, public school
foundation, charter school foundation or cyber charter
school foundation.
(ii) Any receipts not used for grants for innovative
educational programs may only be used for the
administrative expenses of the educational improvement
organization. The administrative expenses must be
reasonable and necessary for the educational improvement
organization's management and distribution of grants
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funded under this article.
* * *
"Eligible pre-kindergarten student." A student, including an
eligible student with a disability, who is enrolled in a pre-
kindergarten program and is a member of a household with a
maximum annual household income [as increased by the applicable
income allowance].
"Eligible student." A school-age student, including an
eligible student with a disability, who is enrolled in a school
and is a member of a household with a maximum annual household
income [as increased by the applicable income allowance].
* * *
"Household income." [All money or property received of
whatever nature and from whatever source derived. The term does
not include the following:
(1) Periodic payments for sickness and disability other
than regular wages received during a period of sickness or
disability.
(2) Disability, retirement or other payments arising
under workers' compensation acts, occupational disease acts
and similar legislation by any government.
(3) Payments commonly recognized as old-age or
retirement benefits paid to persons retired from service
after reaching a specific age or after a stated period of
employment.
(4) Payments commonly known as public assistance or
unemployment compensation payments by a governmental agency.
(5) Payments to reimburse actual expenses.
(6) Payments made by employers or labor unions for
programs covering hospitalization, sickness, disability or
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death, supplemental unemployment benefits, strike benefits,
Social Security and retirement.
(7) Compensation received by United States servicemen
serving in a combat zone.
(8) Payments received from a governmental agency to
relieve the economic effects of the COVID-19 pandemic.] As
follows:
(1) All income from whatever source derived, including:
(i) Salaries, wages, bonuses, commissions, income
from self-employment, alimony, support money and cash
public assistance.
(ii) The gross amount of any pensions or annuities,
including railroad retirement benefits.
(iii) All benefits received under the Social
Security Act (49 Stat. 620, 42 U.S.C. § 301 et seq.), net
of amounts withheld for Medicare Part B premium payment.
(iv) All benefits received under State unemployment
insurance laws.
(v) All interest received from the Federal
Government or a state government or an instrumentality or
political subdivision of the Federal Government or state
government.
(vi) Realized capital gains and rentals.
(vii) Workers' compensation.
(viii) The gross amount of loss and time insurance
benefits, life insurance benefits and proceeds, except
the first $10,000 of the total of death benefit payments.
(ix) Gifts of cash or property, other than transfers
between members of a household, in excess of a total
value of $300.
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(2) Th e term does not include:
(i) Surplus food or other relief in kind supplied by
a government agency.
(ii) Federal veterans' disability payments.
(iii) State veterans' benefits.
(iv) Payments to reimburse actual expenses.
(v) Compensation received by United States service
members serving in a combat zone.
(vi) Refunds or rebates paid by a government agency.
["Income allowance." The base amount of $15,000 for each
eligible student, eligible pre-kindergarten student and
dependent member of the household. Beginning July 1, 2014, the
department shall annually adjust the base amount to reflect
upward changes in the Consumer Price Index for All Urban
Consumers for the Pennsylvania, New Jersey, Delaware and
Maryland area for the preceding 12 months. The department shall
immediately submit the adjusted amounts to the Legislative
Reference Bureau for publication as a notice in the Pennsylvania
Bulletin.]
* * *
"Maximum annual household income."
[(1) Subject to adjustment under paragraphs (2) and (3),
the amount of $90,000, plus the applicable income allowance.
(2) With respect to an eligible student with a
disability, as calculated by multiplying:
(i) the applicable amount under paragraph (1); by
(ii) the applicable support level factor according
to the following table:
Support Level Support Level Factor
1 1.50
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2 2.993
(3) Beginning July 1, 2014, the department shall
annually adjust the income amounts under paragraphs (1) and
(2) to reflect any upward changes in the Consumer Price Index
for All Urban Consumers for the Pennsylvania, New Jersey,
Delaware and Maryland area in the preceding 12 months and
shall immediately submit the adjusted amounts to the
Legislative Reference Bureau for publication as a notice in
the Pennsylvania Bulletin.] An amount equal to 200% of the
Federal poverty level.
* * *
"Opportunity scholarship organization." A nonprofit entity
which:
(1) Is exempt from Federal taxation under section 501(c)
(3) of the Internal Revenue Code of 1986 (Public Law 99-514,
26 U.S.C. § 1 et seq.); and
(2) Contributes at least 90% of the entity's annual cash
receipts to an opportunity scholarship program [or at least
85% of the annual cash receipts if the entity reports an
annual IRS program expense percentage of greater than 90% on
its IRS 990 tax filing]. The following apply:
(i) For the purposes of this definition, a nonprofit
entity contributes the entity's cash receipts to an
opportunity scholarship program when the entity expends
or otherwise irrevocably encumbers those funds for
distribution during the then-current fiscal year of the
nonprofit entity or during the next succeeding fiscal
year of the nonprofit entity.
(ii) Any cash receipts not used for contributions to
an opportunity scholarship program may only be used for
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the administrative expenses of the opportunity
scholarship organization. The administrative expenses
must be reasonable and necessary for the opportunity
scholarship organization's management and distribution of
scholarships funded under this article.
* * *
"Pre-kindergarten scholarship organization." A nonprofit
entity which:
(1) is exempt from Federal taxation under section 501(c)
(3) of the Internal Revenue Code of 1986 or is operated as a
separate segregated fund by a scholarship organization that
has been qualified under section 2003-B; and
(2) contributes at least 90% of its annual cash receipts
to a pre-kindergarten scholarship program by expending or
otherwise irrevocably encumbering those funds for
distribution during the then-current fiscal year of the
organization or during the next succeeding fiscal year of the
organization [or at least 85% of the annual cash receipts if
the entity reports an annual IRS program expense percentage
of greater than 90% on its IRS 990 tax filing]. Any cash
receipts not used for contributions to a pre-kindergarten
scholarship program may only be used for the administrative
expenses of the pre-kindergarten scholarship organization.
The administrative expenses must be reasonable and necessary
for the pre-kindergarten scholarship organization's
management and distribution of scholarships funded under this
article.
* * *
"Scholarship organization." A nonprofit entity which:
(1) is exempt from Federal taxation under section 501(c)
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(3) of the Internal Revenue Code of 1986; and
(2) contributes at least 90% of its annual cash receipts
to a scholarship program [or at least 85% of the annual cash
receipts if the entity reports an annual IRS program expense
percentage of greater than 90% on its IRS 990 tax filing].
The following apply:
(i) For purposes of this definition, a nonprofit
entity "contributes" its annual cash receipts to a
scholarship program when it expends or otherwise
irrevocably encumbers those funds for distribution during
the then-current fiscal year of the nonprofit entity or
during the next succeeding fiscal year of the nonprofit
entity.
(ii) Any cash receipts not used for contributions to
a scholarship program may only be used for the
administrative expenses of the scholarship organization.
The administrative expenses must be reasonable and
necessary for the scholarship organization's management
and distribution of scholarships funded under this
article.
* * *
Section 2. Section 2003-B(c)(3), (d)(3), (d.1)(4) and (d.2)
of the act are amended, subsection (c)(1) is amended by adding
subparagraphs, subsection (d.1)(2) is amended by adding
subparagraphs and the section is amended by adding a subsection
to read:
Section 2003-B. Qualification and application by organizations.
* * *
(c) Scholarship organizations and pre-kindergarten
scholarship organizations.--A scholarship organization or pre-
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kindergarten scholarship organization must certify to the
department that the organization is eligible to participate in
the educational improvement tax credit program established under
this article and must agree to annually report the following
information based on the immediately preceding fiscal year to
the department by November 1 of each year:
(1) For each fiscal year through the 2024-2025 fiscal
year:
* * *
(x) For each scholarship award given to an
applicant:
(A) An indicator of whether the applicant was an
eligible student or an eligible student with a
disability.
(B) The dollar amount of the scholarship award.
(C) The total amount of tuition and school-
related fees charged to the applicant and the
percentage of the applicant's total annual tuition
and school-related fees offset by the scholarship
award.
(D) The household income of the recipient's
household members reported in ranges determined by
the department.
(E) For the year in which the scholarship award
was used:
(I) The name of the applicant's school
district of residence.
(II) The name of the school entity that the
applicant attended.
(III) The applicant's grade level.
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(F) For the year prior to the year in which the
scholarship award was used:
(I) The name of the applicant's school
district of residence.
(II) The name of the school entity that the
applicant attended.
(xi) For each scholarship award denied to the
applicant:
(A) An indicator of whether the applicant was an
eligible student or an eligible student with a
disability.
(B) The household income of the recipient's
household members reported in ranges determined by
the department.
(C) For the year in which the scholarship award
was denied:
(I) The name of the applicant's school
district of residence.
(II) The name of the school entity that the
applicant attended.
(III) The applicant's grade level.
(D) For the year prior to the year in which the
scholarship award was denied:
(I) The name of the applicant's school
district of residence.
(II) The name of the school entity that the
applicant attended.
(xii) The information provided under subparagraphs
(x) and (xi) shall not include personally identifiable
information.
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* * *
[(3) The department may not require any other
information to be provided by scholarship organizations or
pre-kindergarten scholarship organizations, except as
expressly authorized in this article.]
(d) Educational improvement organization.--
* * *
[(3) The department may not require any other
information to be provided by educational improvement
organizations, except as expressly authorized in this
article.]
(d.1) Opportunity scholarship organizations.--
* * *
(2) For each fiscal year through the 2024-2025 fiscal
year, an opportunity scholarship organization must agree to
report the following information on a form provided by the
department by November 1 of each year:
* * *
(xvi) For each scholarship award given to an
applicant:
(A) An indicator of whether the applicant was an
eligible student or an eligible student with a
disability.
(B) The dollar amount of the scholarship award.
(C) The total amount of tuition and school-
related fees charged to the applicant and the
percentage of the applicant's total annual tuition
and school-related fees offset by the scholarship
award.
(D) The household income of the recipient's
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household members reported in ranges determined by
the department.
(E) For the year in which the scholarship award
was used:
(I) The name of the applicant's school
district of residence.
(II) The name of the school entity that the
applicant attended.
(III) The applicant's grade level.
(F) For the year prior to the year in which the
scholarship award was used:
(I) The name of the applicant's school
district of residence.
(II) The name of the school entity that the
applicant attended.
(xvii) For each scholarship award denied to the
applicant:
(A) An indicator of whether the applicant was an
eligible student or an eligible student with a
disability.
(B) The household income of the recipient's
household members reported in ranges determined by
the department.
(C) For the year in which the scholarship award
was denied:
(I) The name of the applicant's school
district of residence.
(II) The name of the school entity that the
applicant attended.
(III) The applicant's grade level.
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(D) For the year prior to the year in which the
scholarship award was denied:
(I) The name of the applicant's school
district of residence.
(II) The name of the school entity that the
applicant attended.
(xviii) The information provided under subparagraphs
(xvi) and (xvii) shall not include personally
identifiable information.
* * *
[(4) The department may not require other information to
be provided by opportunity scholarship organizations, except
as expressly authorized in this article.]
* * *
(d.2) Verification of income.--Each scholarship
organization, pre-kindergarten scholarship organization and
opportunity scholarship organization shall provide for an
application and review process for scholarship applicants that
includes a means of verification of household income, which may
include submission of the household members' most recently
available Federal or State tax returns, if required to be filed
by the household members. The scholarship organization, pre-
kindergarten scholarship organization or opportunity scholarship
organization shall retain records verifying applicant household
income for a period of three years and shall make these records
available to the department upon request.
* * *
(g) R eporting.--
(1) Each educational improvement organization,
scholarship organization, pre-kindergarten scholarship
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organization or opportunity scholarship organization shall
annually report to the department the use of contributions
not used for grants for innovative educational programs or
for contributions to a scholarship program, pre-kindergarten
scholarship program or opportunity scholarship program.
(2) No later than November 1 of each year, each school
which has accepted a recipient shall report the following to
the department:
(i) Any changes in student tuition from the previous
academic year.
(ii) School-level demographic data and the
demographic composition of scholarship recipients,
reporting the number of students for each by gender, race
and ethnicity, students with disabilities and students
with limited English proficiency.
(iii) For scholarship recipients in the previous
school year, the number who graduated, reenrolled in the
same school or enrolled in another school.
(iv) Aggregate school performance data at the school
level and for scholarship recipients, including student
performance on assessments administered to the grade
level in the building, graduation rate, attendance rate
and any other data requested by the department.
(v) Overall and disaggregated data on school
discipline.
(vi) Information on services provided by the school
for students with disabilities and English language
learners.
(3) A school that permanently closes its operations and
has enrolled a scholarship recipient within the past three
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years shall notify the department of its closure.
(4) The department shall annually produce a report based
on the aggregate information reported to it under this
section and make it available on the publicly accessible
Internet website of the department.
Section 3. This act shall take effect in 60 days.
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