1Amend Bill, page 1, line 5 (A09427), by inserting after
2"credit"

3; and providing for an educational improvement opportunity
4tax credit

5Amend Bill, page 38, line 38 (A09427), by striking out all of
6said line and inserting

7Section 10. The act is amended by adding an article to read:

8ARTICLE XVII-G.2

9EDUCATIONAL IMPROVEMENT OPPORTUNITY TAX CREDIT

10Section 1701-G.2. Scope of article.

11This article establishes the educational improvement
12opportunity tax credit.

13Section 1702-G.2. Definitions.

14The following words and phrases when used in this article
15shall have the meanings given to them in this section unless the
16context clearly indicates otherwise:

17"Assessment." The Pennsylvania System of School Assessment
18test, the Keystone Exam, an equivalent local assessment or
19another test established by the State Board of Education to meet
20the requirements of section 2603-B(d)(10)(i) of the Public
21School Code of 1949 and required under the No Child Left Behind
22Act of 2001 (Public Law 107-110, 115 Stat. 1425) or its
23successor statute or any other test required to achieve other
24standards established by the Department of Education for the
25public school or school district under 22 Pa. Code § 403.3
26(relating to single accountability system).

27"Business firm." An entity authorized to do business in this
28Commonwealth and subject to a tax under Article XVI of the act
29of May 17, 1921 (P.L.682, No.284), known as The Insurance
30Company Law of 1921, or taxes imposed under Article III, IV, VI,
31VII, VIII, IX or XV. The term includes a pass-through entity.

32"Contribution." A donation of cash, personal property or
33services, the value of which is the net cost of the donation to
34the donor or the pro rata hourly wage, including benefits, of
35the individual performing the services.

36"Department." The Department of Community and Economic

1Development of the Commonwealth.

2"Educational improvement initiative." An initiative
3implemented by a school district under section 1710-G.2.

4"Educational improvement organization." A nonprofit entity
5which:

6(1) is exempt from Federal taxation under section 501(c)
7(3) of the Internal Revenue Code of 1986 (Public Law 99-514,
826 U.S.C. § 1 et seq.); and

9(2) contributes at least 80% of its annual receipts as
10grants to a public school for educational improvement
11initiatives.

12For purposes of this definition, a nonprofit entity
13"contributes" its annual cash receipts when it expends or
14otherwise irrevocably encumbers those funds for expenditure
15during the then current fiscal year of the nonprofit entity or
16during the next succeeding fiscal year of the nonprofit entity.
17A nonprofit entity shall include a school district foundation
18and public school foundation.

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"Pass-through entity." A partnership as defined in section
28301(n.0), a single-member limited liability company treated as a
29disregarded entity for Federal income tax purposes or a
30Pennsylvania S corporation as defined in section 301(n.1).

31"Program." The Educational Improvement Opportunity Tax
32Credit Program established under this article.

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

35"Tax credit." The educational improvement opportunity tax
36credit provided under this article.

37Section 1703-G.2. Qualification and application.

38(a) Establishment.–-The Educational Improvement Opportunity
39Tax Credit Program is established. The program shall provide tax
40credits to entities that provide contributions to educational
41improvement organizations. Contributions to the educational
42improvement organizations shall be used to provide grants to
43school districts with low-achieving schools to improve students'
44academic performance through educational improvement initiatives
45under section 1710-G.2.

46(b) Information.--In order to qualify under this article, an
47educational improvement organization must submit information to
48the department that enables the department to confirm that the
49educational improvement organization is exempt from taxation
50under section 501(c)(3) of the Internal Revenue Code of 1986
51(Public Law 99-514, 26 U.S.C. § 1 et seq.).

1(c) Application.--An application submitted by an educational
2improvement organization must certify to the department that the
3organization is eligible to participate in the program. The
4application must include a description of the educational
5improvement initiatives under section 1710-G.2 that are being
6funded by the educational improvement organization. The
7department shall prescribe the form of the application.

8(d) Annual certification of eligibility.--By August 15,
92014, and by February 15, 2015, and each February 15 thereafter,
10an educational improvement organization must certify to the
11department that the organization is eligible to participate in
12the program.

13(e) Report.--

14(1) An educational improvement organization must agree
15to report the following information on a form provided by the
16department by September 1, 2015, and each September 1
17thereafter:

18(i) The names of the school districts and the low-
19achieving schools that received grants and the total
20amount of the grants made to school districts during the
21immediately preceding school year.

22(ii) A description of how each grant was utilized
23during the immediately preceding school year and a
24description of any demonstrated or expected improvements
25in academic performance of students.

26(iii) Where the educational improvement organization
27collects information on a county-by-county basis, the
28total number and the total amount of grants made during
29the immediately preceding school year for initiatives at
30public schools in each county in which the educational
31improvement organization made grants.

32(iv) The organization's Federal Form 990 or other
33Federal form indicating the tax status of the
34organization for Federal tax purposes, if any, and a copy
35of a compilation, review or audit of the organization's
36financial statements conducted by a certified public
37accounting firm.

38(2) The information required under paragraph (1) shall
39be submitted on a form provided by the department. No later
40than September 1, 2014, and May 1 of each year thereafter,
41the department shall annually distribute such sample forms,
42together with the forms on which the reports are required to
43be made, to each listed educational improvement organization.

44(3) The department may not require any other information
45to be provided by educational improvement organizations,
46except as expressly authorized in this article.

47(f) Notification.--The department shall notify the
48educational improvement organization that the organization meets
49the requirements of this article for that fiscal year no later
50than 60 days after the organization has submitted the
51information required under this section.

1(g) Publication.--The department shall annually publish a
2list of each educational improvement organization qualified
3under this section in the Pennsylvania Bulletin. The list shall
4also be posted and updated as necessary on the department's
5publicly accessible Internet website.

6Section 1704-G.2. Tax credit application.

7(a) Educational improvement organization.--A business firm
8shall apply to the department for a tax credit under section
91705-G.2. A business firm shall receive a tax credit if the
10educational improvement organization that receives the
11contribution appears on the list published under section 1703-
12G.2(f).

13(b) Availability of tax credits.--Tax credits shall be made
14available by the department on a first-come, first-served basis
15within the limitation established under section 1706-G.2(a).

16(c) Contributions.--A contribution by a business firm to an
17educational improvement organization shall be made no later than
1860 days following the approval of an application under
19subsection (a).

20Section 1705-G.2. Tax credit.

21(a) Educational improvement organizations.--

22(1) In accordance with section 1706-G.2(a), the
23Department of Revenue shall grant a tax credit against any
24tax due under Article XVI of the act of May 17, 1921
25(P.L.682, No.284), known as The Insurance Company Law of
261921, or under Article III, IV, VI, VII, VIII, IX or XV to a
27business firm providing proof of a contribution to an
28educational improvement organization in the taxable year in
29which the contribution is made, which shall not exceed 75% of
30the total amount contributed during the taxable year by the
31business firm.

32(2) For the fiscal year 2014-2015 and each fiscal year
33thereafter, the tax credit shall not exceed $750,000 annually
34per business firm for contributions made to educational
35improvement organizations.

36(b) Additional amount.--

37(1) The Department of Revenue shall grant a tax credit
38of up to 90% of the total amount contributed during the
39taxable year if the business firm provides a written
40commitment to provide the educational improvement
41organization with the same amount of contribution for two
42consecutive tax years.

43(2) The business firm must provide the written
44commitment under this subsection to the department at the
45time of application.

46(c) Combination of tax credits.--

47(1) A business firm may receive tax credits from the
48Department of Revenue in any tax year for any combination of
49contributions under subsection (a) or (b).

50(2) In no case may a business firm receive tax credits
51in any tax year in excess of $750,000 for contributions under

1subsections (a) and (b) made during fiscal year 2014-2015 or
2any fiscal year thereafter.

3(d) Pass-through entity.--

4(1) If a pass-through entity does not intend to use all
5approved tax credits under this section, it may elect in
6writing to transfer all or a portion of the credit to
7shareholders, members or partners in proportion to the share
8of the entity's distributive income to which the shareholder,
9member or partner is entitled for use in the taxable year in
10which the contribution is made or in the taxable year
11immediately following the year in which the contribution is
12made. The election shall designate the year in which the
13transferred credits are to be used and shall be made
14according to procedures established by the Department of
15Revenue.

16(2) A pass-through entity and a shareholder, member or
17partner of a pass-through entity shall not claim the credit
18under this section for the same contribution.

19(3) The shareholder, member or partner may not carry
20forward, carry back, obtain a refund of or sell or assign the
21credit.

22(e) Restriction on applicability of credits.--No credits
23granted under this section shall be applied against any tax
24withheld by an employer from an employee under Article III.

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

26(1) Except as provided in paragraph (2), the department
27may accept applications for tax credits available during a
28fiscal year no earlier than July 1 of each fiscal year.

29(2) The application of any business firm for tax credits
30available during a fiscal year as part of the second year of
31a two-year commitment or as a renewal of a two-year
32commitment that was fulfilled in the previous fiscal year may
33be accepted no earlier than May 15 preceding the fiscal year.

34Section 1706-G.2. Tax credit limitations.

35(a) Amount.--The total aggregate amount of all tax credits
36approved shall not exceed $50,000,000 in a fiscal year.

37(b) Activities.--No tax credit shall be approved for
38activities that are part of a business firm's normal course of
39business.

40(c) Tax liability.--

41(1) Except as provided in paragraph (2), a tax credit
42granted for any one taxable year may not exceed the tax
43liability of a business firm.

44(2) In the case of a credit granted to a pass-through
45entity which elects to transfer the credit according to
46section 1705-G.2(d), a tax credit granted for any one taxable
47year and transferred to a shareholder, member or partner may
48not exceed the tax liability of the shareholder, member or
49partner.

50(d) Use.--A tax credit not used by the applicant in the
51taxable year the contribution was made or in the year designated

1by the shareholder, member or partner to whom the credit was
2transferred under section 1705-G.2(d) may not be carried forward
3or carried back and is not refundable or transferable.

4Section 1707-G.2. Tax credit lists.

5The Department of Revenue shall provide a list of all
6educational improvement organizations receiving contributions
7from business firms granted a tax credit under this article to
8the General Assembly by June 30 of each year.

9Section 1708-G.2. Department notice.

10By August 15, 2014, and by February 1 of each year
11thereafter, the department shall provide all educational
12improvement organizations with a list of the low-achieving
13schools located within each school district.

14Section 1709-G.2. List of low-achieving schools.

15(a) List of low-achieving schools.--By September 1, 2014,
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, 2014, 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.

26Section 1710-G.2. Educational improvement initiatives.

27The following initiatives designed by a school district to
28improve the academic performance of students in a low-achieving
29school in meeting State academic standards are eligible for
30grant funding under this article:

31(1) Targeted tutoring in reading and mathematics
32provided during the normal school day to increase student
33academic achievement on State assessments.

34(2) Targeted interventions, both after-school programs
35and summer-school programs, that include tutoring by
36Department of Education-approved providers, mentoring and
37family support for at-risk students addressing truancy,
38parenting skills and intensive social services.

39(3) Other programs or activities, as approved by the
40Department of Education, which the board of school directors
41of a school district determines are essential to improving
42academic performance of students in a low-achieving school.

43Section 11. This act shall take effect as follows:

44(1) The amendment of section 1706-F of the act shall
45take effect in 60 days.

46(2) The remainder of this act shall take effect
47immediately.