1Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2act relating to tax reform and State taxation by codifying
3and enumerating certain subjects of taxation and imposing
4taxes thereon; providing procedures for the payment,
5collection, administration and enforcement thereof; providing
6for tax credits in certain cases; conferring powers and
7imposing duties upon the Department of Revenue, certain
8employers, fiduciaries, individuals, persons, corporations
9and other entities; prescribing crimes, offenses and
10penalties," <-further providing for limitations. further 
11providing for educational improvement tax credit; and 
12repealing provisions relating to educational opportunity 
13scholarship tax credit.

14The General Assembly of the Commonwealth of Pennsylvania
15hereby enacts as follows:

<-16Section 1. Section 1706-F(a) of the act of March 4, 1971
17(P.L.6, No.2), known as the Tax Reform Code of 1971, is amended
18to read:

19Section 1706-F. Limitations.

20(a) Amount.--

21(1) The total aggregate amount of all tax credits

1approved shall not exceed [$100,000,000] $125,000,000 in a
2fiscal year. No less than [$60,000,000] $75,000,000 of the
3total aggregate amount shall be used to provide tax credits
4for contributions from business firms to scholarship
5organizations. No less than [$30,000,000] $37,500,000 of the
6total aggregate amount shall be used to provide tax credits
7for contributions from business firms to educational
8improvement organizations.

9(2) The following apply to specific fiscal years:

10(i) For fiscal years 2004-2005, 2005-2006 and 2006-
112007, the total aggregate amount of all tax credits
12approved for contributions from business firms to pre-
13kindergarten scholarship programs shall not exceed
14$5,000,000 in a fiscal year.

15(ii) For fiscal years 2007-2008, 2008-2009, 2009-
162010, 2010-2011 and 2011-2012, the total aggregate amount
17of all tax credits approved for contributions from
18business firms to pre-kindergarten scholarship programs
19shall not exceed $8,000,000 in a fiscal year.

20(iii) For fiscal year 2012-2013 [and each fiscal
21year thereafter], the total aggregate amount of all tax
22credits approved for contributions from business firms to
23pre-kindergarten scholarship programs shall not exceed
24$10,000,000 in a fiscal year.

25(iv) For fiscal year 2013-2014 and each fiscal year
26thereafter, the total aggregate amount of all tax credits
27approved for contributions from business firms to pre-
28kindergarten scholarship programs shall not exceed
29$12,500,000 in a fiscal year.

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

1activities that are a part of a business firm's normal course of
2business.

3(c) Tax liability.--

4(1) Except as provided in paragraph (2), a tax credit
5granted for any one taxable year may not exceed the tax
6liability of a business firm.

7(2) In the case of a credit granted to a pass-through
8entity which elects to transfer the credit according to
9section 1705-F(e), a tax credit granted for any one taxable
10year and transferred to a shareholder, member or partner may
11not exceed the tax liability of the shareholder, member or
12partner.

13(d) Use.--A tax credit not used by the applicant in the
14taxable year the contribution was made or in the year designated
15by the shareholder, member or partner to whom the credit was
16transferred under section 1705-F(e) may not be carried forward
17or carried back and is not refundable or transferable.

18(e) Nontaxable income.--A scholarship received by an
19eligible student or eligible pre-kindergarten student shall not
20be considered to be taxable income for the purposes of Article
21III.

22Section 2. This act shall take effect in 60 days.

<-23Section 1. Article XVII-F heading of the act of March 4,
241971 (P.L.6, No.2), known as the Tax Reform Code of 1971, added
25October 9, 2009 (P.L.451, No.48), is amended to read:

26ARTICLE XVII-F

27EDUCATIONAL [IMPROVEMENT TAX CREDIT]

28TAX CREDITS

29Section 2. Section 1701-F of the act, added October 9, 2009
30(P.L.451, No.48), is amended to read:

1Section 1701-F. Scope of article.

2This article establishes the educational improvement [tax 
3credit] and opportunity scholarship tax credits.

4Section 3. The definitions of "business firm," "income
5allowance," "maximum annual household income," "pass-through
6entity" and "pre-kindergarten program" in section 1702-F of the
7act, amended or added October 9, 2009 (P.L.451, No.48) and July
82, 2012 (P.L.751, No.85), are amended and the section is amended
9by adding definitions to read:

10Section 1702-F. Definitions.

11The following words and phrases when used in this article
12shall have the meanings given to them in this section unless the
13context clearly indicates otherwise:

14"Applicable taxes."  Any of the taxes due under Article III,
15IV, VI, VII, VIII, IX, XV or XX or a tax under Article XVI of
16the act of May 17, 1921 (P.L.682, No.284), known as The
17Insurance Company Law of 1921.

18"Applicant."  An eligible student who applies for a
19scholarship.

20"Assessment."  The Pennsylvania System of School Assessment
21test, the Keystone Exam, an equivalent local assessment or
22another test established by the State Board of Education to meet
23the requirements of section 2603-B(d)(10)(i) of the Public
24School Code of 1949, and required under the No Child Left Behind
25Act of 2001 (Public Law 107-110, 115 Stat. 1425) or its
26successor statute or another test required to achieve other
27standards established by the Department of Education for the
28public school or school district under 22 Pa. Code § 403.3
29(relating to single accountability system).

30"Attendance boundary."  A geographic area of residence used

1by a school district to assign a student to a public school.

2"Average daily membership."  As defined in section 2501(3) of
3the Public School Code of 1949.

4"Business firm." An entity authorized to do business in this
5Commonwealth and subject to taxes imposed under Article III, IV,
6VI, VII, VIII, IX [or XV], XV or XX or a tax under Article XVI 
7of the act of May 17, 1921 (P.L.682, No.284), known as The 
8Insurance Company Law of 1921. The term includes a pass-through
9entity[.], including a pass-through entity, the purpose of which 
10is the making of contributions under this article and whose 
11shareholders, partners or members are composed of owners or 
12employes of other business firms.

13* * *

14"Elementary school."  A school which is not a secondary 
15school.

16* * *

17"Income allowance."

18[(1) As follows:

19(i) Before July 1, 2011, $10,000 for each eligible
20student, eligible pre-kindergarten student and dependent
21member of the household.

22(ii) After June 30, 2011, and through June 30, 2013, 
23$12,000 for each eligible student, eligible pre-
24kindergarten student and dependent member of the
25household.

26(iii) After June 30, 2013, and through June 30,
272014, $15,000 for each eligible student, eligible pre-
28kindergarten student and dependent member of the
29household.

30(2) Beginning July 1 2014, the Department of Community

1and Economic Development shall annually adjust the income
2allowance amounts under paragraph (1) to reflect any upward
3changes in the Consumer Price Index for All Urban Consumers
4for the Pennsylvania, New Jersey, Delaware and Maryland area
5in the preceding 12 months and shall immediately submit the
6adjusted amounts to the Legislative Reference Bureau for
7publication as a notice in the Pennsylvania Bulletin.]

8The base amount of $15,000 for each eligible student,
9eligible pre-kindergarten student and dependent member of the
10household. Beginning July 1, 2014, the department shall annually
11adjust the base amount to reflect upward changes in the Consumer
12Price Index for All Urban Consumers for the Pennsylvania, New
13Jersey, Delaware and Maryland area for the preceding 12 months.
14The department shall immediately submit the adjusted amounts to
15the Legislative Reference Bureau for publication as a notice in
16the Pennsylvania Bulletin.

17* * *

18"Kindergarten."  A one-year formal educational program that
19occurs during the school year immediately prior to first grade.
20The term includes a part-time and a full-time program.

21"Low-achieving school."  A public school that ranked in the
22lowest 15% of the school's designation as an elementary school
23or a secondary school based on combined mathematics and reading
24scores from the annual assessment administered in the previous
25school year and for which the Department of Education has posted
26results on the Department of Education's publicly accessible
27Internet website. The term does not include a charter school,
28cyber charter school or area vocational-technical school.

29"Maximum annual household income."

30(1) [Except as set forth in paragraph (2) and subject to
 

1paragraph (3), as follows:

2(i) Before July 1, 2011, not more than $50,000.

3(ii) After June 30, 2011, and through June 30, 2013,
4not more than $60,000.

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

6Subject to adjustment under paragraphs (2) and (3), the
7amount of $75,000, plus the applicable income allowance.

8(2) With respect to an eligible student with a
9disability, as calculated by multiplying:

10(i) [the sum of:

11(A)] the applicable amount under paragraph (1)[;
12and

13(B) the applicable income allowance]; by

14(ii) the applicable support level factor according
15to the following table:

16Support Level	Support Level Factor
171	1.50
182	2.993

19(3) Beginning July 1, 2014, the [Department of Community
20and Economic Development] department shall annually adjust
21the income amounts under paragraphs (1) and (2) to reflect
22any upward changes in the Consumer Price Index for All Urban
23Consumers for the Pennsylvania, New Jersey, Delaware and
24Maryland area in the preceding 12 months and shall
25immediately submit the adjusted amounts to the Legislative
26Reference Bureau for publication as a notice in the
27Pennsylvania Bulletin.

28"Nonpublic school."  A school which is a nonprofit
29organization and which is located in this Commonwealth. The term
30does not include a public school.

1"Opportunity scholarship organization."  A nonprofit entity
2which:

3(1) Is exempt from Federal taxation under section 501(c)
4(3) of the Internal Revenue Code of 1986 (Public Law 99-514,
526 U.S.C. § 1 et seq.); and

6(2) Contributes at least 80% of the entity's annual cash
7receipts to an opportunity scholarship program.

8For the purposes of this definition, a nonprofit entity
9contributes the entity's cash receipts to an opportunity
10scholarship program when the entity expends or otherwise
11irrevocably encumbers those funds for distribution during the
12then current fiscal year of the nonprofit entity or during the
13next succeeding fiscal year of the nonprofit entity.

14"Opportunity scholarship."  An award given to an applicant to
15pay tuition and school-related fees necessary to attend a
16participating nonpublic school or a participating public school
17located in a school district which is not the recipient's school
18district of residence.

19"Opportunity scholarship program."  A program to provide 
20opportunity scholarships to eligible students who reside within 
21the attendance area of a low-achieving school.

22"Parent."  An individual who:

23(1)  is a resident of this Commonwealth; and

24(2)  either:

25(i) has legal custody or guardianship of a student;
26or

27(ii) keeps in the individual's home a student and
28supports the student gratis as if the student were a
29lineal descendant of the individual.

30"Participating nonpublic school."  A nonpublic school which
 

1notifies the Department of Education under section 1711-F that 
2the school wishes to accept opportunity scholarship recipients.

3"Participating public school."  A public school in a school 
4district which notifies the Department of Education under 
5section 1711-F that the school wishes to accept opportunity 
6scholarship recipients. The term does not include a low-
7achieving school.

8"Pass-through entity." A partnership as defined in section
9301(n.0), a single-member limited liability company treated as a
10disregarded entity for Federal income tax purposes or a
11Pennsylvania S corporation as defined in section 301(n.1). The 
12term includes a pass-through entity that owns an interest in a 
13pass-through entity.

14"Pre-kindergarten program." A program of instruction for
15three-year-old [or], four-year-old, five-year-old or six-year-
16old students that utilizes a curriculum aligned with the
17curriculum of the school with which it is affiliated and which
18provides one of the following:

19(1) A minimum of two hours of instructional and
20developmental activities per day at least 60 days per school
21year.

22(2) A minimum of two hours of instructional and
23developmental activities per day at least 20 days over the
24summer recess.

25* * *

26"Public School Code of 1949."  The act of March 10, 1949
27(P.L.30, No.14), known as the Public School Code of 1949.

28"Recipient."  An applicant who receives a scholarship.

29* * *

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

1the student's primary domicile is located.

2* * *

3"Secondary school."  A school with an eleventh grade.

4* * *

5"Student."  An individual who meets all of the following:

6(1) Is school age.

7(2) Is a resident of this Commonwealth.

8(3) Attends or is about to attend a school.

9* * *

10Section 4. Section 1703-F of the act, amended or added
11October 9, 2009 (P.L.451, No.48) and July 2, 2012 (P.L.751, 
12No.48), is amended to read:

13Section 1703-F. Qualification and application by organizations.

14(a) Establishment.--In accordance with section 14 of Article
15III of the Constitution of Pennsylvania, [an educational
16improvement tax credit program is] the educational improvement
17and opportunity scholarship tax credit programs are hereby
18established to enhance the educational opportunities available
19to all students in this Commonwealth.

20(b) Information.--In order to qualify under this article, an 
21educational improvement organization, a scholarship 
22organization, a pre-kindergarten scholarship organization or an 
23[educational improvement] opportunity scholarship organization 
24must submit information to the department that enables the 
25department to confirm that the organization is exempt from 
26taxation under section 501(c)(3) of the Internal Revenue Code of 
271986 (Public Law 99-514, 26 U.S.C. § 1 et seq.).

28(c) Scholarship organizations and pre-kindergarten
29scholarship organizations.--A scholarship organization or pre-
30kindergarten scholarship organization must certify to the

1department that the organization is eligible to participate in
2the educational improvement tax credit program established under
3this article and must agree to annually report the following
4information to the department by September 1 of each year:

5(1) (i) The number of scholarships awarded during the
6immediately preceding school year to eligible pre-
7kindergarten students.

8(ii) The total and average amounts of the
9scholarships awarded during the immediately preceding
10school year to eligible pre-kindergarten students.

11(iii) The number of scholarships awarded during the
12immediately preceding school year to eligible students in
13grades kindergarten through eight.

14(iv) The total and average amounts of the
15scholarships awarded during the immediately preceding
16school year to eligible students in grades kindergarten
17through eight.

18(v) The number of scholarships awarded during the
19immediately preceding school year to eligible students in
20grades nine through 12.

21(vi) The total and average amounts of the
22scholarships awarded during the immediately preceding
23school year to eligible students in grades nine through
2412.

25(vii) Where the scholarship organization or pre-
26kindergarten scholarship organization collects
27information on a county-by-county basis, the total number
28and the total amount of scholarships awarded during the
29immediately preceding school year to residents of each
30county in which the scholarship organization or pre-

1kindergarten scholarship organization awarded
2scholarships.

3(viii) The total number of scholarship applications
4processed and the amounts of any application fees
5charged, either per scholarship application or in the
6aggregate through a third-party processor.

7(ix) The organization's Federal Form 990 or other
8Federal form indicating the tax status of the
9organization for Federal tax purposes, if any, and a copy
10of a compilation, review or audit of the organization's
11financial statements conducted by a certified public
12accounting firm.

13(2) The information required under paragraph (1) shall
14be submitted on a form provided by the department. No later
15than May 1 of each year, the department shall annually
16distribute such sample forms, together with the forms on
17which the reports are required to be made, to each listed
18scholarship organization and pre-kindergarten scholarship
19organization.

20(3) The department may not require any other information
21to be provided by scholarship organizations or pre-
22kindergarten scholarship organizations, except as expressly
23authorized in this article.

24(d) Educational improvement organization.--

25(1) An application submitted by an educational
26improvement organization must describe its proposed
27innovative educational program or programs in a form
28prescribed by the department. The department shall consult
29with the Department of Education as necessary. The department
30shall review and approve or disapprove the application. In

1order to be eligible to participate in the educational 
2improvement tax credit program established under this
3article, an educational improvement organization must agree
4to annually report the following information to the
5department by [December 1, 2005, and] September 1 of each
6year [thereafter]:

7(i) The name of the innovative educational program
8or programs and the total amount of the grant or grants
9made to those programs during the immediately preceding
10school year.

11(ii) A description of how each grant was utilized
12during the immediately preceding school year and a
13description of any demonstrated or expected innovative
14educational improvements.

15(iii) The names of the public schools and school
16districts where innovative educational programs that
17received grants during the immediately preceding school
18year were implemented.

19(iv) Where the educational improvement organization
20collects information on a county-by-county basis, the
21total number and the total amount of grants made during
22the immediately preceding school year for programs at
23public schools in each county in which the educational
24improvement organization made grants.

25(v) The organization's Federal Form 990 or other
26Federal form indicating the tax status of the
27organization for Federal tax purposes, if any, and a copy
28of a compilation, review or audit of the organization's
29financial statements conducted by a certified public
30accounting firm.

1(2) The information required under paragraph (1) shall
2be submitted on a form provided by the department. No later
3than [September 1, 2005, and] May 1 of each year
4[thereafter], the department shall annually distribute such
5sample forms, together with the forms on which the reports
6are required to be made, to each listed educational
7improvement organization.

8(3) The department may not require any other information
9to be provided by educational improvement organizations,
10except as expressly authorized in this article.

11(d.1) Opportunity scholarship organizations.--

12(1) An opportunity scholarship organization must enhance
13the educational opportunities available to students in this
14Commonwealth by providing opportunity scholarships to
15eligible students who reside within the attendance boundary
16of low-achieving schools to attend schools which are not low-
17achieving schools and which are not public schools within the
18eligible student's school district of residence. By February
1915 of each year, an opportunity scholarship organization must
20certify to the department that the organization is eligible
21to participate in the opportunity scholarship tax credit
22program.

23(2) An opportunity scholarship organization must agree
24to report the following information on a form provided by the
25department by September 1 of each year:

26(i) The total number of applications for opportunity
27scholarships received during the immediately preceding
28school year from eligible students in grades kindergarten
29through eight.

30(ii) The number of opportunity scholarships awarded

1during the immediately preceding school year to eligible
2students in grades kindergarten through eight.

3(iii) The total and average amounts of the
4opportunity scholarships awarded during the immediately
5preceding school year to eligible students in grades
6kindergarten through eight.

7(iv) The total number of applications for
8opportunity scholarships received during the immediately
9preceding school year from eligible students in grades
10nine through 12.

11(v) The number of opportunity scholarships awarded
12during the immediately preceding school year to eligible
13students in grades nine through 12.

14(vi) The total and average amounts of the
15opportunity scholarships awarded during the immediately
16preceding school year to eligible students in grades nine
17through 12.

18(vii) Where the opportunity scholarship organization
19collects information on a county-by-county basis, the
20total number and the total amount of opportunity
21scholarships awarded during the immediately preceding
22school year to residents of each county in which the
23opportunity scholarship organization awarded opportunity
24scholarships.

25(viii) The number of opportunity scholarships
26awarded during the immediately preceding school year to
27applicants with a household income that does not exceed
28185% of the Federal poverty level.

29(ix) The total and average amounts of opportunity
30scholarships awarded during the immediately preceding

1school year to applicants with a household income that
2does not exceed 185% of the Federal poverty level.

3(x) The number of opportunity scholarships awarded
4during the immediately preceding school year to
5applicants with a household income that does not exceed
6185% of the Federal poverty level and who reside within a
7first class school district.

8(xi) The total and average amounts of opportunity
9scholarships awarded during the immediately preceding
10school year to applicants with a household income that
11does not exceed 185% of the Federal poverty level and who
12reside within a first class school district.

13(xii) The number of opportunity scholarships awarded
14during the immediately preceding school year to
15applicants with a household income that does not exceed
16185% of the Federal poverty level and who reside within a
17school district that was designated as a financial
18recovery school district under Article VI-A of the Public
19School Code of 1949 at the time of the award.

20(xiii) The total and average amounts of opportunity
21scholarships awarded during the immediately preceding
22school year to applicants with a household income that
23does not exceed 185% of the Federal poverty level and who
24reside within a school district that was designated as a
25financial recovery school district under Article VI-A of
26the Public School Code of 1949 at the time of the award.

27(xiv) The total number of opportunity scholarship
28applications processed and the amounts of any application
29fees charged either per opportunity scholarship
30application or in the aggregate through a third-party

1processor.

2(xv) The opportunity scholarship organization's
3Federal Form 990 or other Federal form indicating the tax
4status of the opportunity scholarship organization for
5Federal tax purposes, if any, and a copy of a
6compilation, review or audit of the opportunity
7scholarship organization's financial statements conducted
8by a certified public accounting firm.

9(3) No later than May 1 of each year, the department
10shall annually distribute such sample forms, together with
11the forms on which the reports are required to be made, to
12each listed opportunity scholarship organization.

13(4) The department may not require other information to
14be provided by opportunity scholarship organizations, except
15as expressly authorized in this article.

16(e) Notification.--The department shall notify the
17scholarship organization, pre-kindergarten scholarship
18organization [or], educational improvement organization or 
19opportunity scholarship organization that the organization meets
20the requirements of and is qualified under this article for that
21fiscal year no later than 60 days after the organization has
22submitted the information required under this section.

23(f) Publication.--The department shall annually publish a
24list of each scholarship organization, pre-kindergarten
25scholarship organization [or], educational improvement
26organization and opportunity scholarship organization qualified
27under this section in the Pennsylvania Bulletin. The list shall
28also be posted and updated as necessary on the publicly
29accessible Internet website of the department.

30Section 5. Section 1704-F of the act, added December 9, 2009

1(P.L.451, No.48), is amended to read:

2Section 1704-F. Application by business firms.

3(a) Scholarship organization [or], pre-kindergarten
4scholarship organization or opportunity scholarship 
5organization.--A business firm shall apply to the department for
6a tax credit for contributions to a scholarship organization, 
7pre-kindergarten scholarship organization or opportunity 
8scholarship organization under section 1705-F. A business firm
9shall receive a tax credit under this article if the scholarship
10organization [or], pre-kindergarten scholarship organization or 
11opportunity scholarship organization that receives the
12contribution appears on the list established under section 1703-
13F(f), subject to the limitations in sections 1705-F and 1706-F.

14(b) Educational improvement organization.--A business firm
15must apply to the department for a credit for a contribution to 
16an educational improvement organization under section 1705-F. A
17business firm shall receive a tax credit under this article if
18the department has approved the program provided by the
19educational improvement organization that receives the
20contribution, subject to the limitations in sections 1705-F and 
211706-F.

22(c) Availability of tax credits.--Tax credits under this
23article shall be made available by the department on a first-
24come, first-served basis within the limitation established under
25section 1706-F(a).

26(d) Contributions.--A contribution by a business firm to a
27scholarship organization, pre-kindergarten scholarship 
28organization, opportunity scholarship organization or
29educational improvement organization shall be made no later than
3060 days following the approval of an application under

1subsection (a) or (b).

2(e) Application in the alternative.--At the time of
3application for an educational improvement or opportunity
4scholarship tax credit, the department shall advise a business
5firm that the firm may elect that its application for a
6particular credit should, in the alternative, be deemed an
7application for a different tax credit authorized under this
8section if the business firm's preferred choice of tax credit is
9not available. When a business firm does not receive its
10preferred choice of tax credit, the department shall promptly
11consider the business firm's application in the alternative for
12a different tax credit authorized under this section.

13Section 4. Sections 1705-F and 1706-F of the act, amended
14July 2, 2012 (P.L.751, No.85), are amended to read:

15Section 1705-F. Tax [credit] credits.

16(a) Scholarship or educational improvement organizations.--
17In accordance with section [1706-F(a)] 1706-F, the Department of
18Revenue shall grant a tax credit against any [tax due under
19Article III, IV, VI, VII, VIII, IX or XV or under Article XVI of 
20the act of May 17, 1921 (P.L.682, No.284), known as The 
21Insurance Company Law of 1921,] applicable tax to a business
22firm providing proof of a contribution to a scholarship
23organization or educational improvement organization in the
24taxable year in which the contribution is made [which] in 
25accordance with the following:

26(1) The tax credit shall not exceed 75% of the total
27amount contributed during the taxable year by the business
28firm.

29(2) For fiscal year [2012-2013, the tax credit shall not
30exceed $400,000 annually per business firm for contributions

1made to scholarship organizations or educational improvement
2organizations. For fiscal year 2013-2014] 2014-2015, and each 
3fiscal year thereafter, the tax credit shall not exceed 
4$750,000 annually per business firm for contributions made to 
5scholarship organizations or educational improvement 
6organizations[.] except as provided under subsection (i).

7(a.1) Opportunity scholarship organizations.--In accordance
8with section 1706-F, the Department of Revenue shall grant a tax
9credit against any applicable tax to a business firm providing
10proof of a contribution to an opportunity scholarship
11organization in the taxable year in which the contribution is
12made in accordance with the following:

13(1) The tax credit shall not exceed 75% of the total
14amount contributed during the taxable year by the business
15firm.

16(2) For fiscal year 2014-2015, and each fiscal year
17thereafter, the tax credit shall not exceed $750,000 annually
18per business firm for contributions made to opportunity
19scholarship organizations, except as provided in subsection
20(i).

21(b) Additional amount.--[The] In accordance with section 
221706-F, the Department of Revenue shall grant a tax credit of up
23to 90% of the total amount contributed during the taxable year
24if the business firm provides a written commitment to provide
25the scholarship organization [or], educational improvement
26organization or opportunity scholarship organization with the
27same amount of contribution for two consecutive tax years. The
28business firm must provide the written commitment under this
29subsection to the department at the time of application.

30(c) Pre-kindergarten scholarship organizations.--In

1accordance with section [1706-F(a)] 1706-F, the Department of
2Revenue shall grant a tax credit against any [tax due under
3Article III, IV, VI, VII, VIII, IX or XV or under Article XVI of 
4The Insurance Company Law of 1921] applicable tax to a business
5firm providing proof of a contribution to a pre-kindergarten
6scholarship organization in the taxable year in which the
7contribution is made [which] in accordance with the following:

8(1) The tax credit shall be equal to 100% of the first
9$10,000 contributed during the taxable year by the business
10firm[,] and [which] shall not exceed 90% of the remaining
11amount contributed during the taxable year by the business
12firm. At the time of application, a business firm may provide 
13a written commitment to the department to provide the pre-
14kindergarten scholarship organization with at least the same 
15amount of contribution for two consecutive years.

16(2)  [Such] The tax credit shall not exceed $200,000
17annually per business firm for contributions made to pre-
18kindergarten scholarship organizations, except as provided in 
19subsection (i).

20(d) Combination of tax credits.--[A] In accordance with 
21section 1706-F, a business firm may receive tax credits from the
22Department of Revenue in any tax year for any combination of
23contributions under [subsection (a) or (b) or (c)] subsection 
24(a), (a.1), (b) or (c). [In] Except as provided in subsection 
25(i), in no case may a business firm receive tax credits in any
26tax year in excess of the following:

27(1) [$400,000 for] $750,000 for combined contributions
28[under subsections (a) and (b) made during fiscal year 2012-
292013 or in excess of] to scholarship and educational 
30improvement organizations under subsections (a) and (b).

1(2) $750,000 for contributions [under subsections (a) 
2and (b) made after fiscal year 2012-2013. In no case shall a
3business firm receive tax credits in any tax year in excess
4of] to opportunity scholarship organizations under 
5subsections (a.1) and (b).

6(3)  $200,000 for contributions [under subsection (c)] to 
7pre-kindergarten scholarship organizations under subsection 
8(c).

9(e) Pass-through entity.--

10(1) If a pass-through entity does not intend to use all
11approved tax credits under this section, it may elect in
12writing to [transfer] distribute for no consideration all or
13a portion of the credit to shareholders, members or partners
14in proportion to the [share of the entity's distributive
15income to which] percentage interest of the shareholder,
16member or partner [is entitled for use] in distributions from 
17the pass-through entity, which credits may be used by the 
18shareholders, members or partners in the taxable year in
19which the contribution is made or in the taxable year
20immediately following the year in which the contribution is
21made. The election shall designate the year in which the
22[transferred] distributed credits are to be used and shall be
23made according to procedures established by the Department of
24Revenue. A pass-through entity that received a distribution 
25from a pass-through entity under this paragraph may make a 
26distribution under this paragraph.

27(2) A pass-through entity and a shareholder, member or
28partner of a pass-through entity shall not claim the credit
29under this section for the same contribution.

30(3) The shareholder, member or partner may not carry

1forward, carry back, obtain a refund of or sell or assign the
2credit.

3(4) An individual shareholder, partner or member may
4apply a credit distributed under this section to income
5taxable under Article III to the shareholder, partner or
6member, to the spouse of the shareholder, partner or member
7or to both, if both the shareholder, partner or member and
8the spouse report income on a joint personal income tax
9return.

10(f) Restriction on applicability of credits.--No credits
11granted under this section shall be applied against any tax
12withheld by an employer from an employee under Article III.

13(g) Time of application for credits.--

14(1) Except as provided in paragraph (2), the department
15may accept applications for tax credits available during a
16fiscal year no earlier than July 1 of each fiscal year.

17(2) The application of any business firm for tax credits
18available during a fiscal year as part of the second year of
19a two-year commitment or as a renewal of a two-year 
20commitment which was fulfilled in the previous fiscal year
21may be accepted no earlier than May 15 preceding the fiscal
22year.

23(h) Waiting list.--The department shall maintain a waiting
24list consisting of each business firm which chooses to be
25included on the list and whose application has not been approved
26because all available tax credits have been awarded. A business
27firm that was not awarded a tax credit due to a lack of
28available tax credits shall be notified of and offered a place
29on the waiting list. When tax credits become available, the
30department shall award the tax credits to the business firms in

1the order in which the business firms were placed on the waiting
2list.

3(i) Temporary increase in maximum tax credits available.--

4(1) If all tax credits authorized under this article for
5contributions to the category of scholarship organizations,
6opportunity scholarship organizations or pre-kindergarten
7scholarship organizations have not been awarded as of October
81 of any fiscal year, then for applications accepted by the
9department from October 1 through November 30 of such fiscal
10year, the limitations set forth in subsections (a), (a.1),
11(c) and (d) relating to the maximum amount of tax credits a
12business firm can receive during a fiscal year for
13contributions to each such category of organizations shall
14not apply. Under this paragraph, the department may accept
15applications under section 1704-F from October 1 through
16November 30 as follows:

17(i) A business firm, including a business firm that
18already applied for the maximum tax credits available
19pursuant to subsections (a) and (d), may apply under
20section 1704-F(a) for up to the total amount of tax
21credits remaining available for contributions to
22scholarship organizations for the fiscal year as set
23forth in section 1706-F(a)(1).

24(ii) A business firm, including a business firm that
25already applied for the maximum tax credits available
26pursuant to subsections (a.1) and (d), may apply under
27section 1704-F(a) for up to the total amount of tax
28credits remaining available for contributions to
29opportunity scholarship organizations for the fiscal year
30as set forth in section 1706-F(a)(3).

1(iii) A business firm, including a business firm
2that already applied for the maximum tax credits
3available pursuant to subsections (c) and (d), may apply
4under section 1704-F(a) for up to the total amount of tax
5credits remaining available for contributions to pre-
6kindergarten scholarship organizations for the fiscal
7year as set forth in section 1706-F(a)(2).

8(2) The provisions of subsection (b) shall not apply to
9applications for tax credits made under this subsection. Tax
10credits awarded under this subsection shall not exceed 75% of
11the total amount contributed during the taxable year by a
12business firm pursuant to an application filed under this
13subsection.

14(3) Prior to the award of tax credits applied for under
15this subsection, the department shall first award tax credits
16applied for by a business firm during the period October 1
17through November 30 in an amount no greater than the maximum
18amount of tax credits for which a business firm is eligible
19under subsections (a), (a.1), (c) and (d). The tax credits
20shall be awarded on a first-come, first-served basis as set
21forth in section 1704-F(c).

22(4) After the department has awarded tax credits under
23paragraph (3), any tax credits remaining available within the
24category of scholarship organizations, opportunity
25scholarship organizations and pre-kindergarten scholarship
26organizations shall be awarded based on the total amount of
27tax credits within each category of organization for which
28applications are received under this subsection from October
291 through November 30 of the fiscal year as follows:

30(i) If the total amount of tax credits applied for

1by all business firms under this subsection does not
2exceed the total amount of tax credits that remained
3available for award within a category as of October 1,
4less those tax credits awarded under subsection (i)(3),
5then each business firm may be awarded the full amount of
6tax credits applied for.

7(ii) If the total amount of tax credits applied for
8by all business firms under this subsection exceeds the
9total amount of tax credits that remained available for
10award within a category as of October 1, less those tax
11credits awarded under subsection (i)(3), then each
12business firm may be awarded an amount of tax credits
13determined by multiplying the amount of tax credits
14applied for by the business firm by a ratio, the
15numerator of which is the total amount of tax credits
16that remained available for award within the category as
17of October 1, less those awarded as set forth in
18subsection (i)(3), and the denominator of which is the
19total amount of tax credits applied for by all business
20firms under this subsection.

21(5) Notwithstanding a temporary increase in maximum tax
22credits available under this subsection, the limitations set
23forth in subsections (a), (a.1), (c) and (d) relating to the
24maximum amount of tax credits a business firm can receive
25during a year for contributions to a category of scholarship
26organizations, opportunity scholarship organizations or pre-
27kindergarten scholarship organizations shall be reinstated
28for all applications accepted by the department on or after
29December 1 of the fiscal year.

30(j) Reallocation of tax credits.--

1(1) Beginning on January 1 of any fiscal year, if any
2tax credits authorized under this article for contributions
3to any of the categories of scholarship organizations,
4opportunity scholarship organizations or pre-kindergarten
5scholarship organizations remain unawarded, such unawarded
6tax credits may be reallocated to any of the categories of
7scholarship organizations, opportunity scholarship
8organizations or pre-kindergarten scholarship organizations
9for which all available tax credits have been awarded. The
10department shall, within ten business days, inform each
11business firm on the waiting list maintained by the
12department under subsection (h) that tax credits remain
13available under another category for which the business firm
14has not yet applied. If a business firm notified under this
15paragraph elects, the department shall reallocate available
16tax credits for award to the business firm in the business
17firm's preferred tax credit category, notwithstanding the
18limitations contained in section 1706-F(a). The amount of tax
19credits to be awarded to a business firm under this paragraph
20shall not exceed the amount of tax credits available for
21reallocation or the maximum amount of tax credits for which a
22business firm is eligible under subsections (a), (a.1), (c)
23and (d). Each business firm shall have ten business days from
24the date of the department's notice to elect a reallocation
25of tax credits under this paragraph. The department shall
26award tax credits on a first-come, first-served basis.

27(2) After the department has awarded tax credits under
28paragraph (1), the department shall accept new applications
29for reallocation of tax credits from any of the categories of
30scholarship organizations, opportunity scholarship

1organizations or pre-kindergarten scholarship organizations
2for which tax credits remain available to the applicant's
3preferred category of scholarship organizations, opportunity
4scholarship organizations or pre-kindergarten scholarship
5organizations for which all available tax credits have been
6awarded, notwithstanding any limitations contained in section
71706-F(a). The amount of tax credits to be awarded to a
8business firm under this paragraph shall not exceed the
9amount of tax credits available for reallocation or the
10maximum amount of tax credits for which a business firm is
11eligible under subsections (a), (a.1), (c) and (d). The
12department shall award tax credits on a first-come, first-
13served basis.

14(3) No tax credits shall be awarded under this
15subsection until the department has completed the award of
16tax credits for applications made under subsection (i).

17(4) The department shall not reallocate tax credits from
18any of the categories of scholarship organizations,
19opportunity scholarship organizations or pre-kindergarten
20scholarship organizations to the category of educational
21improvement organizations.

22(5) Subsections (b) and (g) shall not apply to an
23application for reallocation of tax credits under this
24subsection.

25Section 1706-F. Limitations.

26(a) Amount.--

27(1) The total aggregate amount of all tax credits
28approved for contributions from business firms to scholarship 
29organizations, educational improvement organizations and pre-
30kindergarten scholarship organizations shall not exceed

1$100,000,000 in a fiscal year.

2(i) No less than $60,000,000 of the total aggregate
3amount shall be used to provide tax credits for
4contributions from business firms to scholarship
5organizations.

6(ii) No less than $30,000,000 of the total aggregate
7amount shall be used to provide tax credits for
8contributions from business firms to educational
9improvement organizations.

10[(2) The following apply to specific fiscal years:

11(i) For fiscal years 2004-2005, 2005-2006 and 2006-
122007, the total aggregate amount of all tax credits
13approved for contributions from business firms to pre-
14kindergarten scholarship programs shall not exceed
15$5,000,000 in a fiscal year.

16(ii) For fiscal years 2007-2008, 2008-2009, 2009-
172010, 2010-2011 and 2011-2012, the]

18(iii) The total aggregate amount of all tax credits
19approved for contributions from business firms to pre-
20kindergarten scholarship [programs] organizations shall
21not exceed [$8,000,000] $10,000,000 in a fiscal year.

22[(iii) For fiscal year 2012-2013 and each fiscal
23year thereafter, the]

24(2) The total aggregate amount of all tax credits
25approved for contributions from business firms to [pre-
26kindergarten scholarship programs] opportunity scholarship 
27organizations shall not exceed [$10,000,000] $50,000,000 in a
28fiscal year.

29(b) Activities.--No tax credit shall be approved for
30activities that are a part of a business firm's normal course of

1business.

2(c) Tax liability.--

3(1) Except as provided in paragraph (2), a tax credit
4granted for any one taxable year may not exceed the tax
5liability of a business firm.

6(2) In the case of a credit granted to a pass-through
7entity which elects to [transfer] distribute the credit
8according to section 1705-F(e), a tax credit granted for any
9one taxable year and [transferred] distributed to a
10shareholder, member or partner may not exceed the tax
11liability of the shareholder, member or partner.

12(d) Use.--A tax credit not used by the applicant in the
13taxable year the contribution was made or in the year designated
14by the shareholder, member or partner to whom the credit was
15transferred under section 1705-F(e) may not be carried forward
16or carried back and is not refundable or transferable.

17(e) Nontaxable income.--A scholarship from any category of 
18organization received by an eligible student or eligible pre-
19kindergarten student shall not be considered to be taxable
20income for the purposes of Article III.

21(f) Financial assistance.--A scholarship from any category
22of organization received by an eligible student or eligible pre-
23kindergarten student shall not constitute an appropriation or
24financial assistance to the school attended by the recipient.

25Section 5. Section 1707-F of the act, added October 9, 2009
26(P.L.451, No.48), is amended to read:

27Section 1707-F. Lists.

28The Department of Revenue shall provide a list of all
29scholarship organizations, pre-kindergarten scholarship
30organizations [and], educational improvement organizations and
 

1opportunity scholarship organizations receiving contributions
2from business firms granted a tax credit under this article to
3the General Assembly by June 30th of each year.

4Section 6. The act is amended by adding sections to read:

5Section 1709-F. Opportunity scholarships.

6(a) Notice.--By February 1 of each year, the department
7shall provide all opportunity scholarship organizations with a
8list of the low-achieving schools located within each school
9district.

10(b) Award.--An opportunity scholarship organization may
11award an opportunity scholarship to an applicant who resides
12within the attendance boundary of a low-achieving school to
13attend a participating public school or a participating
14nonpublic school selected by the parent of the applicant. If an
15applicant who received an opportunity scholarship for the prior
16school year resides within the attendance boundary of a school
17that was removed from the list of low-achieving schools provided
18by the department under subsection (a), the applicant may
19receive an opportunity scholarship. The opportunity scholarship
20may be for each year of enrollment in a participating public
21school or participating nonpublic school for up to the lesser of
22five years or until completion of grade 12, provided the
23applicant otherwise remains eligible. In awarding scholarships,
24an opportunity scholarship organization shall give preference to
25any of the following:

26(1) An applicant who received an opportunity scholarship
27for the prior school year.

28(2) An applicant of a household with a household income
29that does not exceed 185% of the Federal poverty level for
30the school year preceding the school year for which the

1application is being made.

2(3) An applicant of a household with a household income
3that does not exceed 185% of the Federal poverty level for
4the school year preceding the school year for which the
5application is being made and who resides within any of the
6following:

7(i) A first class school district.

8(ii) A school district designated as a financial
9recovery school district under Article VI-A of the
10Public School Code of 1949 for the year for which the
11award is made.

12(c) Home schooling.--An opportunity scholarship organization
13shall not award an opportunity scholarship to an applicant for
14enrollment in a home education program under section 1327.1 of
15the Public School Code of 1949.

16(d) Funding.--The aggregate amount of opportunity
17scholarships shall not exceed the aggregate amount of
18contributions made by business firms to the opportunity
19scholarship organization.

20(e) Amount.--

21(1) The maximum amount of an opportunity scholarship
22awarded to an applicant without a disability shall be $8,500.

23(2) The maximum amount of an opportunity scholarship
24awarded to an applicant with a disability shall be $15,000.

25(3) In no case shall the combined amount of the
26opportunity scholarship awarded to a recipient and any
27additional financial assistance provided to the recipient
28exceed the tuition rate and school-related fees for the
29participating public school or participating nonpublic school
30that the recipient will attend.

1Section 1710-F. Low-achieving schools.

2(a) List of low-achieving schools.--By February 1 of each
3year, the Department of Education shall publish on the
4Department of Education's publicly accessible Internet website
5and in the Pennsylvania Bulletin a list of the low-achieving
6schools for the following school year.

7(b) Notice.--By February 1 of each year, the Department of
8Education shall notify every school district identified as
9having at least one low-achieving school of such identification
10and shall furnish the school district with a list of the low-
11achieving schools located within the school district.

12(c) Publication.--Within 15 days of receipt of a
13notification under subsection (b), a school district shall post
14on the district's publicly accessible Internet website notice of
15all of the following:

16(1) A description of the opportunity scholarship
17program.

18(2) Instructions for applying for an opportunity
19scholarship.

20(3) A list of schools in the school district that have
21been designated by the Department of Education as low-
22achieving schools.

23(4) Notice that a parent must directly contact a school
24district of a participating public school or a participating
25nonpublic school if the parent seeks to enroll the student in
26the opportunity scholarship program.

27(d) Notification to parents.--

28(1) Within 15 days of receipt of a notification under
29subsection (b), a school district shall notify the parents of
30each student who is currently attending or residing within

1the attendance boundary of a low-achieving school during the
2school year of the school's designation.

3(2) Upon registration of a kindergarten student, a
4school district shall notify the parents of the kindergarten
5student that the student will be assigned to a low-achieving
6school during the school year of the school's designation.

7(3) The notice shall be in a form provided by the
8Department of Education and shall provide the following
9information regarding the opportunity scholarship program:

10(i) A description of the opportunity scholarship
11program.

12(ii) Instructions for obtaining information about
13applying for an opportunity scholarship under the
14opportunity scholarship program.

15(iii) Notice of the parent's responsibilities with
16regard to applying to a school district of a
17participating public school or a participating nonpublic
18school if the parent seeks to enroll the student in the
19opportunity scholarship program.

20(e) Average daily membership.--

21(1) Notwithstanding any other provision of law to the
22contrary, a recipient who was enrolled in the recipient's
23resident school district or in a charter school, regional
24charter school or cyber charter school when the recipient
25first received an opportunity scholarship shall continue to
26be counted in the average daily membership of the school
27district for a period of one year after enrolling in a
28participating public school or a participating nonpublic
29school.

30(2) During the year referenced in paragraph (1) and each

1school year thereafter, a school district of a participating
2public school in which the recipient is enrolled shall not
3include the recipient in the school district's average daily
4membership.

5Section 1711-F. School participation in program.

6(a) Election.--

7(1) By February 15 of each year, a nonpublic school may
8elect to participate in the opportunity scholarship program
9for the following school year.

10(2) By February 15 of each year, a school district may
11elect to participate in the opportunity scholarship program
12for the following school year.

13(b) Notice.--

14(1) A school district or nonpublic school that elects to
15participate under subsection (a) must notify the Department
16of Education of the district's or nonpublic school's intent
17to participate.

18(2) For a school district, the notice under paragraph
19(1) must be submitted on a form developed by the Department
20of Education and shall specify all of the following:

21(i) Each school within the school district which the
22school district intends to make a participating public
23school.

24(ii) The amount of tuition and school-related fees
25attributable to each available seat. The amount under
26this subparagraph shall not exceed the amount calculated
27under section 2561 of the Public School Code of 1949.

28(3) For a nonpublic school, the notice under paragraph
29(1) must be submitted on a form developed by the Department
30of Education and shall specify the amount of tuition and

1school-related fees attributable to an available seat.

2(c) Tuition rates.--

3(1) No school district of a participating public school
4or participating nonpublic school may charge a recipient a
5higher tuition rate or school-related fee than the school
6district of the participating public school or participating
7nonpublic school would have charged to a similarly situated
8student who is not receiving an opportunity scholarship.

9(2) Notwithstanding the provisions of section 2561 of
10the Public School Code of 1949, a school district of a
11participating public school may charge a recipient a tuition
12rate that is lower than that charged to students who are not
13recipients of opportunity scholarships.

14(d) Participating public school criteria.--The following
15criteria apply to a participating public school:

16(1) Except as otherwise provided in this article, a
17school district shall enroll students in a participating
18public school on a lottery basis from a pool of recipients
19who meet the application deadline set by the Department of
20Education until the participating public school fills the
21school's available seats. The pool may not include a
22recipient who:

23(i) Has been expelled or is in the process of being
24expelled under section 1317.2 or 1318 of the Public
25School Code of 1949 and applicable regulations of the
26State Board of Education.

27(ii) Has been recruited by the school district or
28its representatives for athletic purposes.

29(2) The enrollment of recipients may not place the
30school district in violation of a valid and binding

1desegregation order.

2(3) Priority shall be given to:

3(i) An existing recipient.

4(ii) A recipient who is a sibling of a student
5currently enrolled in the school district.

6(e) Participating nonpublic school criteria.--The following
7criteria apply to a participating nonpublic school:

8(1) The participating nonpublic school may not
9discriminate on a basis which is illegal under Federal or
10State laws applicable to nonpublic schools.

11(2) The participating nonpublic school shall comply with
12section 1521 of the Public School Code of 1949.

13(3) The participating nonpublic school or its
14representatives may not recruit a student for athletic
15purposes.

16(f) Student rules, policies and procedures.--

17(1) Prior to enrollment of a recipient, a school
18district of a participating public school or a participating
19nonpublic school shall inform the parent of a recipient of
20any and all rules, policies and procedures of the
21participating public school or participating nonpublic
22school, including any academic policies, disciplinary rules
23and administrative procedures of the participating public
24school or participating nonpublic school.

25(2) Enrollment of a recipient in a participating public
26school or participating nonpublic school shall constitute
27acceptance of any rules, policies and procedures of the
28participating public school or participating nonpublic
29school.

30(g) Transportation.--

1(1) Transportation of recipients shall be provided under
2section 1361 of the Public School Code of 1949.

3(2) Reimbursement shall be as follows:

4(i) Transportation of a recipient attending a
5participating public school shall be subject to
6reimbursement under section 2541 of the Public School
7Code of 1949.

8(ii) Transportation of a recipient attending a
9participating nonpublic school shall be subject to
10reimbursement under sections 2509.3 and 2541 of the
11Public School Code of 1949.

12(h) Construction.--Nothing in this article shall be
13construed to:

14(1) Prohibit a participating nonpublic school from
15limiting admission to a particular grade level, a single
16gender or areas of concentration of the participating
17nonpublic school, including mathematics, science and the
18arts.

19(2) Authorize the Commonwealth or any of its agencies or
20officers or political subdivisions to impose any additional
21requirements on a participating nonpublic school which are
22not otherwise authorized under the laws of this Commonwealth
23or to require a participating nonpublic school to enroll a
24recipient if the participating nonpublic school does not
25offer appropriate programs or is not structured or equipped
26with the necessary facilities to meet the special needs of
27the recipient or does not offer a particular program
28requested.

29Section 1712-F. Tuition grants by school districts.

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

1district may use funds received from the Commonwealth for
2educational purposes to establish a program of tuition grants to
3provide for the education of students who reside within the
4district and attend or will attend a public or nonpublic school
5on a tuition-paying basis.

6(b) Nonpublic school grant amount.--For students who attend
7or will attend a nonpublic school, the grant amount for each
8student shall not exceed the amount of the per pupil State
9subsidy for basic education of the school district of residence.

10(c) Average daily membership.--

11(1) A student who receives a tuition grant under this
12section shall be included in the average daily membership for
13purposes of determining the school district of residence's
14basic education funding.

15(2) A student who receives a grant under this section to
16attend a public school outside the school district awarding
17the tuition grant shall not be included in the average daily
18membership of the school district the student attends.

19(d) Guidelines.--

20(1) The board of school directors of a school district
21shall prepare guidelines on all the following:

22(i) Establishment of an application form and
23approval process.

24(ii) Standards for verification of the accuracy of
25application information.

26(iii) Confirmation of attendance by a student who
27receives a tuition grant.

28(iv) Restrictive endorsement of grant checks by
29parents to the school chosen by the parents.

30(v) Pro rata refunds of grants for students who

1withdraw during the school year.

2(vi) Repayment of refunded grants to the school
3district.

4(vii) Reasonable deadline dates for submission of
5grant applications.

6(2) The board of school directors of a school shall
7announce the award of grants no later than August 1 of the
8school year in which the grants will be utilized.

9(3) Upon receipt of written confirmation of enrollment
10from the student's school of choice, grants shall be paid to
11the parents of a student by a check that may only be endorsed
12to the selected school.

13(4) In the event a student is no longer enrolled prior
14to the completion of the school term, the school shall send
15written notice to the school district.

16(e) Nontaxable.--Grants awarded to students under this
17section shall not:

18(1) Be considered taxable income for purposes of a local
19taxing ordinance or for purposes of Article III.

20(2) Constitute financial assistance or appropriations to
21the school attended by the student.

22(f) Construction.--Nothing in this section shall be
23construed to empower the Commonwealth or a school district or
24any of their agencies or officers to do any of the following:

25(1) Prescribe the course content or admissions criteria
26for any religiously affiliated school.

27(2) Compel any private school to accept or enroll a
28student.

29(3) Impose any additional requirements on any private
30school that are not otherwise authorized.

1(4) Require any school to accept or retain a student if
2the school does not offer programs or is not structured or
3equipped with the necessary facilities to meet the special
4needs of the student or does not offer a particular program
5requested.

6Section 1713-F. Original jurisdiction.

7The Pennsylvania Supreme Court shall have exclusive and
8original jurisdiction to hear a challenge or to render a
9declaratory judgment concerning the constitutionality of this
10article. The Pennsylvania Supreme Court may take such action as
11the court deems appropriate, consistent with the Pennsylvania
12Supreme Court's retaining jurisdiction over such a matter, to
13find facts or to expedite a final judgment in connection with a
14challenge or request for declaratory relief.

15Section 7. Article XVII-G.1 heading and sections 1701-G.1, 
161702-G.1, 1703-G.1, 1704-G.1, 1705-G.1, 1706-G.1 and 1707-G.1, 
17of the act, added July 2, 2012 (P.L.751, No.85), are repealed:

18[ARTICLE XVII-G.1

19EDUCATIONAL OPPORTUNITY SCHOLARSHIP TAX CREDIT

20Section 1701-G.1. Scope of article.

21This article establishes the educational opportunity
22scholarship tax credit.

23Section 1702-G.1. Definitions.

24The following words and phrases when used in this article
25shall have the meanings given to them in this section unless the
26context clearly indicates otherwise:

27"Applicant." An eligible student who applies for a
28scholarship.

29"Assessment." The Pennsylvania System of School Assessment
30test, the Keystone Exam, an equivalent local assessment or

1another test established by the State Board of Education to meet
2the requirements of section 2603-B(d)(10)(i) of the Public
3School Code of 1949 and required under the No Child Left Behind
4Act of 2001 (Public Law 107-110, 115 Stat. 1425) or its
5successor statute or any other test required to achieve other
6standards established by the Department of Education for the
7public school or school district under 22 Pa. Code § 403.3
8(relating to single accountability system).

9"Attendance boundary." A geographic area of residence used
10by a school district to assign a student to a public school.

11"Average daily membership." As defined in section 2501(3) of
12the Public School Code of 1949.

13"Business firm." An entity authorized to do business in this
14Commonwealth and subject to a tax under Article XVI of the act
15of May 17, 1921 (P.L.682, No.284), known as The Insurance
16Company Law of 1921, or taxes imposed under Article III, IV, VI,
17VII, VIII, IX or XV. The term includes a pass-through entity.

18"Contribution." A donation of cash, personal property or
19services, the value of which is the net cost of the donation to
20the donor or the pro rata hourly wage, including benefits, of
21the individual performing the services.

22"Department." The Department of Community and Economic
23Development of the Commonwealth.

24"Elementary school." A school which is not a secondary
25school.

26"Eligible student." A student or a student with a disability
27who:

28(1) resides within the attendance boundary of a low-
29achieving school as of the first day of classes of the school
30year; and

1(2) is a member of a household which has a household
2income no greater than the maximum annual household income
3allowance.

4"Household." An individual who lives alone or with the
5following: a spouse, parent and their unemancipated minor
6children, other unemancipated minor children who are related by
7blood or marriage or other adults or unemancipated minor
8children living in the household who are dependent upon the
9individual.

10"Household income." All moneys or property received by a
11household of whatever nature and from whatever source derived.
12The term does not include the following:

13(1) Periodic payments for sickness and disability other
14than regular wages received during a period of sickness or
15disability.

16(2) Disability, retirement or other payments arising
17under workers' compensation acts, occupational disease acts
18and similar legislation by any government.

19(3) Payments commonly recognized as old-age or
20retirement benefits paid to persons retired from service
21after reaching a specific age or after a stated period of
22employment.

23(4) Payments commonly known as public assistance or
24unemployment compensation payments by a governmental agency.

25(5) Payments to reimburse actual expenses.

26(6) Payments made by employers or labor unions for
27programs covering hospitalization, sickness, disability or
28death, supplemental unemployment benefits, strike benefits,
29Social Security and retirement.

30(7) Compensation received by United States servicemen

1serving in a combat zone.

2"Income allowance."

3(1) The following shall apply:

4(i) After June 30, 2012, and through June 30, 2013,
5$12,000 for each dependent member of the household.

6(ii) After June 30, 2013, and through June 30, 2014,
7$15,000 for each dependent member of the household.

8(2) Beginning July 1, 2014, the Department of Community
9and Economic Development shall annually adjust the income
10allowance amounts under paragraph (1) to reflect any upward
11changes in the Consumer Price Index for All Urban Consumers
12for the Pennsylvania, New Jersey, Delaware and Maryland area
13in the preceding 12 months and shall immediately submit the
14adjusted amounts to the Legislative Reference Bureau for
15publication as a notice in the Pennsylvania Bulletin.

16"Kindergarten." A one-year formal educational program that
17occurs during the school year immediately prior to first grade.
18The term includes a part-time and a full-time program.

19"Low-achieving school." A public school that ranked in the
20lowest 15% of its designation as an elementary school or a
21secondary school based on combined mathematics and reading
22scores from the annual assessment administered in the previous
23school year and for which the Department of Education has posted
24results on its publicly accessible Internet website. The term
25does not include a charter school, cyber charter school or area
26vocational-technical school.

27"Maximum annual household income allowance."

28(1) Except as stated in paragraph (2) and subject to
29adjustment under paragraph (3), the sum of:

30(i) Either:

1(A) after June 30, 2012, and through June 30,
22013, not more than $60,000; or

3(B) after June 30, 2013, not more than $75,000.

4(ii) The applicable income allowance.

5(2) With respect to a student with a disability, as
6calculated by multiplying:

7(i) the applicable amount under paragraph (1); by

8(ii) the applicable support level factor according
9to the following table:

10Support Level	Support Level Factor
111	1.50
122	2.993

13(3) Beginning July 1, 2014, the Department of Community
14and Economic Development shall annually adjust the income
15amounts under paragraphs (1) and (2) to reflect any upward
16changes in the Consumer Price Index for All Urban Consumers
17for the Pennsylvania, New Jersey, Delaware and Maryland area
18in the preceding 12 months and shall immediately submit the
19adjusted amounts to the Legislative Reference Bureau for
20publication as a notice in the Pennsylvania Bulletin.

21"Nonpublic school." A school which is a nonprofit
22organization and which is located in the Commonwealth. The term
23does not include a public school.

24"Parent." An individual who:

25(1) is a resident of the Commonwealth; and

26(2) either:

27(i) has legal custody or guardianship of a student;
28or

29(ii) keeps in his home a student and supports the
30student gratis as if the student were a lineal descendant

1of the individual.

2"Participating nonpublic school." A nonpublic school which
3notifies the Department of Education under section 1710-G.1 that
4it wishes to participate in the program.

5"Participating public school." A public school in a school
6district which notifies the Department of Education under
7section 1710-G.1(b) that it wishes to participate in the
8program. The term shall not include a low-achieving school.

9"Pass-through entity." A partnership as defined in section
10301(n.0), a single-member limited liability company treated as a
11disregarded entity for Federal income tax purposes or a
12Pennsylvania S corporation as defined in section 301(n.1).

13"Public School Code of 1949." The act of March 10, 1949
14(P.L.30, No.14), known as the Public School Code of 1949.

15"Program." The Educational Opportunity Scholarship Tax
16Credit Program established under this article.

17"Recipient." An applicant who receives a scholarship.

18"Scholarship." An award given to an applicant for the
19recipient to pay tuition and school-related fees necessary to
20attend a participating nonpublic school or a participating
21public school located in a school district which is not the
22recipient's school district of residence.

23"Scholarship organization." A nonprofit entity which:

24(1) is exempt from Federal taxation under section
25501(c ) ( 3) of the Internal Revenue Code of 1986 (Public Law
2699-514, 26 U.S.C. § 1 et seq.); and

27(2) contributes at least 80% of its annual cash receipts
28to a scholarship program.

29For purposes of this definition, a nonprofit entity
30"contributes" its annual cash receipts to a scholarship program

1when it expends or otherwise irrevocably encumbers those funds
2for distribution during the then current fiscal year of the
3nonprofit entity or during the next succeeding fiscal year of
4the nonprofit entity.

5"School." An elementary school or a secondary school at
6which the compulsory attendance requirements of the Commonwealth
7may be met and which meets the applicable requirements of Title
8VI of the Civil Rights Act of 1964 (Public Law 88-352, 78 Stat.
9241).

10"School age." The age of an individual from the earliest
11admission age to a school's kindergarten or, when no
12kindergarten is provided, the school's earliest admission age
13for beginners, until the end of the school year the individual
14attains 21 years of age or graduation from high school,
15whichever occurs first.

16"School district of residence." The school district in which
17the student's primary domicile is located.

18"School-related fees." Fees charged by a school to all
19students for books, instructional materials, technology
20equipment and services, uniforms and activities.

21"Secondary school." A school with an eleventh grade.

22"Special education school." A school or program within a
23school that is designated specifically and exclusively for
24students with any of the disabilities listed in 34 CFR § 300.8
25(relating to child with a disability) and meets one of the
26following:

27(1) is licensed under the act of January 28, 1988
28(P.L.24, No.11), known as the Private Academic Schools Act;

29(2) is accredited by an accrediting association approved
30by the State Board of Education;

1(3) is a school for the blind or deaf receiving
2Commonwealth appropriations; or

3(4) is operated by or under the authority of a bona fide
4religious institution or by the Commonwealth or any political
5subdivision thereof.

6"Student." An individual who meets all of the following:

7(1) Is school age.

8(2) Is a resident of this Commonwealth.

9(3) Attends or is about to attend a school.

10"Student with a disability." A student who meets all of the
11following:

12(1) Is either enrolled in a special education school or
13has otherwise been identified, in accordance with 22 Pa. Code
14Ch. 14 (relating to special education services and programs),
15as a "child with a disability" as defined in 34 CFR § 300.8
16(relating to child with a disability).

17(2) Needs special education and related services.

18"Support level." The level of support needed by an eligible
19student with a disability, as provided in the following matrix:

20Support Level 1 - The student is not enrolled in a
21special education school.

22Support Level 2 - The student is enrolled as a student in
23a special education school.

24Section 1703-G.1. Qualification and application.

25(a) Establishment.--The Educational Opportunity Scholarship
26Tax Credit Program is established. The program shall provide tax
27credits to entities that provide contributions to scholarship
28organizations. The scholarship organizations must enhance the
29educational opportunities available to students in this
30Commonwealth by providing scholarships to eligible students who

1reside within the attendance boundary of low-achieving schools
2to attend schools which are not low-achieving schools and which
3are not a public school within the school district of residence.

4(b) Information.--In order to qualify under this article, a
5scholarship organization must submit information to the
6department that enables the department to confirm that the
7scholarship organization is exempt from taxation under section
8501(c)(3) of the Internal Revenue Code of 1986 (Public Law 99-
9514, 26 U.S.C. § 1 et seq.).

10(c) Annual certification of eligibility.--By August 15,
112012, and by February 15, 2013, and each February 15 thereafter,
12a scholarship organization must certify to the department that
13the organization is eligible to participate in the program.

14(d) Report.--

15(1) A scholarship organization must agree to report the
16following information on a form provided by the department by
17September 1, 2013, and each September 1 thereafter:

18(i) The total number of applications for
19scholarships received during the immediately preceding
20school year from eligible students in grades kindergarten
21through eight.

22(ii) The number of scholarships awarded during the
23immediately preceding school year to eligible students in
24grades kindergarten through eight.

25(iii) The total and average amounts of the
26scholarships awarded during the immediately preceding
27school year to eligible students in grades kindergarten
28through eight.

29(iv) The total number of applications for
30scholarships received during the immediately preceding

1school year from eligible students in grades 9 through
212.

3(v) The number of scholarships awarded during the
4immediately preceding school year to eligible students in
5grades 9 through 12.

6(vi) The total and average amounts of the
7scholarships awarded during the immediately preceding
8school year to eligible students in grades 9 through 12.

9(vii) Where the scholarship organization collects
10information on a county-by-county basis, the total number
11and the total amount of scholarships awarded during the
12immediately preceding school year to residents of each
13county in which the scholarship organization awarded
14scholarships.

15(viii) The number of scholarships awarded during the
16immediately preceding school year to applicants with a
17household income that does not exceed 185% of the Federal
18poverty level.

19(ix) The total and average amounts of the
20scholarships awarded during the immediately preceding
21school year to applicants with a household income that
22does not exceed 185% of the Federal poverty level.

23(x) The number of scholarships awarded during the
24immediately preceding school year to applicants with a
25household income that does not exceed 185% of the Federal
26poverty level and who reside within a first class school
27district.

28(xi) The total and average amounts of the
29scholarships awarded during the immediately preceding
30school year to applicants with a household income that

1does not exceed 185% of the Federal poverty level and who
2reside within a first class school district.

3(xii) The number of scholarships awarded during the
4immediately preceding school year to applicants with a
5household income that does not exceed 185% of the Federal
6poverty level and who reside within a school district
7with an average daily membership greater than 7,500 and
8that receives an advance of its basic education subsidy
9at any time.

10(xiii) The total and average amounts of the
11scholarships awarded during the immediately preceding
12school year to applicants with a household income that
13does not exceed 185% of the Federal poverty level and who
14reside within a school district with an average daily
15membership greater than 7,500 and that receives an
16advance of its basic education subsidy at any time.

17(xiv) The number of scholarships awarded during the
18immediately preceding school year to applicants with a
19household income that does not exceed 185% of the Federal
20poverty level and who reside within a school district
21that receives an advance of its basic education subsidy
22at any time and is either subject to a declaration of
23financial distress under section 691 of the Public School
24Code of 1949 or engaged in litigation against the
25Commonwealth in which the school district seeks financial
26assistance from the Commonwealth to allow the school
27district to continue to operate.

28(xv) The total and average amounts of the
29scholarships awarded during the immediately preceding
30school year to applicants with a household income that

1does not exceed 185% of the Federal poverty level and who
2reside within a school district that receives an advance
3of its basic education subsidy at any time and is either
4subject to a declaration of financial distress under
5section 691 of the Public School Code of 1949 or is
6engaged in litigation against the Commonwealth in which
7the school district seeks financial assistance from the
8Commonwealth to allow the school district to continue to
9operate.

10(xvi) The total number of scholarship applications
11processed and the amounts of any application fees charged
12either per scholarship application or in the aggregate
13through a third-party processor.

14(xvii) The scholarship organization's Federal Form
15990 or other Federal form indicating the tax status of
16the scholarship organization for Federal tax purposes, if
17any, and a copy of a compilation, review or audit of the
18scholarship organization's financial statements conducted
19by a certified public accounting firm.

20(2) No later than May 1, 2013, and each May 1
21thereafter, the department shall annually distribute such
22sample forms, together with the forms on which the reports
23are required to be made, to each listed scholarship
24organization.

25(3) The department may not require any other information
26to be provided by scholarship organizations, except as
27expressly authorized in this article.

28(e) Notification.--The department shall notify a scholarship
29organization that it meets the requirements of this article for
30that fiscal year no later than 60 days after the scholarship

1organization submits the information required under this
2section.

3(f) Publication.--The department shall annually publish a
4list of each scholarship organization qualified under this
5section in the Pennsylvania Bulletin and shall post and update
6the list as necessary on the publicly accessible Internet
7website of the department.

8Section 1704-G.1. Tax credit application.

9(a) Scholarship organization.--A business firm shall apply
10to the department for a tax credit under section 1705-G.1. A
11business firm shall receive a tax credit under this article if
12the scholarship organization that receives the contribution
13appears on the list published under section 1703-G.1(f).

14(b) Availability of tax credits.--Tax credits under this
15article shall be made available by the department on a first-
16come-first-served basis within the limitation established under
17section 1706-G.1(a).

18(c) Contributions.--A contribution by a business firm to a
19scholarship organization shall be made no later than 60 days
20following the approval of an application under subsection (a).

21Section 1705-G.1. Tax credit.

22(a) Scholarship organizations.--

23(1) In accordance with section 1706-G.1(a), the
24Department of Revenue shall grant a tax credit against any
25tax due under Article XVI of the act of May 17, 1921
26(P.L.682, No.284), known as The Insurance Company Law of
271921, or under Article III, IV, VI, VII, VIII, IX or XV to a
28business firm providing proof of a contribution to a
29scholarship organization in the taxable year in which the
30contribution is made, which shall not exceed 75% of the total

1amount contributed during the taxable year by the business
2firm.

3(2) For the fiscal year 2012-2013, the tax credit shall
4not exceed $400,000 annually per business firm for
5contributions made to scholarship organizations.

6(3) For the fiscal years 2013-2014 and each fiscal year
7thereafter, the tax credit shall not exceed $750,000 annually
8per business firm for contributions made to scholarship
9organizations.

10(b) Additional amount.--

11(1) The Department of Revenue shall grant a tax credit
12of up to 90% of the total amount contributed during the
13taxable year if the business firm provides a written
14commitment to provide the scholarship organization with the
15same amount of contribution for two consecutive tax years.

16(2) The business firm must provide the written
17commitment under this subsection to the department at the
18time of application.

19(c) Combination of tax credits.--

20(1) A business firm may receive tax credits from the
21Department of Revenue in any tax year for any combination of
22contributions under subsection (a) or (b).

23(2) In no case may a business firm receive tax credits
24in any tax year:

25(i) in excess of $400,000 for contributions under
26subsections (a) and (b) made during fiscal year 2012-
272013; or

28(ii) in excess of $750,000 for contributions under
29subsections (a) and (b) made during fiscal year 2013-2014
30or any fiscal year thereafter.

1(d) Pass-through entity.--

2(1) If a pass-through entity does not intend to use all
3approved tax credits under this section, it may elect in
4writing to transfer all or a portion of the credit to
5shareholders, members or partners in proportion to the share
6of the entity's distributive income to which the shareholder,
7member or partner is entitled for use in the taxable year in
8which the contribution is made or in the taxable year
9immediately following the year in which the contribution is
10made. The election shall designate the year in which the
11transferred credits are to be used and shall be made
12according to procedures established by the Department of
13Revenue.

14(2) A pass-through entity and a shareholder, member or
15partner of a pass-through entity shall not claim the credit
16under this section for the same contribution.

17(3) The shareholder, member or partner may not carry
18forward, carry back, obtain a refund of or sell or assign the
19credit.

20(e) Restriction on applicability of credits.--No credits
21granted under this section shall be applied against any tax
22withheld by an employer from an employee under Article III.

23(f) Time of application for credits.--

24(1) Except as provided in paragraph (2), the department
25may accept applications for tax credits available during a
26fiscal year no earlier than July 1 of each fiscal year.

27(2) The application of any business firm for tax credits
28available during a fiscal year as part of the second year of
29a two-year commitment or as a renewal of a two-year
30commitment that was fulfilled in the previous fiscal year may

1be accepted no earlier than May 15 preceding the fiscal year.

2Section 1706-G.1. Tax credit limitations.

3(a) Amount.--The total aggregate amount of all tax credits
4approved shall not exceed $50,000,000 in a fiscal year.

5(b) Activities.--No tax credit shall be approved for
6activities that are a part of a business firm's normal course of
7business.

8(c) Tax liability.--

9(1) Except as provided in paragraph (2), a tax credit
10granted for any one taxable year may not exceed the tax
11liability of a business firm.

12(2) In the case of a credit granted to a pass-through
13entity which elects to transfer the credit according to
14section 1705-G.1(d), a tax credit granted for any one taxable
15year and transferred to a shareholder, member or partner may
16not exceed the tax liability of the shareholder, member or
17partner.

18(d) Use.--A tax credit not used by the applicant in the
19taxable year the contribution was made or in the year designated
20by the shareholder, member or partner to whom the credit was
21transferred under section 1705-G.1(d) may not be carried forward
22or carried back and is not refundable or transferable.

23(e) Nontaxable income.--A scholarship received by an
24eligible student shall not be considered to be taxable income
25for the purposes of Article III.

26Section 1707-G.1. Tax credit lists.

27The Department of Revenue shall provide a list of all
28scholarship organizations receiving contributions from business
29firms granted a tax credit under this article to the General
30Assembly by June 30 of each year.]

1Section 8. Section 1708-G.1 of the act, amended or added
2July 2, 2012 (P.L.751, No.85) and July 9, 2013 (P.L.270, No.52),
3is repealed.

4[Section 1708-G.1. Scholarships.

5(a) Notice.--By August 15, 2012, and by February 1 of each
6year thereafter, the department shall provide all scholarship
7organizations with a list of the low-achieving schools located
8within each school district.

9(b) Award.--A scholarship organization may award a
10scholarship to an applicant who resides within the attendance
11boundary of a low-achieving school to attend a participating
12public school or a participating nonpublic school selected by
13the parent of the applicant. If an applicant who received an 
14educational opportunity scholarship under this article for the 
15prior school year resides within the attendance boundary of a 
16school that was removed from the list of low-achieving schools 
17provided by the department under subsection (a), the applicant 
18may receive an educational opportunity scholarship. The 
19scholarship may be for each year of enrollment in a 
20participating public school or participating nonpublic school 
21for up to the lesser of five years or until completion of grade 
2212 provided the applicant otherwise remains eligible. In
23awarding scholarships, a scholarship organization shall give
24preference to any of the following:

25(1) An applicant who received a scholarship for the
26prior school year.

27(2) An applicant of a household with a household income
28that does not exceed 185% of the Federal poverty level for
29the school year preceding the school year for which the
30application is being made.

1(3) An applicant of a household with a household income
2that does not exceed 185% of the Federal poverty level for
3the school year preceding the school year for which the
4application is being made and who resides within any of the
5following:

6(i) a first class school district;

7(ii) a school district with an average daily
8membership greater than 7,500 and that receives an
9advance of its basic education subsidy at any time; or

10(iii) a school district that receives an advance of
11its basic education subsidy at any time and is either
12subject to a declaration of financial distress under
13section 691 of the Public School Code of 1949 or engaged
14in litigation against the Commonwealth in which the
15school district seeks financial assistance from the
16Commonwealth to allow the school district to continue to
17operate.

18(c) Home schooling.--A scholarship organization shall not
19award a scholarship to an applicant for enrollment in a home
20education program under section 1327.1 of the Public School Code
21of 1949.

22(d) Funding.--The aggregate amount of scholarships shall not
23exceed the aggregate amount of contributions made by business
24firms to the scholarship organization.

25(e) Amount.--

26(1) The maximum amount of a scholarship awarded to an
27applicant without a disability shall be $8,500.

28(2) The maximum amount of a scholarship awarded to an
29applicant with a disability shall be $15,000.

30(3) In no case shall the combined amount of the

1scholarship awarded to a recipient and any additional
2financial assistance provided to the recipient exceed the
3tuition rate and school-related fees for the participating
4public school or participating nonpublic school that the
5recipient will attend.

6(f) Taxation.--A scholarship shall not be considered taxable
7income for purposes of Article III or a local taxing ordinance.

8(g) Financial assistance.--A scholarship shall not
9constitute financial assistance or an appropriation to the
10participating public school or the participating nonpublic
11school attended by a recipient.]

12Section 9. Sections 1709-G.1, 1710-G.1, 1711-G.1 and 1712-
13G.1 of the act, added July 2, 2012, are repealed:

14[Section 1709-G.1. Low-achieving schools.

15(a) List of low-achieving schools.--By September 1, 2012,
16and by February 1 of each year thereafter, the Department of
17Education shall publish on its publicly accessible Internet
18website and in the Pennsylvania Bulletin a list of the low-
19achieving schools for the following school year.

20(b) Notice.--By August 1, 2012, and by February 1 of each
21year thereafter, the Department of Education shall notify every
22school district identified as having at least one low-achieving
23school of its designation and shall furnish the school district
24with a list of the low-achieving schools located within the
25school district.

26(c) Publication.--Within 15 days of receipt of a
27notification under subsection (b), a school district shall post
28on its publicly accessible Internet website notice of all of the
29following:

30(1) A description of the program.

1(2) Instructions for applying for a scholarship.

2(3) A list of schools in the school district that have
3been designated by the Department of Education as low-
4achieving schools.

5(4) Notice that a parent must contact directly a school
6district of a participating public school or a participating
7nonpublic school if the parent seeks to enroll the student in
8the program.

9(d) Notification to parents.--

10(1) Within 15 days of receipt of a notification under
11subsection (b), a school district shall notify the parents of
12each student who is currently attending or residing within
13the attendance boundary of a low-achieving school during the
14school year of the school's designation.

15(2) Upon registration of a kindergarten student, a
16school district shall notify the parents of the kindergarten
17student that the student will be assigned to a low-achieving
18school during the school year of the school's designation.

19(3) The notice shall be in a form provided by the
20Department of Education and shall provide the following
21information regarding the program:

22(i) A description of the program.

23(ii) Instructions for obtaining information about
24applying for a scholarship under the program.

25(iii) Notice of the parent's responsibilities with
26regard to applying to a school district of a
27participating public school or a participating nonpublic
28school if the parent seeks to enroll the student in the
29program.

30(e) Average daily membership.--

1(1) Notwithstanding any other provision of law to the
2contrary, a recipient who was enrolled in the recipient's
3resident school district or in a charter school, regional
4charter school or cyber charter school when the recipient
5first received a scholarship shall continue to be counted in
6the average daily membership of the school district for a
7period of one year after enrolling in a participating public
8school or a participating nonpublic school.

9(2) During the year referenced in paragraph (1) and each
10school year thereafter, a school district of a participating
11public school in which the recipient is enrolled shall not
12include the recipient in the school district's average daily
13membership.

14Section 1710-G.1. School participation in program.

15(a) Election.--

16(1) By August 15, 2012, and by February 15 of each year
17thereafter, a nonpublic school may elect to participate in
18the program for the following school year.

19(2) By August 15, 2012, and by February 15 of each year
20thereafter, a school district may elect to participate in the
21program for the following school year.

22(b) Notice.--

23(1) A school district or nonpublic school that elects to
24participate under subsection (a) must notify the Department
25of Education of its intent to participate.

26(2) For a school district, the notice under paragraph
27(1) must be submitted on a form developed by the Department
28of Education and shall specify all of the following:

29(i) Each school within the school district which the
30school district intends to make a participating public

1school.

2(ii) The amount of tuition and school-related fees
3attributable to each available seat. The amount under
4this subparagraph shall not exceed the amount calculated
5under section 2561 of the Public School Code of 1949.

6(3) For a nonpublic school, the notice under paragraph
7(1) must be submitted on a form developed by the Department
8of Education and shall specify the amount of tuition and
9school-related fees attributable to an available seat.

10(c) Tuition rates.--

11(1) No school district of a participating public school
12or participating nonpublic school may charge a recipient a
13higher tuition rate or school-related fee than the
14participating public school or participating nonpublic school
15would have charged to a similarly situated student who is not
16receiving a scholarship.

17(2) Notwithstanding the provisions of section 2561 of
18the Public School Code of 1949, a school district of a
19participating public school may charge a recipient a tuition
20rate that is lower than that charged to students who are not
21recipients of scholarships.

22(d) Participating public school criteria.--The following
23criteria apply to a participating public school:

24(1) Except as otherwise provided in this article, a
25school district shall enroll students in a participating
26public school on a lottery basis from a pool of recipients
27who meet the application deadline set by the Department of
28Education until the participating public school fills its
29available seats. The pool may not include a recipient who:

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

1expelled under section 1317.2 or 1318 of the Public
2School Code of 1949 and applicable regulations of the
3State Board of Education; or

4(ii) has been recruited by the school district or
5its representatives for athletic purposes.

6(2) The enrollment of recipients may not place the
7school district in violation of a valid and binding
8desegregation order.

9(3) Priority shall be given to:

10(i) An existing recipient.

11(ii) A recipient who is a sibling of a student
12currently enrolled in the school district.

13(e) Participating nonpublic school criteria.--The following
14criteria apply to a participating nonpublic school:

15(1) The participating nonpublic school may not
16discriminate on a basis which is illegal under Federal or
17State laws applicable to nonpublic schools.

18(2) The participating nonpublic school shall comply with
19section 1521 of the Public School Code of 1949.

20(3) The participating nonpublic school or its
21representatives may not recruit a student for athletic
22purposes.

23(f) Student rules, policies and procedures.--

24(1) Prior to enrollment of a recipient, a school
25district of a participating public school or a participating
26nonpublic school shall inform the parent of a recipient of
27any and all rules, policies and procedures of the
28participating public school or participating nonpublic
29school, including any academic policies, disciplinary rules
30and administrative procedures of the participating public

1school or participating nonpublic school.

2(2) Enrollment of a recipient in a participating public
3school or participating nonpublic school shall constitute
4acceptance of any rules, policies and procedures of the
5participating public school or participating nonpublic
6school.

7(g) Transportation.--

8(1) Transportation of recipients shall be provided under
9section 1361 of the Public School Code of 1949.

10(2) Reimbursement shall be as follows:

11(i) Transportation of a recipient attending a
12participating public school shall be subject to
13reimbursement under section 2541 of the Public School
14Code of 1949.

15(ii) Transportation of a recipient attending a
16participating nonpublic school shall be subject to
17reimbursement under sections 2509.3 and 2541 of the
18Public School Code of 1949.

19(h) Construction.--Nothing in this article shall be
20construed to:

21(1) Prohibit a participating nonpublic school from
22limiting admission to a particular grade level, a single
23gender or areas of concentration of the participating
24nonpublic school, including mathematics, science and the
25arts.

26(2) Authorize the Commonwealth or any of its agencies or
27officers or political subdivisions to impose any additional
28requirements on a participating nonpublic school which are
29not otherwise authorized under the laws of this Commonwealth
30or to require a participating nonpublic school to enroll a

1recipient if the participating nonpublic school does not
2offer appropriate programs or is not structured or equipped
3with the necessary facilities to meet the special needs of
4the recipient or does not offer a particular program
5requested.

6Section 1711-G.1. Tuition grants by school districts.

7(a) General rule.--The board of school directors of a school
8district may use funds received from the Commonwealth for
9educational purposes to establish a program of tuition grants to
10provide for the education of students who reside within the
11district and attend or will attend a public or nonpublic school
12on a tuition-paying basis.

13(b) Nonpublic school grant amount.--For students who attend
14or will attend a nonpublic school, the grant amount for each
15student shall not exceed the amount of the per pupil State
16subsidy for basic education of the school district of residence.

17(c) Average daily membership.--

18(1) A student who receives a tuition grant under this
19section shall be included in the average daily membership for
20purposes of determining the school district of residence's
21basic education funding.

22(2) A student who receives a grant under this section to
23attend a public school outside the school district awarding
24the tuition grant shall not be included in the average daily
25membership of the school district the student attends.

26(d) Guidelines.--

27(1) The board of school directors of a school district
28shall prepare guidelines establishing an application form and
29approval process, standards for verification as to the
30accuracy of application information, confirmation of

1attendance by a student who receives a tuition grant,
2restrictive endorsement of grant checks by parents to the
3school chosen by the parents, pro rata refunds of grants for
4students who withdraw during the school year, repayment of
5refunded grants to the school district and reasonable
6deadline dates for submission of grant applications.

7(2) The board of school directors of a school shall
8announce the award of grants no later than August 1 of the
9school year in which the grants will be utilized.

10(3) Upon receipt of written confirmation of enrollment
11from the student's school of choice, grants shall be paid to
12the parents of a student by a check that may only be endorsed
13to the selected school.

14(4) In the event a student is no longer enrolled prior
15to the completion of the school term, the school shall send
16written notice thereof to the school district.

17(e) Nontaxable.--Grants awarded to students under this
18section shall not be considered taxable income for purposes of
19any local taxing ordinance or for purposes of Article III, nor
20shall such grants constitute financial assistance or
21appropriations to the school attended by the student.

22(f) Construction.--Nothing in this section shall be
23construed to empower the Commonwealth or any school district or
24any of their agencies or officers to:

25(1) prescribe the course content or admissions criteria
26for any religiously affiliated school;

27(2) compel any private school to accept or enroll a
28student;

29(3) impose any additional requirements on any private
30school that are not otherwise authorized; or

1(4) require any school to accept or retain a student if
2the school does not offer programs or is not structured or
3equipped with the necessary facilities to meet the special
4needs of the student or does not offer a particular program
5requested.

6Section 1712-G.1. Original jurisdiction.

7The Pennsylvania Supreme Court shall have exclusive and
8original jurisdiction to hear any challenge or to render a
9declaratory judgment concerning the constitutionality of this
10article. The Pennsylvania Supreme Court may take such action as
11it deems appropriate, consistent with the Pennsylvania Supreme
12Court's retaining jurisdiction over such a matter, to find facts
13or to expedite a final judgment in connection with such a
14challenge or request for declaratory relief.]

15Section 10. This act shall take effect immediately.