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," in educational improvement tax credit, further
11providing for definitions <-and for limitations.

12Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
13act relating to tax reform and State taxation by codifying
14and enumerating certain subjects of taxation and imposing
15taxes thereon; providing procedures for the payment,
16collection, administration and enforcement thereof; providing
17for tax credits in certain cases; conferring powers and
18imposing duties upon the Department of Revenue, certain
19employers, fiduciaries, individuals, persons, corporations
20and other entities; prescribing crimes, offenses and
21penalties," further providing for educational improvement tax
22credit; and repealing provisions relating to educational
23opportunity scholarship tax credit; and, in city
24revitalization and improvement zones, further providing for

1definitions <-and for establishment of contracting authority.

2The General Assembly of the Commonwealth of Pennsylvania
3hereby enacts as follows:

4Section 1. The definition of "public school" in section<-
51702-F of the act of March 4, 1971 (P.L.6, No.2), known as the
6Tax Reform Code of 1971, added October 9, 2009 (P.L.451, No.48),
7is amended and the section is amended by adding a definition to
8read:

9Section 1702-F. Definitions.

10The following words and phrases when used in this article
11shall have the meanings given to them in this section unless the
12context clearly indicates otherwise:

13* * *

14"Career and technical school." A public secondary school
15established under the provisions of Article XVIII of the act of
16March 10, 1949 (P.L.30, No.14), known as the Public School Code
17of 1949.

18* * *

19"Public school." A public pre-kindergarten where compulsory
20attendance requirements do not apply or a public kindergarten,
21elementary school [or], secondary school or career and technical
22school at which the compulsory attendance requirements of this
23Commonwealth may be met and which meets the applicable
24requirements of Title VI of the Civil Rights Act of 1964 (Public
25Law 88-352, 78 Stat. 241).

26* * *

<-27Section 2. Section 1706-F(a) of the act, amended July 2,
282012 (P.L.751, No.85), is amended to read:

29Section 1706-F. Limitations.

30(a) Amount.--

1(1) The total aggregate amount of all tax credits
2approved shall not exceed $100,000,000 in a fiscal year. No
3less than $60,000,000 of the total aggregate amount shall be
4used to provide tax credits for contributions from business
5firms to scholarship organizations. No less than $30,000,000
6of the total aggregate amount shall be used to provide tax
7credits for 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 year
21thereafter, the total aggregate amount of all tax credits
22approved for contributions from business firms to pre-
23kindergarten scholarship programs shall not exceed
24$10,000,000 in a fiscal year.

25(3) (i) From the tax credits for contributions by
26business firms to educational improvement organizations,
2710% of the available amount shall initially be set aside
28for contributions by business firms to educational
29improvement organizations that provide donations to
30career and technical schools and shall be distributed in

1accordance with section 1705-F(g).

2(ii) Tax credits remaining from the amount set aside
3in subparagraph (i) after July 1 of each year shall be
4made available to business firms for contributions to any
5educational improvement organization and shall be
6distributed in accordance with section 1705-F(g).

7* * *

8Section 3 2 3. This act shall take effect in 60 days.

9Section 1. Article XVII-F heading of the act of March 4,<-
101971 (P.L.6, No.2), known as the Tax Reform Code of 1971, added
11October 9, 2009 (P.L.451, No.48), is amended to read:

12ARTICLE XVII-F

13EDUCATIONAL [IMPROVEMENT TAX CREDIT]

14TAX CREDITS

15Section 2. Section 1701-F of the act, added October 9, 2009
16(P.L.451, No.48), is amended to read:

17Section 1701-F. Scope of article.

18This article establishes the educational improvement [tax 
19credit] and opportunity scholarship tax credits.

20Section 3. The definitions of "business firm," "income
21allowance," "maximum annual household income," "pass-through
22entity," "pre-kindergarten program" and "public school" in
23section 1702-F of the act, amended or added October 9, 2009
24(P.L.451, No.48) and July 2, 2012 (P.L.751, No.85), are amended
25and the section is amended by adding definitions to read:

26Section 1702-F. Definitions.

27The following words and phrases when used in this article
28shall have the meanings given to them in this section unless the
29context clearly indicates otherwise:

30"Applicable taxes."  Any of the taxes due under Article III,

1IV, VI, VII, VIII, IX, XV or XX or a tax under Article XVI of
2the act of May 17, 1921 (P.L.682, No.284), known as The
3Insurance Company Law of 1921.

4"Applicant."  An eligible student who applies for a
5scholarship.

6"Assessment."  The Pennsylvania System of School Assessment
7test, the Keystone Exam, an equivalent local assessment or
8another test established by the State Board of Education to meet
9the requirements of section 2603-B(d)(10)(i) of the Public
10School Code of 1949, and required under the No Child Left Behind
11Act of 2001 (Public Law 107-110, 115 Stat. 1425) or its
12successor statute or another test required to achieve other
13standards established by the Department of Education for the
14public school or school district under 22 Pa. Code § 403.3
15(relating to single accountability system).

16"Attendance boundary."  A geographic area of residence used
17by a school district to assign a student to a public school.

18"Average daily membership."  As defined in section 2501(3) of
19the Public School Code of 1949.

20"Business firm." An entity authorized to do business in this
21Commonwealth and subject to taxes imposed under Article III, IV,
22VI, VII, VIII, IX [or XV], XV or XX or a tax under Article XVI 
23of the act of May 17, 1921 (P.L.682, No.284), known as The 
24Insurance Company Law of 1921. The term includes a pass-through
25entity[.], including a pass-through entity, the purpose of which 
26is the making of contributions under this article and whose 
27shareholders, partners or members are composed of owners or 
28employes of other business firms.

29"Career and technical school." A public secondary school
30established under the provisions of Article XVIII of the act of

1March 10, 1949 (P.L.30, No.14), known as the Public School Code
2of 1949.

3* * *

4"Elementary school."  A school which is not a secondary 
5school.

6* * *

7"Income allowance."

8[(1) As follows:

9(i) Before July 1, 2011, $10,000 for each eligible
10student, eligible pre-kindergarten student and dependent
11member of the household.

12(ii) After June 30, 2011, and through June 30, 2013, 
13$12,000 for each eligible student, eligible pre-
14kindergarten student and dependent member of the
15household.

16(iii) After June 30, 2013, and through June 30,
172014, $15,000 for each eligible student, eligible pre-
18kindergarten student and dependent member of the
19household.

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

28The base amount of $15,000 for each eligible student,
29eligible pre-kindergarten student and dependent member of the
30household. Beginning July 1, 2014, the department shall annually

1adjust the base amount to reflect upward changes in the Consumer
2Price Index for All Urban Consumers for the Pennsylvania, New
3Jersey, Delaware and Maryland area for the preceding 12 months.
4The department shall immediately submit the adjusted amounts to
5the Legislative Reference Bureau for publication as a notice in
6the Pennsylvania Bulletin.

7* * *

8"Kindergarten."  A one-year formal educational program that
9occurs during the school year immediately prior to first grade.
10The term includes a part-time and a full-time program.

11"Low-achieving school."  A public school that ranked in the
12lowest 15% of the school's designation as an elementary school
13or a secondary school based on combined mathematics and reading
14scores from the annual assessment administered in the previous
15school year and for which the Department of Education has posted
16results on the Department of Education's publicly accessible
17Internet website. The term does not include a charter school,
18cyber charter school or area vocational-technical school.

19"Maximum annual household income."

20(1) [Except as set forth in paragraph (2) and subject to 
21paragraph (3), as follows:

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

23(ii) After June 30, 2011, and through June 30, 2013,
24not more than $60,000.

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

26Subject to adjustment under paragraphs (2) and (3), the
27amount of $75,000, plus the applicable income allowance.

28(2) With respect to an eligible student with a
29disability, as calculated by multiplying:

30(i) [the sum of:

1(A)] the applicable amount under paragraph (1)[;
2and

3(B) the applicable income allowance]; by

4(ii) the applicable support level factor according
5to the following table:

6Support Level	Support Level Factor
71	1.50
82	2.993

9(3) Beginning July 1, 2014, the [Department of Community
10and Economic Development] department shall annually adjust
11the income amounts under paragraphs (1) and (2) to reflect
12any upward changes in the Consumer Price Index for All Urban
13Consumers for the Pennsylvania, New Jersey, Delaware and
14Maryland area in the preceding 12 months and shall
15immediately submit the adjusted amounts to the Legislative
16Reference Bureau for publication as a notice in the
17Pennsylvania Bulletin.

18"Nonpublic school."  A school which is a nonprofit
19organization and which is located in this Commonwealth. The term
20does not include a public school.

21"Opportunity scholarship organization."  A nonprofit entity
22which:

23(1) Is exempt from Federal taxation under section 501(c)
24(3) of the Internal Revenue Code of 1986 (Public Law 99-514,
2526 U.S.C. § 1 et seq.); and

26(2) Contributes at least 80% of the entity's annual cash
27receipts to an opportunity scholarship program.

28For the purposes of this definition, a nonprofit entity
29contributes the entity's cash receipts to an opportunity
30scholarship program when the entity expends or otherwise

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

4"Opportunity scholarship."  An award given to an applicant to
5pay tuition and school-related fees necessary to attend a
6participating nonpublic school or a participating public school
7located in a school district which is not the recipient's school
8district of residence.

9"Opportunity scholarship program."  A program to provide 
10opportunity scholarships to eligible students who reside within 
11the attendance area of a low-achieving school.

12"Parent."  An individual who:

13(1)  is a resident of this Commonwealth; and

14(2)  either:

15(i) has legal custody or guardianship of a student;
16or

17(ii) keeps in the individual's home a student and
18supports the student gratis as if the student were a
19lineal descendant of the individual.

20"Participating nonpublic school."  A nonpublic school which 
21notifies the Department of Education under section 1711-F that 
22the school wishes to accept opportunity scholarship recipients.

23"Participating public school."  A public school in a school 
24district which notifies the Department of Education under 
25section 1711-F that the school wishes to accept opportunity 
26scholarship recipients. The term does not include a low-
27achieving school.

28"Pass-through entity." A partnership as defined in section
29301(n.0), a single-member limited liability company treated as a
30disregarded entity for Federal income tax purposes or a

1Pennsylvania S corporation as defined in section 301(n.1). The 
2term includes a pass-through entity that owns an interest in a 
3pass-through entity.

4"Pre-kindergarten program." A program of instruction for
5three-year-old [or], four-year-old, five-year-old or six-year-
6old students, other than a kindergarten, that utilizes a
7curriculum aligned with the curriculum of the school with which
8it is affiliated and which provides one of the following:

9(1) A minimum of two hours of instructional and
10developmental activities per day at least 60 days per school
11year.

12(2) A minimum of two hours of instructional and
13developmental activities per day at least 20 days over the
14summer recess.

15* * *

16"Public school." A public pre-kindergarten where compulsory
17attendance requirements do not apply or a public kindergarten,
18elementary school [or], secondary school or career and technical 
19school at which the compulsory attendance requirements of this
20Commonwealth may be met and which meets the applicable
21requirements of Title VI of the Civil Rights Act of 1964 (Public
22Law 88-352, 78 Stat. 241).

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

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

26* * *

27"School district of residence."  The school district in which
28the student's primary domicile is located.

29* * *

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

1* * *

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

3(1) Is school age.

4(2) Is a resident of this Commonwealth.

5(3) Attends or is about to attend a school.

6* * *

7Section 4. Section 1703-F of the act, amended or added
8October 9, 2009 (P.L.451, No.48) and July 2, 2012 (P.L.751, 
9No.85), is amended to read:

10Section 1703-F. Qualification and application by organizations.

11(a) Establishment.--In accordance with section 14 of Article
12III of the Constitution of Pennsylvania, [an educational
13improvement tax credit program is] the educational improvement
14and opportunity scholarship tax credit programs are hereby
15established to enhance the educational opportunities available
16to all students in this Commonwealth.

17(b) Information.--In order to qualify under this article, an 
18educational improvement organization, a scholarship 
19organization, a pre-kindergarten scholarship organization or an 
20[educational improvement] opportunity scholarship organization 
21must submit information to the department that enables the 
22department to confirm that the organization is exempt from 
23taxation under section 501(c)(3) of the Internal Revenue Code of 
241986 (Public Law 99-514, 26 U.S.C. § 1 et seq.).

25(c) Scholarship organizations and pre-kindergarten
26scholarship organizations.--A scholarship organization or pre-
27kindergarten scholarship organization must certify to the
28department that the organization is eligible to participate in
29the educational improvement tax credit program established under
30this article and must agree to annually report the following

1information to the department by September 1 of each year:

2(1) (i) The number of scholarships awarded during the
3immediately preceding school year to eligible pre-
4kindergarten students.

5(ii) The total and average amounts of the
6scholarships awarded during the immediately preceding
7school year to eligible pre-kindergarten students.

8(iii) The number of scholarships awarded during the
9immediately preceding school year to eligible students in
10grades kindergarten through eight.

11(iv) The total and average amounts of the
12scholarships awarded during the immediately preceding
13school year to eligible students in grades kindergarten
14through eight.

15(v) The number of scholarships awarded during the
16immediately preceding school year to eligible students in
17grades nine through 12.

18(vi) The total and average amounts of the
19scholarships awarded during the immediately preceding
20school year to eligible students in grades nine through
2112.

22(vii) Where the scholarship organization or pre-
23kindergarten scholarship organization collects
24information on a county-by-county basis, the total number
25and the total amount of scholarships awarded during the
26immediately preceding school year to residents of each
27county in which the scholarship organization or pre-
28kindergarten scholarship organization awarded
29scholarships.

30(viii) The total number of scholarship applications

1processed and the amounts of any application fees
2charged, either per scholarship application or in the
3aggregate through a third-party processor.

4(ix) The organization's Federal Form 990 or other
5Federal form indicating the tax status of the
6organization for Federal tax purposes, if any, and a copy
7of a compilation, review or audit of the organization's
8financial statements conducted by a certified public
9accounting firm.

10(2) The information required under paragraph (1) shall
11be submitted on a form provided by the department. No later
12than May 1 of each year, the department shall annually
13distribute such sample forms, together with the forms on
14which the reports are required to be made, to each listed
15scholarship organization and pre-kindergarten scholarship
16organization.

17(3) The department may not require any other information
18to be provided by scholarship organizations or pre-
19kindergarten scholarship organizations, except as expressly
20authorized in this article.

21(d) Educational improvement organization.--

22(1) An application submitted by an educational
23improvement organization must describe its proposed
24innovative educational program or programs in a form
25prescribed by the department. The department shall consult
26with the Department of Education as necessary. The department
27shall review and approve or disapprove the application. In
28order to be eligible to participate in the educational 
29improvement tax credit program established under this
30article, an educational improvement organization must agree

1to annually report the following information to the
2department by [December 1, 2005, and] September 1 of each
3year [thereafter]:

4(i) The name of the innovative educational program
5or programs and the total amount of the grant or grants
6made to those programs during the immediately preceding
7school year.

8(ii) A description of how each grant was utilized
9during the immediately preceding school year and a
10description of any demonstrated or expected innovative
11educational improvements.

12(iii) The names of the public schools and school
13districts where innovative educational programs that
14received grants during the immediately preceding school
15year were implemented.

16(iv) Where the educational improvement organization
17collects information on a county-by-county basis, the
18total number and the total amount of grants made during
19the immediately preceding school year for programs at
20public schools in each county in which the educational
21improvement organization made grants.

22(v) The organization's Federal Form 990 or other
23Federal form indicating the tax status of the
24organization for Federal tax purposes, if any, and a copy
25of a compilation, review or audit of the organization's
26financial statements conducted by a certified public
27accounting firm.

28(2) The information required under paragraph (1) shall
29be submitted on a form provided by the department. No later
30than [September 1, 2005, and] May 1 of each year

1[thereafter], the department shall annually distribute such
2sample forms, together with the forms on which the reports
3are required to be made, to each listed educational
4improvement organization.

5(3) The department may not require any other information
6to be provided by educational improvement organizations,
7except as expressly authorized in this article.

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

9(1) An opportunity scholarship organization must enhance
10the educational opportunities available to students in this
11Commonwealth by providing opportunity scholarships to
12eligible students who reside within the attendance boundary
13of low-achieving schools to attend schools which are not low-
14achieving schools and which are not public schools within the
15eligible student's school district of residence. By February
1615 of each year, an opportunity scholarship organization must
17certify to the department that the organization is eligible
18to participate in the opportunity scholarship tax credit
19program.

20(2) An opportunity scholarship organization must agree
21to report the following information on a form provided by the
22department by September 1 of each year:

23(i) The total number of applications for opportunity
24scholarships received during the immediately preceding
25school year from eligible students in grades kindergarten
26through eight.

27(ii) The number of opportunity scholarships awarded
28during the immediately preceding school year to eligible
29students in grades kindergarten through eight.

30(iii) The total and average amounts of the

1opportunity scholarships awarded during the immediately
2preceding school year to eligible students in grades
3kindergarten through eight.

4(iv) The total number of applications for
5opportunity scholarships received during the immediately
6preceding school year from eligible students in grades
7nine through 12.

8(v) The number of opportunity scholarships awarded
9during the immediately preceding school year to eligible
10students in grades nine through 12.

11(vi) The total and average amounts of the
12opportunity scholarships awarded during the immediately
13preceding school year to eligible students in grades nine
14through 12.

15(vii) Where the opportunity scholarship organization
16collects information on a county-by-county basis, the
17total number and the total amount of opportunity
18scholarships awarded during the immediately preceding
19school year to residents of each county in which the
20opportunity scholarship organization awarded opportunity
21scholarships.

22(viii) The number of opportunity scholarships
23awarded during the immediately preceding school year to
24applicants with a household income that does not exceed
25185% of the Federal poverty level.

26(ix) The total and average amounts of opportunity
27scholarships awarded during the immediately preceding
28school year to applicants with a household income that
29does not exceed 185% of the Federal poverty level.

30(x) The number of opportunity scholarships awarded

1during the immediately preceding school year to
2applicants with a household income that does not exceed
3185% of the Federal poverty level and who reside within a
4first class school district.

5(xi) The total and average amounts of opportunity
6scholarships awarded during the immediately preceding
7school year to applicants with a household income that
8does not exceed 185% of the Federal poverty level and who
9reside within a first class school district.

10(xii) The number of opportunity scholarships awarded
11during the immediately preceding school year to
12applicants with a household income that does not exceed
13185% of the Federal poverty level and who reside within a
14school district that was designated as a financial
15recovery school district under Article VI-A of the Public
16School Code of 1949 at the time of the award.

17(xiii) The total and average amounts of opportunity
18scholarships awarded during the immediately preceding
19school year to applicants with a household income that
20does not exceed 185% of the Federal poverty level and who
21reside within a school district that was designated as a
22financial recovery school district under Article VI-A of
23the Public School Code of 1949 at the time of the award.

24(xiv) The total number of opportunity scholarship
25applications processed and the amounts of any application
26fees charged either per opportunity scholarship
27application or in the aggregate through a third-party
28processor.

29(xv) The opportunity scholarship organization's
30Federal Form 990 or other Federal form indicating the tax

1status of the opportunity scholarship organization for
2Federal tax purposes, if any, and a copy of a
3compilation, review or audit of the opportunity
4scholarship organization's financial statements conducted
5by a certified public accounting firm.

6(3) No later than May 1 of each year, the department
7shall annually distribute such sample forms, together with
8the forms on which the reports are required to be made, to
9each listed opportunity scholarship organization.

10(4) The department may not require other information to
11be provided by opportunity scholarship organizations, except
12as expressly authorized in this article.

13(e) Notification.--The department shall notify the
14scholarship organization, pre-kindergarten scholarship
15organization [or], educational improvement organization or 
16opportunity scholarship organization that the organization meets
17the requirements of and is qualified under this article for that
18fiscal year no later than 60 days after the organization has
19submitted the information required under this section.

20(f) Publication.--The department shall annually publish a
21list of each scholarship organization, pre-kindergarten
22scholarship organization [or], educational improvement
23organization and opportunity scholarship organization qualified
24under this section in the Pennsylvania Bulletin. The list shall
25also be posted and updated as necessary on the publicly
26accessible Internet website of the department.

27Section 5. Section 1704-F of the act, added October 9, 2009
28(P.L.451, No.48), is amended to read:

29Section 1704-F. Application by business firms.

30(a) Scholarship organization [or], pre-kindergarten

1scholarship organization or opportunity scholarship 
2organization.--A business firm shall apply to the department for
3a tax credit for contributions to a scholarship organization, 
4pre-kindergarten scholarship organization or opportunity 
5scholarship organization under section 1705-F. A business firm
6shall receive a tax credit under this article if the scholarship
7organization [or], pre-kindergarten scholarship organization or 
8opportunity scholarship organization that receives the
9contribution appears on the list established under section 1703-
10F(f), subject to the limitations in sections 1705-F and 1706-F.

11(b) Educational improvement organization.--A business firm
12must apply to the department for a credit for a contribution to 
13an educational improvement organization under section 1705-F. A
14business firm shall receive a tax credit under this article if
15the department has approved the program provided by the
16educational improvement organization that receives the
17contribution, subject to the limitations in sections 1705-F and 
181706-F.

19(c) Availability of tax credits.--Tax credits under this
20article shall be made available by the department on a first-
21come, first-served basis within the limitation established under
22section 1706-F(a).

23(d) Contributions.--A contribution by a business firm to a
24scholarship organization, pre-kindergarten scholarship 
25organization, opportunity scholarship organization or
26educational improvement organization shall be made no later than
2760 days following the approval of an application under
28subsection (a) or (b).

29(e) Application in the alternative.--At the time of
30application for an educational improvement or opportunity

1scholarship tax credit, the department shall advise a business
2firm that the firm may elect that its application for a
3particular credit should, in the alternative, be deemed an
4application for a different tax credit authorized under this
5section if the business firm's preferred choice of tax credit is
6not available. When a business firm does not receive its
7preferred choice of tax credit, the department shall promptly
8consider the business firm's application in the alternative for
9a different tax credit authorized under this section.

10Section 6. Sections 1705-F and 1706-F of the act, amended
11July 2, 2012 (P.L.751, No.85), are amended to read:

12Section 1705-F. Tax [credit] credits.

13(a) Scholarship or educational improvement organizations.--
14In accordance with section [1706-F(a)] 1706-F, the Department of
15Revenue shall grant a tax credit against any [tax due under
16Article III, IV, VI, VII, VIII, IX or XV or under Article XVI of 
17the act of May 17, 1921 (P.L.682, No.284), known as The 
18Insurance Company Law of 1921,] applicable tax to a business
19firm providing proof of a contribution to a scholarship
20organization or educational improvement organization in the
21taxable year in which the contribution is made [which] in 
22accordance with the following:

23(1) The tax credit shall not exceed 75% of the total
24amount contributed during the taxable year by the business
25firm.

26(2) For fiscal year [2012-2013, the tax credit shall not
27exceed $400,000 annually per business firm for contributions
28made to scholarship organizations or educational improvement
29organizations. For fiscal year 2013-2014] 2014-2015, and each 
30fiscal year thereafter, the tax credit shall not exceed
 

1$750,000 annually per business firm for contributions made to 
2scholarship organizations or educational improvement 
3organizations[.] except as provided under subsection (i).

4(a.1) Opportunity scholarship organizations.--In accordance
5with section 1706-F, the Department of Revenue shall grant a tax
6credit against any applicable tax to a business firm providing
7proof of a contribution to an opportunity scholarship
8organization in the taxable year in which the contribution is
9made in accordance with the following:

10(1) The tax credit shall not exceed 75% of the total
11amount contributed during the taxable year by the business
12firm.

13(2) For fiscal year 2014-2015, and each fiscal year
14thereafter, the tax credit shall not exceed $750,000 annually
15per business firm for contributions made to opportunity
16scholarship organizations, except as provided in subsection
17(i).

18(b) Additional amount.--[The] In accordance with section 
191706-F, the Department of Revenue shall grant a tax credit of up
20to 90% of the total amount contributed during the taxable year
21if the business firm provides a written commitment to provide
22the scholarship organization [or], educational improvement
23organization or opportunity scholarship organization with the
24same amount of contribution for two consecutive tax years. The
25business firm must provide the written commitment under this
26subsection to the department at the time of application.

27(c) Pre-kindergarten scholarship organizations.--In
28accordance with section [1706-F(a)] 1706-F, the Department of
29Revenue shall grant a tax credit against any [tax due under
30Article III, IV, VI, VII, VIII, IX or XV or under Article XVI of
 

1The Insurance Company Law of 1921] applicable tax to a business
2firm providing proof of a contribution to a pre-kindergarten
3scholarship organization in the taxable year in which the
4contribution is made [which] in accordance with the following:

5(1) The tax credit shall be equal to 100% of the first
6$10,000 contributed during the taxable year by the business
7firm[,] and [which] shall not exceed 90% of the remaining
8amount contributed during the taxable year by the business
9firm. At the time of application, a business firm may provide 
10a written commitment to the department to provide the pre-
11kindergarten scholarship organization with at least the same 
12amount of contribution for two consecutive years.

13(2)  [Such] The tax credit shall not exceed $200,000
14annually per business firm for contributions made to pre-
15kindergarten scholarship organizations, except as provided in 
16subsection (i).

17(d) Combination of tax credits.--[A] In accordance with 
18section 1706-F, a business firm may receive tax credits from the
19Department of Revenue in any tax year for any combination of
20contributions under [subsection (a) or (b) or (c)] subsection 
21(a), (a.1), (b) or (c). [In] Except as provided in subsection 
22(i), in no case may a business firm receive tax credits in any
23tax year in excess of the following:

24(1) [$400,000 for] $750,000 for combined contributions
25[under subsections (a) and (b) made during fiscal year 2012-
262013 or in excess of] to scholarship and educational 
27improvement organizations under subsections (a) and (b).

28(2) $750,000 for contributions [under subsections (a) 
29and (b) made after fiscal year 2012-2013. In no case shall a
30business firm receive tax credits in any tax year in excess

1of] to opportunity scholarship organizations under 
2subsections (a.1) and (b).

3(3)  $200,000 for contributions [under subsection (c)] to 
4pre-kindergarten scholarship organizations under subsection 
5(c).

6(e) Pass-through entity.--

7(1) If a pass-through entity does not intend to use all
8approved tax credits under this section, it may elect in
9writing to [transfer] distribute for no consideration all or
10a portion of the credit to shareholders, members or partners
11in proportion to the [share of the entity's distributive
12income to which] percentage interest of the shareholder,
13member or partner [is entitled for use] in distributions from 
14the pass-through entity, which credits may be used by the 
15shareholders, members or partners in the taxable year in
16which the contribution is made or in the taxable year
17immediately following the year in which the contribution is
18made. The election shall designate the year in which the
19[transferred] distributed credits are to be used and shall be
20made according to procedures established by the Department of
21Revenue. A pass-through entity that received a distribution 
22from a pass-through entity under this paragraph may make a 
23distribution under this paragraph.

24(2) A pass-through entity and a shareholder, member or
25partner of a pass-through entity shall not claim the credit
26under this section for the same contribution.

27(3) The shareholder, member or partner may not carry
28forward, carry back, obtain a refund of or sell or assign the
29credit.

30(4) An individual shareholder, partner or member may

1apply a credit distributed under this section to income
2taxable under Article III to the shareholder, partner or
3member, to the spouse of the shareholder, partner or member
4or to both, if both the shareholder, partner or member and
5the spouse report income on a joint personal income tax
6return.

7(f) Restriction on applicability of credits.--No credits
8granted under this section shall be applied against any tax
9withheld by an employer from an employee under Article III.

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

11(1) Except as provided in paragraph (2), the department
12may accept applications for tax credits available during a
13fiscal year no earlier than July 1 of each fiscal year.

14(2) The application of any business firm for tax credits
15available during a fiscal year as part of the second year of
16a two-year commitment or as a renewal of a two-year 
17commitment which was fulfilled in the previous fiscal year
18may be accepted no earlier than May 15 preceding the fiscal
19year.

20(h) Waiting list.--The department shall maintain a waiting
21list consisting of each business firm which chooses to be
22included on the list and whose application has not been approved
23because all available tax credits have been awarded. A business
24firm that was not awarded a tax credit due to a lack of
25available tax credits shall be notified of and offered a place
26on the waiting list. When tax credits become available, the
27department shall award the tax credits to the business firms in
28the order in which the business firms were placed on the waiting
29list.

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

1(1) If all tax credits authorized under this article for
2contributions to the category of scholarship organizations,
3opportunity scholarship organizations or pre-kindergarten
4scholarship organizations have not been awarded as of October
51 of any fiscal year, then for applications accepted by the
6department from October 1 through November 30 of such fiscal
7year, the limitations set forth in subsections (a), (a.1),
8(c) and (d) relating to the maximum amount of tax credits a
9business firm can receive during a fiscal year for
10contributions to each such category of organizations shall
11not apply. Under this paragraph, the department may accept
12applications under section 1704-F from October 1 through
13November 30 as follows:

14(i) A business firm, including a business firm that
15already applied for the maximum tax credits available
16pursuant to subsections (a) and (d), may apply under
17section 1704-F(a) for up to the total amount of tax
18credits remaining available for contributions to
19scholarship organizations for the fiscal year as set
20forth in section 1706-F(a)(1).

21(ii) A business firm, including a business firm that
22already applied for the maximum tax credits available
23pursuant to subsections (a.1) and (d), may apply under
24section 1704-F(a) for up to the total amount of tax
25credits remaining available for contributions to
26opportunity scholarship organizations for the fiscal year
27as set forth in section 1706-F(a)(3).

28(iii) A business firm, including a business firm
29that already applied for the maximum tax credits
30available pursuant to subsections (c) and (d), may apply

1under section 1704-F(a) for up to the total amount of tax
2credits remaining available for contributions to pre-
3kindergarten scholarship organizations for the fiscal
4year as set forth in section 1706-F(a)(2).

5(2) The provisions of subsection (b) shall not apply to
6applications for tax credits made under this subsection. Tax
7credits awarded under this subsection shall not exceed 75% of
8the total amount contributed during the taxable year by a
9business firm pursuant to an application filed under this
10subsection.

11(3) Prior to the award of tax credits applied for under
12this subsection, the department shall first award tax credits
13applied for by a business firm during the period October 1
14through November 30 in an amount no greater than the maximum
15amount of tax credits for which a business firm is eligible
16under subsections (a), (a.1), (c) and (d). The tax credits
17shall be awarded on a first-come, first-served basis as set
18forth in section 1704-F(c).

19(4) After the department has awarded tax credits under
20paragraph (3), any tax credits remaining available within the
21category of scholarship organizations, opportunity
22scholarship organizations and pre-kindergarten scholarship
23organizations shall be awarded based on the total amount of
24tax credits within each category of organization for which
25applications are received under this subsection from October
261 through November 30 of the fiscal year as follows:

27(i) If the total amount of tax credits applied for
28by all business firms under this subsection does not
29exceed the total amount of tax credits that remained
30available for award within a category as of October 1,

1less those tax credits awarded under subsection (i)(3),
2then each business firm may be awarded the full amount of
3tax credits applied for.

4(ii) If the total amount of tax credits applied for
5by all business firms under this subsection exceeds the
6total amount of tax credits that remained available for
7award within a category as of October 1, less those tax
8credits awarded under subsection (i)(3), then each
9business firm may be awarded an amount of tax credits
10determined by multiplying the amount of tax credits
11applied for by the business firm by a ratio, the
12numerator of which is the total amount of tax credits
13that remained available for award within the category as
14of October 1, less those awarded as set forth in
15subsection (i)(3), and the denominator of which is the
16total amount of tax credits applied for by all business
17firms under this subsection.

18(5) Notwithstanding a temporary increase in maximum tax
19credits available under this subsection, the limitations set
20forth in subsections (a), (a.1), (c) and (d) relating to the
21maximum amount of tax credits a business firm can receive
22during a year for contributions to a category of scholarship
23organizations, opportunity scholarship organizations or pre-
24kindergarten scholarship organizations shall be reinstated
25for all applications accepted by the department on or after
26December 1 of the fiscal year.

27(j) Reallocation of tax credits.--

28(1) Beginning on January 1 of any fiscal year, if any
29tax credits authorized under this article for contributions
30to any of the categories of scholarship organizations,

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

24(2) After the department has awarded tax credits under
25paragraph (1), the department shall accept new applications
26for reallocation of tax credits from any of the categories of
27scholarship organizations, opportunity scholarship
28organizations or pre-kindergarten scholarship organizations
29for which tax credits remain available to the applicant's
30preferred category of scholarship organizations, opportunity

1scholarship organizations or pre-kindergarten scholarship
2organizations for which all available tax credits have been
3awarded, notwithstanding any limitations contained in section
41706-F(a). The amount of tax credits to be awarded to a
5business firm under this paragraph shall not exceed the
6amount of tax credits available for reallocation or the
7maximum amount of tax credits for which a business firm is
8eligible under subsections (a), (a.1), (c) and (d). The
9department shall award tax credits on a first-come, first-
10served basis.

11(3) No tax credits shall be awarded under this
12subsection until the department has completed the award of
13tax credits for applications made under subsection (i).

14(4) The department shall not reallocate tax credits from
15any of the categories of scholarship organizations,
16opportunity scholarship organizations or pre-kindergarten
17scholarship organizations to the category of educational
18improvement organizations.

19(5) Subsections (b) and (g) shall not apply to an
20application for reallocation of tax credits under this
21subsection.

22Section 1706-F. Limitations.

23(a) Amount.--

24(1) The total aggregate amount of all tax credits
25approved for contributions from business firms to scholarship 
26organizations, educational improvement organizations and pre-
27kindergarten scholarship organizations shall not exceed
28$100,000,000 in a fiscal year.

29(i) No less than $60,000,000 of the total aggregate
30amount shall be used to provide tax credits for

1contributions from business firms to scholarship
2organizations.

3(ii) No less than $30,000,000 of the total aggregate
4amount shall be used to provide tax credits for
5contributions from business firms to educational
6improvement organizations.

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

8(i) For fiscal years 2004-2005, 2005-2006 and 2006-
92007, the total aggregate amount of all tax credits
10approved for contributions from business firms to pre-
11kindergarten scholarship programs shall not exceed
12$5,000,000 in a fiscal year.

13(ii) For fiscal years 2007-2008, 2008-2009, 2009-
142010, 2010-2011 and 2011-2012, the]

15(iii) The total aggregate amount of all tax credits
16approved for contributions from business firms to pre-
17kindergarten scholarship [programs] organizations shall
18not exceed [$8,000,000] $10,000,000 in a fiscal year.

19[(iii) For fiscal year 2012-2013 and each fiscal
20year thereafter, the]

21(2) The total aggregate amount of all tax credits
22approved for contributions from business firms to [pre-
23kindergarten scholarship programs] opportunity scholarship 
24organizations shall not exceed [$10,000,000] $50,000,000 in a
25fiscal year.

26(b) Activities.--No tax credit shall be approved for
27activities that are a part of a business firm's normal course of
28business.

29(c) Tax liability.--

30(1) Except as provided in paragraph (2), a tax credit

1granted for any one taxable year may not exceed the tax
2liability of a business firm.

3(2) In the case of a credit granted to a pass-through
4entity which elects to [transfer] distribute the credit
5according to section 1705-F(e), a tax credit granted for any
6one taxable year and [transferred] distributed to a
7shareholder, member or partner may not exceed the tax
8liability of the shareholder, member or partner.

9(d) Use.--A tax credit not used by the applicant in the
10taxable year the contribution was made or in the year designated
11by the shareholder, member or partner to whom the credit was
12transferred under section 1705-F(e) may not be carried forward
13or carried back and is not refundable or transferable.

14(e) Nontaxable income.--A scholarship from any category of 
15organization received by an eligible student or eligible pre-
16kindergarten student shall not be considered to be taxable
17income for the purposes of Article III.

18(f) Financial assistance.--A scholarship from any category
19of organization received by an eligible student or eligible pre-
20kindergarten student shall not constitute an appropriation or
21financial assistance to the school attended by the recipient.

22Section 7. Section 1707-F of the act, added October 9, 2009
23(P.L.451, No.48), is amended to read:

24Section 1707-F. Lists.

25The Department of Revenue shall provide a list of all
26scholarship organizations, pre-kindergarten scholarship
27organizations [and], educational improvement organizations and 
28opportunity scholarship organizations receiving contributions
29from business firms granted a tax credit under this article to
30the General Assembly by June 30th of each year.

1Section 8. The act is amended by adding sections to read:

2Section 1709-F. Opportunity scholarships.

3(a) Notice.--By February 1 of each year, the department
4shall provide all opportunity scholarship organizations with a
5list of the low-achieving schools located within each school
6district.

7(b) Award.--An opportunity scholarship organization may
8award an opportunity scholarship to an applicant who resides
9within the attendance boundary of a low-achieving school to
10attend a participating public school or a participating
11nonpublic school selected by the parent of the applicant. If an
12applicant who received an opportunity scholarship for the prior
13school year resides within the attendance boundary of a school
14that was removed from the list of low-achieving schools provided
15by the department under subsection (a), the applicant may
16receive an opportunity scholarship. The opportunity scholarship
17may be for each year of enrollment in a participating public
18school or participating nonpublic school for up to the lesser of
19five years or until completion of grade 12, provided the
20applicant otherwise remains eligible. In awarding scholarships,
21an opportunity scholarship organization shall give preference to
22any of the following:

23(1) An applicant who received an opportunity scholarship
24for the prior school year.

25(2) An applicant of a household with a household income
26that does not exceed 185% of the Federal poverty level for
27the school year preceding the school year for which the
28application is being made.

29(3) An applicant of a household with a household income
30that does not exceed 185% of the Federal poverty level for

1the school year preceding the school year for which the
2application is being made and who resides within any of the
3following:

4(i) A first class school district.

5(ii) A school district designated as a financial
6recovery school district under Article VI-A of the
7Public School Code of 1949 for the year for which the
8award is made.

9(c) Home schooling.--An opportunity scholarship organization
10shall not award an opportunity scholarship to an applicant for
11enrollment in a home education program under section 1327.1 of
12the Public School Code of 1949.

13(d) Funding.--The aggregate amount of opportunity
14scholarships shall not exceed the aggregate amount of
15contributions made by business firms to the opportunity
16scholarship organization.

17(e) Amount.--

18(1) The maximum amount of an opportunity scholarship
19awarded to an applicant without a disability shall be $8,500.

20(2) The maximum amount of an opportunity scholarship
21awarded to an applicant with a disability shall be $15,000.

22(3) In no case shall the combined amount of the
23opportunity scholarship awarded to a recipient and any
24additional financial assistance provided to the recipient
25exceed the tuition rate and school-related fees for the
26participating public school or participating nonpublic school
27that the recipient will attend.

28Section 1710-F. Low-achieving schools.

29(a) List of low-achieving schools.--By February 1 of each
30year, the Department of Education shall publish on the

1Department of Education's publicly accessible Internet website
2and in the Pennsylvania Bulletin a list of the low-achieving
3schools for the following school year.

4(b) Notice.--By February 1 of each year, the Department of
5Education shall notify every school district identified as
6having at least one low-achieving school of such identification
7and shall furnish the school district with a list of the low-
8achieving schools located within the school district.

9(c) Publication.--Within 15 days of receipt of a
10notification under subsection (b), a school district shall post
11on the district's publicly accessible Internet website notice of
12all of the following:

13(1) A description of the opportunity scholarship
14program.

15(2) Instructions for applying for an opportunity
16scholarship.

17(3) A list of schools in the school district that have
18been designated by the Department of Education as low-
19achieving schools.

20(4) Notice that a parent must directly contact a school
21district of a participating public school or a participating
22nonpublic school if the parent seeks to enroll the student in
23the opportunity scholarship program.

24(d) Notification to parents.--

25(1) Within 15 days of receipt of a notification under
26subsection (b), a school district shall notify the parents of
27each student who is currently attending or residing within
28the attendance boundary of a low-achieving school during the
29school year of the school's designation.

30(2) Upon registration of a kindergarten student, a

1school district shall notify the parents of the kindergarten
2student that the student will be assigned to a low-achieving
3school during the school year of the school's designation.

4(3) The notice shall be in a form provided by the
5Department of Education and shall provide the following
6information regarding the opportunity scholarship program:

7(i) A description of the opportunity scholarship
8program.

9(ii) Instructions for obtaining information about
10applying for an opportunity scholarship under the
11opportunity scholarship program.

12(iii) Notice of the parent's responsibilities with
13regard to applying to a school district of a
14participating public school or a participating nonpublic
15school if the parent seeks to enroll the student in the
16opportunity scholarship program.

17(e) Average daily membership.--

18(1) Notwithstanding any other provision of law to the
19contrary, a recipient who was enrolled in the recipient's
20resident school district or in a charter school, regional
21charter school or cyber charter school when the recipient
22first received an opportunity scholarship shall continue to
23be counted in the average daily membership of the school
24district for a period of one year after enrolling in a
25participating public school or a participating nonpublic
26school.

27(2) During the year referenced in paragraph (1) and each
28school year thereafter, a school district of a participating
29public school in which the recipient is enrolled shall not
30include the recipient in the school district's average daily

1membership.

2Section 1711-F. School participation in program.

3(a) Election.--

4(1) By February 15 of each year, a nonpublic school may
5elect to participate in the opportunity scholarship program
6for the following school year.

7(2) By February 15 of each year, a school district may
8elect to participate in the opportunity scholarship program
9for the following school year.

10(b) Notice.--

11(1) A school district or nonpublic school that elects to
12participate under subsection (a) must notify the Department
13of Education of the district's or nonpublic school's intent
14to participate.

15(2) For a school district, the notice under paragraph
16(1) must be submitted on a form developed by the Department
17of Education and shall specify all of the following:

18(i) Each school within the school district which the
19school district intends to make a participating public
20school.

21(ii) The amount of tuition and school-related fees
22attributable to each available seat. The amount under
23this subparagraph shall not exceed the amount calculated
24under section 2561 of the Public School Code of 1949.

25(3) For a nonpublic school, the notice under paragraph
26(1) must be submitted on a form developed by the Department
27of Education and shall specify the amount of tuition and
28school-related fees attributable to an available seat.

29(c) Tuition rates.--

30(1) No school district of a participating public school

1or participating nonpublic school may charge a recipient a
2higher tuition rate or school-related fee than the school
3district of the participating public school or participating
4nonpublic school would have charged to a similarly situated
5student who is not receiving an opportunity scholarship.

6(2) Notwithstanding the provisions of section 2561 of
7the Public School Code of 1949, a school district of a
8participating public school may charge a recipient a tuition
9rate that is lower than that charged to students who are not
10recipients of opportunity scholarships.

11(d) Participating public school criteria.--The following
12criteria apply to a participating public school:

13(1) Except as otherwise provided in this article, a
14school district shall enroll students in a participating
15public school on a lottery basis from a pool of recipients
16who meet the application deadline set by the Department of
17Education until the participating public school fills the
18school's available seats. The pool may not include a
19recipient who:

20(i) Has been expelled or is in the process of being
21expelled under section 1317.2 or 1318 of the Public
22School Code of 1949 and applicable regulations of the
23State Board of Education.

24(ii) Has been recruited by the school district or
25its representatives for athletic purposes.

26(2) The enrollment of recipients may not place the
27school district in violation of a valid and binding
28desegregation order.

29(3) Priority shall be given to:

30(i) An existing recipient.

1(ii) A recipient who is a sibling of a student
2currently enrolled in the school district.

3(e) Participating nonpublic school criteria.--The following
4criteria apply to a participating nonpublic school:

5(1) The participating nonpublic school may not
6discriminate on a basis which is illegal under Federal or
7State laws applicable to nonpublic schools.

8(2) The participating nonpublic school shall comply with
9section 1521 of the Public School Code of 1949.

10(3) The participating nonpublic school or its
11representatives may not recruit a student for athletic
12purposes.

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

14(1) Prior to enrollment of a recipient, a school
15district of a participating public school or a participating
16nonpublic school shall inform the parent of a recipient of
17any and all rules, policies and procedures of the
18participating public school or participating nonpublic
19school, including any academic policies, disciplinary rules
20and administrative procedures of the participating public
21school or participating nonpublic school.

22(2) Enrollment of a recipient in a participating public
23school or participating nonpublic school shall constitute
24acceptance of any rules, policies and procedures of the
25participating public school or participating nonpublic
26school.

27(g) Transportation.--

28(1) Transportation of recipients shall be provided under
29section 1361 of the Public School Code of 1949.

30(2) Reimbursement shall be as follows:

1(i) Transportation of a recipient attending a
2participating public school shall be subject to
3reimbursement under section 2541 of the Public School
4Code of 1949.

5(ii) Transportation of a recipient attending a
6participating nonpublic school shall be subject to
7reimbursement under sections 2509.3 and 2541 of the
8Public School Code of 1949.

9(h) Construction.--Nothing in this article shall be
10construed to:

11(1) Prohibit a participating nonpublic school from
12limiting admission to a particular grade level, a single
13gender or areas of concentration of the participating
14nonpublic school, including mathematics, science and the
15arts.

16(2) Authorize the Commonwealth or any of its agencies or
17officers or political subdivisions to impose any additional
18requirements on a participating nonpublic school which are
19not otherwise authorized under the laws of this Commonwealth
20or to require a participating nonpublic school to enroll a
21recipient if the participating nonpublic school does not
22offer appropriate programs or is not structured or equipped
23with the necessary facilities to meet the special needs of
24the recipient or does not offer a particular program
25requested.

26Section 1712-F. Tuition grants by school districts.

27(a) General rule.--The board of school directors of a school
28district may use funds received from the Commonwealth for
29educational purposes to establish a program of tuition grants to
30provide for the education of students who reside within the

1district and attend or will attend a public or nonpublic school
2on a tuition-paying basis.

3(b) Nonpublic school grant amount.--For students who attend
4or will attend a nonpublic school, the grant amount for each
5student shall not exceed the amount of the per pupil State
6subsidy for basic education of the school district of residence.

7(c) Average daily membership.--

8(1) A student who receives a tuition grant under this
9section shall be included in the average daily membership for
10purposes of determining the school district of residence's
11basic education funding.

12(2) A student who receives a grant under this section to
13attend a public school outside the school district awarding
14the tuition grant shall not be included in the average daily
15membership of the school district the student attends.

16(d) Guidelines.--

17(1) The board of school directors of a school district
18shall prepare guidelines on all the following:

19(i) Establishment of an application form and
20approval process.

21(ii) Standards for verification of the accuracy of
22application information.

23(iii) Confirmation of attendance by a student who
24receives a tuition grant.

25(iv) Restrictive endorsement of grant checks by
26parents to the school chosen by the parents.

27(v) Pro rata refunds of grants for students who
28withdraw during the school year.

29(vi) Repayment of refunded grants to the school
30district.

1(vii) Reasonable deadline dates for submission of
2grant applications.

3(2) The board of school directors of a school shall
4announce the award of grants no later than August 1 of the
5school year in which the grants will be utilized.

6(3) Upon receipt of written confirmation of enrollment
7from the student's school of choice, grants shall be paid to
8the parents of a student by a check that may only be endorsed
9to the selected school.

10(4) In the event a student is no longer enrolled prior
11to the completion of the school term, the school shall send
12written notice to the school district.

13(e) Nontaxable.--Grants awarded to students under this
14section shall not:

15(1) Be considered taxable income for purposes of a local
16taxing ordinance or for purposes of Article III.

17(2) Constitute financial assistance or appropriations to
18the school attended by the student.

19(f) Construction.--Nothing in this section shall be
20construed to empower the Commonwealth or a school district or
21any of their agencies or officers to do any of the following:

22(1) Prescribe the course content or admissions criteria
23for any religiously affiliated school.

24(2) Compel any private school to accept or enroll a
25student.

26(3) Impose any additional requirements on any private
27school that are not otherwise authorized.

28(4) Require any school to accept or retain a student if
29the school does not offer programs or is not structured or
30equipped with the necessary facilities to meet the special

1needs of the student or does not offer a particular program
2requested.

3Section 1713-F. Original jurisdiction.

4The Pennsylvania Supreme Court shall have exclusive and
5original jurisdiction to hear a challenge or to render a
6declaratory judgment concerning the constitutionality of this
7article. The Pennsylvania Supreme Court may take such action as
8the court deems appropriate, consistent with the Pennsylvania
9Supreme Court's retaining jurisdiction over such a matter, to
10find facts or to expedite a final judgment in connection with a
11challenge or request for declaratory relief.

12Section 9. Article XVII-G.1 heading and sections 1701-G.1, 
131702-G.1, 1703-G.1, 1704-G.1, 1705-G.1, 1706-G.1 and 1707-G.1, 
14of the act, added July 2, 2012 (P.L.751, No.85), are repealed:

15[ARTICLE XVII-G.1

16EDUCATIONAL OPPORTUNITY SCHOLARSHIP TAX CREDIT

17Section 1701-G.1. Scope of article.

18This article establishes the educational opportunity
19scholarship tax credit.

20Section 1702-G.1. Definitions.

21The following words and phrases when used in this article
22shall have the meanings given to them in this section unless the
23context clearly indicates otherwise:

24"Applicant." An eligible student who applies for a
25scholarship.

26"Assessment." The Pennsylvania System of School Assessment
27test, the Keystone Exam, an equivalent local assessment or
28another test established by the State Board of Education to meet
29the requirements of section 2603-B(d)(10)(i) of the Public
30School Code of 1949 and required under the No Child Left Behind

1Act of 2001 (Public Law 107-110, 115 Stat. 1425) or its
2successor statute or any other test required to achieve other
3standards established by the Department of Education for the
4public school or school district under 22 Pa. Code § 403.3
5(relating to single accountability system).

6"Attendance boundary." A geographic area of residence used
7by a school district to assign a student to a public school.

8"Average daily membership." As defined in section 2501(3) of
9the Public School Code of 1949.

10"Business firm." An entity authorized to do business in this
11Commonwealth and subject to a tax under Article XVI of the act
12of May 17, 1921 (P.L.682, No.284), known as The Insurance
13Company Law of 1921, or taxes imposed under Article III, IV, VI,
14VII, VIII, IX or XV. The term includes a pass-through entity.

15"Contribution." A donation of cash, personal property or
16services, the value of which is the net cost of the donation to
17the donor or the pro rata hourly wage, including benefits, of
18the individual performing the services.

19"Department." The Department of Community and Economic
20Development of the Commonwealth.

21"Elementary school." A school which is not a secondary
22school.

23"Eligible student." A student or a student with a disability
24who:

25(1) resides within the attendance boundary of a low-
26achieving school as of the first day of classes of the school
27year; and

28(2) is a member of a household which has a household
29income no greater than the maximum annual household income
30allowance.

1"Household." An individual who lives alone or with the
2following: a spouse, parent and their unemancipated minor
3children, other unemancipated minor children who are related by
4blood or marriage or other adults or unemancipated minor
5children living in the household who are dependent upon the
6individual.

7"Household income." All moneys or property received by a
8household of whatever nature and from whatever source derived.
9The term does not include the following:

10(1) Periodic payments for sickness and disability other
11than regular wages received during a period of sickness or
12disability.

13(2) Disability, retirement or other payments arising
14under workers' compensation acts, occupational disease acts
15and similar legislation by any government.

16(3) Payments commonly recognized as old-age or
17retirement benefits paid to persons retired from service
18after reaching a specific age or after a stated period of
19employment.

20(4) Payments commonly known as public assistance or
21unemployment compensation payments by a governmental agency.

22(5) Payments to reimburse actual expenses.

23(6) Payments made by employers or labor unions for
24programs covering hospitalization, sickness, disability or
25death, supplemental unemployment benefits, strike benefits,
26Social Security and retirement.

27(7) Compensation received by United States servicemen
28serving in a combat zone.

29"Income allowance."

30(1) The following shall apply:

1(i) After June 30, 2012, and through June 30, 2013,
2$12,000 for each dependent member of the household.

3(ii) After June 30, 2013, and through June 30, 2014,
4$15,000 for each dependent member of the household.

5(2) Beginning July 1, 2014, the Department of Community
6and Economic Development shall annually adjust the income
7allowance amounts under paragraph (1) to reflect any upward
8changes in the Consumer Price Index for All Urban Consumers
9for the Pennsylvania, New Jersey, Delaware and Maryland area
10in the preceding 12 months and shall immediately submit the
11adjusted amounts to the Legislative Reference Bureau for
12publication as a notice in the Pennsylvania Bulletin.

13"Kindergarten." A one-year formal educational program that
14occurs during the school year immediately prior to first grade.
15The term includes a part-time and a full-time program.

16"Low-achieving school." A public school that ranked in the
17lowest 15% of its designation as an elementary school or a
18secondary school based on combined mathematics and reading
19scores from the annual assessment administered in the previous
20school year and for which the Department of Education has posted
21results on its publicly accessible Internet website. The term
22does not include a charter school, cyber charter school or area
23vocational-technical school.

24"Maximum annual household income allowance."

25(1) Except as stated in paragraph (2) and subject to
26adjustment under paragraph (3), the sum of:

27(i) Either:

28(A) after June 30, 2012, and through June 30,
292013, not more than $60,000; or

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

1(ii) The applicable income allowance.

2(2) With respect to a student with a disability, as
3calculated by multiplying:

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

5(ii) the applicable support level factor according
6to the following table:

7Support Level	Support Level Factor
81	1.50
92	2.993

10(3) Beginning July 1, 2014, the Department of Community
11and Economic Development shall annually adjust the income
12amounts under paragraphs (1) and (2) to reflect any upward
13changes in the Consumer Price Index for All Urban Consumers
14for the Pennsylvania, New Jersey, Delaware and Maryland area
15in the preceding 12 months and shall immediately submit the
16adjusted amounts to the Legislative Reference Bureau for
17publication as a notice in the Pennsylvania Bulletin.

18"Nonpublic school." A school which is a nonprofit
19organization and which is located in the Commonwealth. The term
20does not include a public school.

21"Parent." An individual who:

22(1) is a resident of the Commonwealth; and

23(2) either:

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

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

29"Participating nonpublic school." A nonpublic school which
30notifies the Department of Education under section 1710-G.1 that

1it wishes to participate in the program.

2"Participating public school." A public school in a school
3district which notifies the Department of Education under
4section 1710-G.1(b) that it wishes to participate in the
5program. The term shall not include a low-achieving school.

6"Pass-through entity." A partnership as defined in section
7301(n.0), a single-member limited liability company treated as a
8disregarded entity for Federal income tax purposes or a
9Pennsylvania S corporation as defined in section 301(n.1).

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

12"Program." The Educational Opportunity Scholarship Tax
13Credit Program established under this article.

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

15"Scholarship." An award given to an applicant for the
16recipient to pay tuition and school-related fees necessary to
17attend a participating nonpublic school or a participating
18public school located in a school district which is not the
19recipient's school district of residence.

20"Scholarship organization." A nonprofit entity which:

21(1) is exempt from Federal taxation under section
22501(c ) ( 3) of the Internal Revenue Code of 1986 (Public Law
2399-514, 26 U.S.C. § 1 et seq.); and

24(2) contributes at least 80% of its annual cash receipts
25to a scholarship program.

26For purposes of this definition, a nonprofit entity
27"contributes" its annual cash receipts to a scholarship program
28when it expends or otherwise irrevocably encumbers those funds
29for distribution during the then current fiscal year of the
30nonprofit entity or during the next succeeding fiscal year of

1the nonprofit entity.

2"School." An elementary school or a secondary school at
3which the compulsory attendance requirements of the Commonwealth
4may be met and which meets the applicable requirements of Title
5VI of the Civil Rights Act of 1964 (Public Law 88-352, 78 Stat.
6241).

7"School age." The age of an individual from the earliest
8admission age to a school's kindergarten or, when no
9kindergarten is provided, the school's earliest admission age
10for beginners, until the end of the school year the individual
11attains 21 years of age or graduation from high school,
12whichever occurs first.

13"School district of residence." The school district in which
14the student's primary domicile is located.

15"School-related fees." Fees charged by a school to all
16students for books, instructional materials, technology
17equipment and services, uniforms and activities.

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

19"Special education school." A school or program within a
20school that is designated specifically and exclusively for
21students with any of the disabilities listed in 34 CFR § 300.8
22(relating to child with a disability) and meets one of the
23following:

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

26(2) is accredited by an accrediting association approved
27by the State Board of Education;

28(3) is a school for the blind or deaf receiving
29Commonwealth appropriations; or

30(4) is operated by or under the authority of a bona fide

1religious institution or by the Commonwealth or any political
2subdivision thereof.

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

4(1) Is school age.

5(2) Is a resident of this Commonwealth.

6(3) Attends or is about to attend a school.

7"Student with a disability." A student who meets all of the
8following:

9(1) Is either enrolled in a special education school or
10has otherwise been identified, in accordance with 22 Pa. Code
11Ch. 14 (relating to special education services and programs),
12as a "child with a disability" as defined in 34 CFR § 300.8
13(relating to child with a disability).

14(2) Needs special education and related services.

15"Support level." The level of support needed by an eligible
16student with a disability, as provided in the following matrix:

17Support Level 1 - The student is not enrolled in a
18special education school.

19Support Level 2 - The student is enrolled as a student in
20a special education school.

21Section 1703-G.1. Qualification and application.

22(a) Establishment.--The Educational Opportunity Scholarship
23Tax Credit Program is established. The program shall provide tax
24credits to entities that provide contributions to scholarship
25organizations. The scholarship organizations must enhance the
26educational opportunities available to students in this
27Commonwealth by providing scholarships to eligible students who
28reside within the attendance boundary of low-achieving schools
29to attend schools which are not low-achieving schools and which
30are not a public school within the school district of residence.

1(b) Information.--In order to qualify under this article, a
2scholarship organization must submit information to the
3department that enables the department to confirm that the
4scholarship organization is exempt from taxation under section
5501(c)(3) of the Internal Revenue Code of 1986 (Public Law 99-
6514, 26 U.S.C. § 1 et seq.).

7(c) Annual certification of eligibility.--By August 15,
82012, and by February 15, 2013, and each February 15 thereafter,
9a scholarship organization must certify to the department that
10the organization is eligible to participate in the program.

11(d) Report.--

12(1) A scholarship organization must agree to report the
13following information on a form provided by the department by
14September 1, 2013, and each September 1 thereafter:

15(i) The total number of applications for
16scholarships received during the immediately preceding
17school year from eligible students in grades kindergarten
18through eight.

19(ii) The number of scholarships awarded during the
20immediately preceding school year to eligible students in
21grades kindergarten through eight.

22(iii) The total and average amounts of the
23scholarships awarded during the immediately preceding
24school year to eligible students in grades kindergarten
25through eight.

26(iv) The total number of applications for
27scholarships received during the immediately preceding
28school year from eligible students in grades 9 through
2912.

30(v) The number of scholarships awarded during the

1immediately preceding school year to eligible students in
2grades 9 through 12.

3(vi) The total and average amounts of the
4scholarships awarded during the immediately preceding
5school year to eligible students in grades 9 through 12.

6(vii) Where the scholarship organization collects
7information on a county-by-county basis, the total number
8and the total amount of scholarships awarded during the
9immediately preceding school year to residents of each
10county in which the scholarship organization awarded
11scholarships.

12(viii) The number of scholarships awarded during the
13immediately preceding school year to applicants with a
14household income that does not exceed 185% of the Federal
15poverty level.

16(ix) The total and average amounts of the
17scholarships awarded during the immediately preceding
18school year to applicants with a household income that
19does not exceed 185% of the Federal poverty level.

20(x) The number of scholarships awarded during the
21immediately preceding school year to applicants with a
22household income that does not exceed 185% of the Federal
23poverty level and who reside within a first class school
24district.

25(xi) The total and average amounts of the
26scholarships awarded during the immediately preceding
27school year to applicants with a household income that
28does not exceed 185% of the Federal poverty level and who
29reside within a first class school district.

30(xii) The number of scholarships awarded during the

1immediately preceding school year to applicants with a
2household income that does not exceed 185% of the Federal
3poverty level and who reside within a school district
4with an average daily membership greater than 7,500 and
5that receives an advance of its basic education subsidy
6at any time.

7(xiii) The total and average amounts of the
8scholarships awarded during the immediately preceding
9school year to applicants with a household income that
10does not exceed 185% of the Federal poverty level and who
11reside within a school district with an average daily
12membership greater than 7,500 and that receives an
13advance of its basic education subsidy at any time.

14(xiv) The number of scholarships awarded during the
15immediately preceding school year to applicants with a
16household income that does not exceed 185% of the Federal
17poverty level and who reside within a school district
18that receives an advance of its basic education subsidy
19at any time and is either subject to a declaration of
20financial distress under section 691 of the Public School
21Code of 1949 or engaged in litigation against the
22Commonwealth in which the school district seeks financial
23assistance from the Commonwealth to allow the school
24district to continue to operate.

25(xv) The total and average amounts of the
26scholarships awarded during the immediately preceding
27school year to applicants with a household income that
28does not exceed 185% of the Federal poverty level and who
29reside within a school district that receives an advance
30of its basic education subsidy at any time and is either

1subject to a declaration of financial distress under
2section 691 of the Public School Code of 1949 or is
3engaged in litigation against the Commonwealth in which
4the school district seeks financial assistance from the
5Commonwealth to allow the school district to continue to
6operate.

7(xvi) The total number of scholarship applications
8processed and the amounts of any application fees charged
9either per scholarship application or in the aggregate
10through a third-party processor.

11(xvii) The scholarship organization's Federal Form
12990 or other Federal form indicating the tax status of
13the scholarship organization for Federal tax purposes, if
14any, and a copy of a compilation, review or audit of the
15scholarship organization's financial statements conducted
16by a certified public accounting firm.

17(2) No later than May 1, 2013, and each May 1
18thereafter, the department shall annually distribute such
19sample forms, together with the forms on which the reports
20are required to be made, to each listed scholarship
21organization.

22(3) The department may not require any other information
23to be provided by scholarship organizations, except as
24expressly authorized in this article.

25(e) Notification.--The department shall notify a scholarship
26organization that it meets the requirements of this article for
27that fiscal year no later than 60 days after the scholarship
28organization submits the information required under this
29section.

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

1list of each scholarship organization qualified under this
2section in the Pennsylvania Bulletin and shall post and update
3the list as necessary on the publicly accessible Internet
4website of the department.

5Section 1704-G.1. Tax credit application.

6(a) Scholarship organization.--A business firm shall apply
7to the department for a tax credit under section 1705-G.1. A
8business firm shall receive a tax credit under this article if
9the scholarship organization that receives the contribution
10appears on the list published under section 1703-G.1(f).

11(b) Availability of tax credits.--Tax credits under this
12article shall be made available by the department on a first-
13come-first-served basis within the limitation established under
14section 1706-G.1(a).

15(c) Contributions.--A contribution by a business firm to a
16scholarship organization shall be made no later than 60 days
17following the approval of an application under subsection (a).

18Section 1705-G.1. Tax credit.

19(a) Scholarship organizations.--

20(1) In accordance with section 1706-G.1(a), the
21Department of Revenue shall grant a tax credit against any
22tax due under Article XVI of the act of May 17, 1921
23(P.L.682, No.284), known as The Insurance Company Law of
241921, or under Article III, IV, VI, VII, VIII, IX or XV to a
25business firm providing proof of a contribution to a
26scholarship organization in the taxable year in which the
27contribution is made, which shall not exceed 75% of the total
28amount contributed during the taxable year by the business
29firm.

30(2) For the fiscal year 2012-2013, the tax credit shall

1not exceed $400,000 annually per business firm for
2contributions made to scholarship organizations.

3(3) For the fiscal years 2013-2014 and each fiscal year
4thereafter, the tax credit shall not exceed $750,000 annually
5per business firm for contributions made to scholarship
6organizations.

7(b) Additional amount.--

8(1) The Department of Revenue shall grant a tax credit
9of up to 90% of the total amount contributed during the
10taxable year if the business firm provides a written
11commitment to provide the scholarship organization with the
12same amount of contribution for two consecutive tax years.

13(2) The business firm must provide the written
14commitment under this subsection to the department at the
15time of application.

16(c) Combination of tax credits.--

17(1) A business firm may receive tax credits from the
18Department of Revenue in any tax year for any combination of
19contributions under subsection (a) or (b).

20(2) In no case may a business firm receive tax credits
21in any tax year:

22(i) in excess of $400,000 for contributions under
23subsections (a) and (b) made during fiscal year 2012-
242013; or

25(ii) in excess of $750,000 for contributions under
26subsections (a) and (b) made during fiscal year 2013-2014
27or any fiscal year thereafter.

28(d) Pass-through entity.--

29(1) If a pass-through entity does not intend to use all
30approved tax credits under this section, it may elect in

1writing to transfer all or a portion of the credit to
2shareholders, members or partners in proportion to the share
3of the entity's distributive income to which the shareholder,
4member or partner is entitled for use in the taxable year in
5which the contribution is made or in the taxable year
6immediately following the year in which the contribution is
7made. The election shall designate the year in which the
8transferred credits are to be used and shall be made
9according to procedures established by the Department of
10Revenue.

11(2) A pass-through entity and a shareholder, member or
12partner of a pass-through entity shall not claim the credit
13under this section for the same contribution.

14(3) The shareholder, member or partner may not carry
15forward, carry back, obtain a refund of or sell or assign the
16credit.

17(e) Restriction on applicability of credits.--No credits
18granted under this section shall be applied against any tax
19withheld by an employer from an employee under Article III.

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

21(1) Except as provided in paragraph (2), the department
22may accept applications for tax credits available during a
23fiscal year no earlier than July 1 of each fiscal year.

24(2) The application of any business firm for tax credits
25available during a fiscal year as part of the second year of
26a two-year commitment or as a renewal of a two-year
27commitment that was fulfilled in the previous fiscal year may
28be accepted no earlier than May 15 preceding the fiscal year.

29Section 1706-G.1. Tax credit limitations.

30(a) Amount.--The total aggregate amount of all tax credits

1approved shall not exceed $50,000,000 in a fiscal year.

2(b) Activities.--No tax credit shall be approved for
3activities that are a part of a business firm's normal course of
4business.

5(c) Tax liability.--

6(1) Except as provided in paragraph (2), a tax credit
7granted for any one taxable year may not exceed the tax
8liability of a business firm.

9(2) In the case of a credit granted to a pass-through
10entity which elects to transfer the credit according to
11section 1705-G.1(d), a tax credit granted for any one taxable
12year and transferred to a shareholder, member or partner may
13not exceed the tax liability of the shareholder, member or
14partner.

15(d) Use.--A tax credit not used by the applicant in the
16taxable year the contribution was made or in the year designated
17by the shareholder, member or partner to whom the credit was
18transferred under section 1705-G.1(d) may not be carried forward
19or carried back and is not refundable or transferable.

20(e) Nontaxable income.--A scholarship received by an
21eligible student shall not be considered to be taxable income
22for the purposes of Article III.

23Section 1707-G.1. Tax credit lists.

24The Department of Revenue shall provide a list of all
25scholarship organizations receiving contributions from business
26firms granted a tax credit under this article to the General
27Assembly by June 30 of each year.]

28Section 10. Section 1708-G.1 of the act, amended or added
29July 2, 2012 (P.L.751, No.85) and July 9, 2013 (P.L.270, No.52),
30is repealed.

1[Section 1708-G.1. Scholarships.

2(a) Notice.--By August 15, 2012, and by February 1 of each
3year thereafter, the department shall provide all scholarship
4organizations with a list of the low-achieving schools located
5within each school district.

6(b) Award.--A scholarship organization may award a
7scholarship to an applicant who resides within the attendance
8boundary of a low-achieving school to attend a participating
9public school or a participating nonpublic school selected by
10the parent of the applicant. If an applicant who received an 
11educational opportunity scholarship under this article for the 
12prior school year resides within the attendance boundary of a 
13school that was removed from the list of low-achieving schools 
14provided by the department under subsection (a), the applicant 
15may receive an educational opportunity scholarship. The 
16scholarship may be for each year of enrollment in a 
17participating public school or participating nonpublic school 
18for up to the lesser of five years or until completion of grade 
1912 provided the applicant otherwise remains eligible. In
20awarding scholarships, a scholarship organization shall give
21preference to any of the following:

22(1) An applicant who received a scholarship for the
23prior school year.

24(2) An applicant of a household with a household income
25that does not exceed 185% of the Federal poverty level for
26the school year preceding the school year for which the
27application is being made.

28(3) 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 and who resides within any of the
2following:

3(i) a first class school district;

4(ii) a school district with an average daily
5membership greater than 7,500 and that receives an
6advance of its basic education subsidy at any time; or

7(iii) a school district that receives an advance of
8its basic education subsidy at any time and is either
9subject to a declaration of financial distress under
10section 691 of the Public School Code of 1949 or engaged
11in litigation against the Commonwealth in which the
12school district seeks financial assistance from the
13Commonwealth to allow the school district to continue to
14operate.

15(c) Home schooling.--A scholarship organization shall not
16award a scholarship to an applicant for enrollment in a home
17education program under section 1327.1 of the Public School Code
18of 1949.

19(d) Funding.--The aggregate amount of scholarships shall not
20exceed the aggregate amount of contributions made by business
21firms to the scholarship organization.

22(e) Amount.--

23(1) The maximum amount of a scholarship awarded to an
24applicant without a disability shall be $8,500.

25(2) The maximum amount of a scholarship awarded to an
26applicant with a disability shall be $15,000.

27(3) In no case shall the combined amount of the
28scholarship awarded to a recipient and any additional
29financial assistance provided to the recipient exceed the
30tuition rate and school-related fees for the participating

1public school or participating nonpublic school that the
2recipient will attend.

3(f) Taxation.--A scholarship shall not be considered taxable
4income for purposes of Article III or a local taxing ordinance.

5(g) Financial assistance.--A scholarship shall not
6constitute financial assistance or an appropriation to the
7participating public school or the participating nonpublic
8school attended by a recipient.]

9Section 11. Sections 1709-G.1, 1710-G.1, 1711-G.1 and 1712-
10G.1 of the act, added July 2, 2012 (P.L.751, No.85), are
11repealed:

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

13(a) List of low-achieving schools.--By September 1, 2012,
14and by February 1 of each year thereafter, the Department of
15Education shall publish on its publicly accessible Internet
16website and in the Pennsylvania Bulletin a list of the low-
17achieving schools for the following school year.

18(b) Notice.--By August 1, 2012, and by February 1 of each
19year thereafter, the Department of Education shall notify every
20school district identified as having at least one low-achieving
21school of its designation and shall furnish the school district
22with a list of the low-achieving schools located within the
23school district.

24(c) Publication.--Within 15 days of receipt of a
25notification under subsection (b), a school district shall post
26on its publicly accessible Internet website notice of all of the
27following:

28(1) A description of the program.

29(2) Instructions for applying for a scholarship.

30(3) A list of schools in the school district that have

1been designated by the Department of Education as low-
2achieving schools.

3(4) Notice that a parent must contact directly a school
4district of a participating public school or a participating
5nonpublic school if the parent seeks to enroll the student in
6the program.

7(d) Notification to parents.--

8(1) Within 15 days of receipt of a notification under
9subsection (b), a school district shall notify the parents of
10each student who is currently attending or residing within
11the attendance boundary of a low-achieving school during the
12school year of the school's designation.

13(2) Upon registration of a kindergarten student, a
14school district shall notify the parents of the kindergarten
15student that the student will be assigned to a low-achieving
16school during the school year of the school's designation.

17(3) The notice shall be in a form provided by the
18Department of Education and shall provide the following
19information regarding the program:

20(i) A description of the program.

21(ii) Instructions for obtaining information about
22applying for a scholarship under the program.

23(iii) Notice of the parent's responsibilities with
24regard to applying to a school district of a
25participating public school or a participating nonpublic
26school if the parent seeks to enroll the student in the
27program.

28(e) Average daily membership.--

29(1) Notwithstanding any other provision of law to the
30contrary, a recipient who was enrolled in the recipient's

1resident school district or in a charter school, regional
2charter school or cyber charter school when the recipient
3first received a scholarship shall continue to be counted in
4the average daily membership of the school district for a
5period of one year after enrolling in a participating public
6school or a participating nonpublic school.

7(2) During the year referenced in paragraph (1) and each
8school year thereafter, a school district of a participating
9public school in which the recipient is enrolled shall not
10include the recipient in the school district's average daily
11membership.

12Section 1710-G.1. School participation in program.

13(a) Election.--

14(1) By August 15, 2012, and by February 15 of each year
15thereafter, a nonpublic school may elect to participate in
16the program for the following school year.

17(2) By August 15, 2012, and by February 15 of each year
18thereafter, a school district may elect to participate in the
19program for the following school year.

20(b) Notice.--

21(1) A school district or nonpublic school that elects to
22participate under subsection (a) must notify the Department
23of Education of its intent to participate.

24(2) For a school district, the notice under paragraph
25(1) must be submitted on a form developed by the Department
26of Education and shall specify all of the following:

27(i) Each school within the school district which the
28school district intends to make a participating public
29school.

30(ii) The amount of tuition and school-related fees

1attributable to each available seat. The amount under
2this subparagraph shall not exceed the amount calculated
3under section 2561 of the Public School Code of 1949.

4(3) For a nonpublic school, the notice under paragraph
5(1) must be submitted on a form developed by the Department
6of Education and shall specify the amount of tuition and
7school-related fees attributable to an available seat.

8(c) Tuition rates.--

9(1) No school district of a participating public school
10or participating nonpublic school may charge a recipient a
11higher tuition rate or school-related fee than the
12participating public school or participating nonpublic school
13would have charged to a similarly situated student who is not
14receiving a scholarship.

15(2) Notwithstanding the provisions of section 2561 of
16the Public School Code of 1949, a school district of a
17participating public school may charge a recipient a tuition
18rate that is lower than that charged to students who are not
19recipients of scholarships.

20(d) Participating public school criteria.--The following
21criteria apply to a participating public school:

22(1) Except as otherwise provided in this article, a
23school district shall enroll students in a participating
24public school on a lottery basis from a pool of recipients
25who meet the application deadline set by the Department of
26Education until the participating public school fills its
27available seats. The pool may not include a recipient who:

28(i) has been expelled or is in the process of being
29expelled under section 1317.2 or 1318 of the Public
30School Code of 1949 and applicable regulations of the

1State Board of Education; or

2(ii) has been recruited by the school district or
3its representatives for athletic purposes.

4(2) The enrollment of recipients may not place the
5school district in violation of a valid and binding
6desegregation order.

7(3) Priority shall be given to:

8(i) An existing recipient.

9(ii) A recipient who is a sibling of a student
10currently enrolled in the school district.

11(e) Participating nonpublic school criteria.--The following
12criteria apply to a participating nonpublic school:

13(1) The participating nonpublic school may not
14discriminate on a basis which is illegal under Federal or
15State laws applicable to nonpublic schools.

16(2) The participating nonpublic school shall comply with
17section 1521 of the Public School Code of 1949.

18(3) The participating nonpublic school or its
19representatives may not recruit a student for athletic
20purposes.

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

22(1) Prior to enrollment of a recipient, a school
23district of a participating public school or a participating
24nonpublic school shall inform the parent of a recipient of
25any and all rules, policies and procedures of the
26participating public school or participating nonpublic
27school, including any academic policies, disciplinary rules
28and administrative procedures of the participating public
29school or participating nonpublic school.

30(2) Enrollment of a recipient in a participating public

1school or participating nonpublic school shall constitute
2acceptance of any rules, policies and procedures of the
3participating public school or participating nonpublic
4school.

5(g) Transportation.--

6(1) Transportation of recipients shall be provided under
7section 1361 of the Public School Code of 1949.

8(2) Reimbursement shall be as follows:

9(i) Transportation of a recipient attending a
10participating public school shall be subject to
11reimbursement under section 2541 of the Public School
12Code of 1949.

13(ii) Transportation of a recipient attending a
14participating nonpublic school shall be subject to
15reimbursement under sections 2509.3 and 2541 of the
16Public School Code of 1949.

17(h) Construction.--Nothing in this article shall be
18construed to:

19(1) Prohibit a participating nonpublic school from
20limiting admission to a particular grade level, a single
21gender or areas of concentration of the participating
22nonpublic school, including mathematics, science and the
23arts.

24(2) Authorize the Commonwealth or any of its agencies or
25officers or political subdivisions to impose any additional
26requirements on a participating nonpublic school which are
27not otherwise authorized under the laws of this Commonwealth
28or to require a participating nonpublic school to enroll a
29recipient if the participating nonpublic school does not
30offer appropriate programs or is not structured or equipped

1with the necessary facilities to meet the special needs of
2the recipient or does not offer a particular program
3requested.

4Section 1711-G.1. Tuition grants by school districts.

5(a) General rule.--The board of school directors of a school
6district may use funds received from the Commonwealth for
7educational purposes to establish a program of tuition grants to
8provide for the education of students who reside within the
9district and attend or will attend a public or nonpublic school
10on a tuition-paying basis.

11(b) Nonpublic school grant amount.--For students who attend
12or will attend a nonpublic school, the grant amount for each
13student shall not exceed the amount of the per pupil State
14subsidy for basic education of the school district of residence.

15(c) Average daily membership.--

16(1) A student who receives a tuition grant under this
17section shall be included in the average daily membership for
18purposes of determining the school district of residence's
19basic education funding.

20(2) A student who receives a grant under this section to
21attend a public school outside the school district awarding
22the tuition grant shall not be included in the average daily
23membership of the school district the student attends.

24(d) Guidelines.--

25(1) The board of school directors of a school district
26shall prepare guidelines establishing an application form and
27approval process, standards for verification as to the
28accuracy of application information, confirmation of
29attendance by a student who receives a tuition grant,
30restrictive endorsement of grant checks by parents to the

1school chosen by the parents, pro rata refunds of grants for
2students who withdraw during the school year, repayment of
3refunded grants to the school district and reasonable
4deadline dates for submission of grant applications.

5(2) The board of school directors of a school shall
6announce the award of grants no later than August 1 of the
7school year in which the grants will be utilized.

8(3) Upon receipt of written confirmation of enrollment
9from the student's school of choice, grants shall be paid to
10the parents of a student by a check that may only be endorsed
11to the selected school.

12(4) In the event a student is no longer enrolled prior
13to the completion of the school term, the school shall send
14written notice thereof to the school district.

15(e) Nontaxable.--Grants awarded to students under this
16section shall not be considered taxable income for purposes of
17any local taxing ordinance or for purposes of Article III, nor
18shall such grants constitute financial assistance or
19appropriations to the school attended by the student.

20(f) Construction.--Nothing in this section shall be
21construed to empower the Commonwealth or any school district or
22any of their agencies or officers to:

23(1) prescribe the course content or admissions criteria
24for any religiously affiliated school;

25(2) compel any private school to accept or enroll a
26student;

27(3) impose any additional requirements on any private
28school that are not otherwise authorized; or

29(4) require any school to accept or retain a student if
30the school does not offer programs or is not structured or

1equipped with the necessary facilities to meet the special
2needs of the student or does not offer a particular program
3requested.

4Section 1712-G.1. Original jurisdiction.

5The Pennsylvania Supreme Court shall have exclusive and
6original jurisdiction to hear any challenge or to render a
7declaratory judgment concerning the constitutionality of this
8article. The Pennsylvania Supreme Court may take such action as
9it deems appropriate, consistent with the Pennsylvania Supreme
10Court's retaining jurisdiction over such a matter, to find facts
11or to expedite a final judgment in connection with such a
12challenge or request for declaratory relief.]

13Section 12. The <-definition of "contracting authority" 
<-14definitions of "contracting authority" and "pilot zone" in 
15section 1802-C of the act, added July 9, 2013 (P.L.270, No.52), 
<-16is are amended to read:

17Section 1802-C. Definitions.

18The following words and phrases when used in this article
19shall have the meanings given to them in this section unless the
20context clearly indicates otherwise:

21* * *

22"Contracting authority." An authority established under 53
23Pa.C.S. Ch. 56 (relating to municipal authorities) by a city, 
24borough, township or home rule county for the purpose of:

25(1) designating zones; and

26(2) engaging in the construction, including related site
27preparation and infrastructure, reconstruction or renovation
28of facilities.

29* * *

<-30"Pilot zone." An area of not more than 130 acres designated

1by the contracting authority following application and approval
2by the Department of Community and Economic Development, the
3office and the department which will provide economic
4development and job creation within a township or borough, with
5a population of at least 7,000 based on the most recent Federal
6decennial census.

7* * *

8Section 12.1. Section 1803-C of the act, added July 9, 2013 
9(P.L.270, No.52), is amended to read:

10Section 1803-C. Establishment of contracting authority.

11(a) [Cities] Authorization.--Except as set forth in
12subsection (b), a city, borough or township may establish a
13contracting authority to designate a zone under this article.

14(b) Distressed cities.--A city that is a distressed city
15under the act of July 10, 1987 (P.L.246, No.47), known as the
16Municipalities Financial Recovery Act, and is located in a home
17rule county may not establish a contracting authority under this
18article.

19(c) Counties.--The home rule county where a distressed city
20under the Municipalities Financial Recovery Act is located may
21establish a contracting authority to designate a zone under this
22article within the distressed city.

23Section 13. This act shall take effect immediately.