THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY PICCOLA, SCARNATI, DINNIMAN, BAKER, ORIE, M. WHITE, WONDERLING, MUSTO, RAFFERTY, FOLMER, D. WHITE, ERICKSON, WAUGH, EARLL, PIPPY, O'PAKE, GREENLEAF, GORDNER, TOMLINSON, ALLOWAY, VANCE, WASHINGTON AND EICHELBERGER, JUNE 4, 2009

REFERRED TO EDUCATION, JUNE 4, 2009  

AN ACT

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

act relating to the public school system, including certain

provisions applicable as well to private and parochial

schools; amending, revising, consolidating and changing the

laws relating thereto," in educational improvement tax

credit, further providing for definitions, for tax credit and

for limitations.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 2002-B of the act of March 10, 1949

(P.L.30, No.14), known as the Public School Code of 1949,

amended or added July 11, 2006 (P.L.1092, No.114) and July 9,

2008 (P.L.846, No.61), is amended to read:

Section 2002-B.  Definitions.

The following words and phrases when used in this article

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

context clearly indicates otherwise:

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

Commonwealth and subject to taxes imposed under Article III, IV,

VI, VII, VIII, IX or XV of the act of March 4, 1971 (P.L.6,

No.2), known as the Tax Reform Code of 1971. This term includes

a pass-through entity.

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

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

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

the individual performing the services.

"Department."  The Department of Community and Economic

Development of the Commonwealth.

"Educational improvement organization."  A nonprofit entity

which:

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

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

26 U.S.C. § 1 et seq.); and

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

grants to a public school for innovative educational

programs.

For purposes of this definition, a nonprofit entity

"contributes" its annual cash receipts when it expends or

otherwise irrevocably encumbers those funds for expenditure

during the then current fiscal year of the nonprofit entity or

during the next succeeding fiscal year of the nonprofit entity.

"Eligible pre-kindergarten student."  For participation in

the pre-kindergarten scholarship program, a student who is

enrolled in a pre-kindergarten program and is a member of a

household with an annual household income of not more than

[$50,000] $60,000. An income allowance of [$10,000] $12,000 

shall be allowed for each eligible student and dependent member

of the household. The Department of Education shall adjust the

income amounts under this definition on July 1 of each year to

reflect any upward changes in the Consumer Price Index for All

Urban Consumers (CPI-U) in the preceding 12 months, as

calculated by the United States Department of Labor, Bureau of

Labor Statistics, and shall immediately thereafter publish the

adjusted amounts in the Pennsylvania Bulletin.

"Eligible student."  A school-age student who is enrolled in

a school and is a member of a household with an annual household

income of not more than [$50,000] $60,000. An income allowance

of [$10,000] $12,000 shall be allowed for each eligible student

and dependent member of the household. The Department of

Education shall adjust the income amounts under this definition

on July 1 of each year to reflect any upward changes in the

Consumer Price Index for All Urban Consumers (CPI-U) in the

preceding 12 months, as calculated by the United States

Department of Labor, Bureau of Labor Statistics, and shall

immediately thereafter publish the adjusted amounts in the

Pennsylvania Bulletin.

"Eligible student with a disability."  A pre-kindergarten

student or a school age student who has been identified as being

a child:

(1)  with mental retardation; hearing impairments,

including deafness; speech or language impairments; visual

impairments, including blindness; serious emotional

disturbance; orthopedic impairments; autism spectrum

disorder; traumatic brain injury; other health impairments;

or specific learning disabilities;

(2)  who, by reason thereof, needs special education and

related services; 

(3)  who is enrolled in a pre-kindergarten program or in

a school; and

(4)  who is a member of a household with an annual

household income of not more than the maximum allowable

household income for students with a disability.

"Household."  An individual living alone or with the

following: a spouse, parent and their unemancipated minor

children; and other unemancipated minor children who are related

by blood or marriage; or other adults or unemancipated minor

children living in the household who are dependent upon the

individual.

"Household income."  All moneys or property received of

whatever nature and from whatever source derived. The term does

not include the following:

(1)  Periodic payments for sickness and disability other

than regular wages received during a period of sickness or

disability.

(2)  Disability, retirement or other payments arising

under workers' compensation acts, occupational disease acts

and similar legislation by any government.

(3)  Payments commonly recognized as old-age or

retirement benefits paid to persons retired from service

after reaching a specific age or after a stated period of

employment.

(4)  Payments commonly known as public assistance or

unemployment compensation payments by a governmental agency.

(5)  Payments to reimburse actual expenses.

(6)  Payments made by employers or labor unions for

programs covering hospitalization, sickness, disability or

death, supplemental unemployment benefits, strike benefits,

Social Security and retirement.

(7)  Compensation received by United States servicemen

serving in a combat zone.

"Innovative educational program."  An advanced academic or

similar program that is not part of the regular academic program

of a public school but that enhances the curriculum or academic

program of the public school or provides pre-kindergarten

programs to public school students.

"Maximum allowable household income for students with a

disability."  The maximum annual household income for eligible

students with a disability as calculated by multiplying the sum

of $60,000 plus the income allowance of $12,000 per dependent

member of the household by the applicable support level factor

according to the following table:

The Department of Education shall adjust the income amounts

under this definition on July 1 of each year to reflect any

upward changes in the Consumer Price Index for All Urban

Consumers (CPI-U) in the preceding 12 months, as calculated by

the United States Department of Labor, Bureau of Labor

Statistics, and shall immediately thereafter publish the

adjusted amounts in the Pennsylvania Bulletin.

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

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

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

company treated as a disregarded entity for Federal income tax

purposes or a Pennsylvania S corporation as defined in section

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

"Pre-kindergarten program."  A program of instruction for

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

curriculum aligned with the curriculum of the school with which

it is affiliated and which provides a minimum of two hours of

instructional and developmental activities per day at least 60

days per school year.

"Pre-kindergarten scholarship organization."  A nonprofit

entity which:

(1)  either is exempt from Federal taxation under section

501(c)(3) of the Internal Revenue Code of 1986 (Public Law

99-514, 26 U.S.C. § 1 et seq.) or is operated as a separate

segregated fund by a scholarship organization that has been

qualified under section 2003-B; and

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

to a pre-kindergarten scholarship program by expending or

otherwise irrevocably encumbering those funds for

distribution during the then current fiscal year of the

organization or during the next succeeding fiscal year of the

organization.

"Pre-kindergarten scholarship program."  A program to provide

tuition to eligible pre-kindergarten students to attend a pre-

kindergarten program operated by or in conjunction with a school

located in this Commonwealth and that includes an application

and review process for the purpose of making awards to eligible

pre-kindergarten students and awards scholarships to eligible

pre-kindergarten students without limiting availability to only

students of one school.

"Public school."  A public pre-kindergarten where compulsory

attendance requirements do not apply or a public kindergarten,

elementary school or secondary school at which the compulsory

attendance requirements of this Commonwealth may be met and

which meets the applicable requirements of Title VI of the Civil

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

"Scholarship organization."  A nonprofit entity which:

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

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

26 U.S.C. § 1 et seq.); and

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

to a scholarship program.

For purposes of this definition, a nonprofit entity

"contributes" its annual cash receipts to a scholarship program

when it expends or otherwise irrevocably encumbers those funds

for distribution during the then current fiscal year of the

nonprofit entity or during the next succeeding fiscal year of

the nonprofit entity.

"Scholarship program."  A program to provide tuition to

eligible students to attend a school located in this

Commonwealth. A scholarship program must include an application

and review process for the purpose of making awards to eligible

students. The award of scholarships to eligible students shall

be made without limiting availability to only students of one

school.

"School."  A public or nonpublic pre-kindergarten,

kindergarten, elementary school or secondary school at which the

compulsory attendance requirements of the Commonwealth may be

met and which meets the applicable requirements of Title VI of

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

"School age."  Children from the earliest admission age to a

school's pre-kindergarten or kindergarten program or, when no

pre-kindergarten or kindergarten program is provided, the

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

the school year the student attains 21 years of age or

graduation from high school, whichever occurs first.

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

student with a disability, as set forth in the following matrix:

Support Level 1 – The student spends at least 75% of the

student's instructional time in a regular classroom setting.

Support Level 2 – The student spends less than 75% of the

student's instructional time in a regular classroom setting.

Support Level 3 – The student is enrolled as a full-time

student in a school or program within a school that is

designed specifically and exclusively for students with

disabilities.

Section 2.  Section 2005-B(e) of the act, amended July 9,

2008 (P.L.846, No.61), is amended to read:

Section 2005-B.  Tax credit.

* * *

(e)  Pass-through entity.--

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

approved tax credits under section 2005-B, it may elect in

writing[, according to procedures established by the

Department of Revenue,] to transfer all or a portion of the

credit to shareholders, members or partners in proportion to

the share of the entity's distributive income to which the

shareholder, member or partner is entitled, for use in the

taxable year in which the contribution is made or in the

taxable year immediately following the year in which the

contribution is made. The election shall designate the year

in which the transferred credits are to be used and shall be

made according to procedures established by the Department of

Revenue.

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

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

under this section for the same contribution.

(3)  [A shareholder, member or partner of a pass-through

entity to whom a credit is transferred under this section

shall immediately claim the credit in the taxable year in

which the transfer is made.] The shareholder, member or

partner may not carry forward, carry back, obtain a refund of

or sell or assign the credit.

* * *

Section 3.  Section 2006-B(d) of the act, amended December

23, 2003 (P.L.304, No.48), is amended to read:

Section 2006-B.  Limitations.

* * *

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

taxable year the contribution was made, or in the year

designated by the shareholder, member or partner to whom the

credit was transferred pursuant to section 2005-B(e), may not be

carried forward or carried back and is not refundable or

transferable.

* * *

Section 4.  This act shall take effect in 60 days.