PRINTER'S NO. 1546
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1188
Session of
2015
INTRODUCED BY ROEBUCK, D. COSTA, HARHAI, HARKINS, KINSEY,
LONGIETTI, McNEILL, MURT, SCHREIBER, SCHWEYER, THOMAS, TRUITT
AND YOUNGBLOOD, MAY 12, 2015
REFERRED TO COMMITTEE ON EDUCATION, MAY 12, 2015
AN ACT
Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
act relating to tax reform and State taxation by codifying
and enumerating certain subjects of taxation and imposing
taxes thereon; providing procedures for the payment,
collection, administration and enforcement thereof; providing
for tax credits in certain cases; conferring powers and
imposing duties upon the Department of Revenue, certain
employers, fiduciaries, individuals, persons, corporations
and other entities; prescribing crimes, offenses and
penalties," providing for an educational improvement
opportunity scholarship tax credit.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
the Tax Reform Code of 1971, is amended by adding an article to
read:
ARTICLE XVII-F.1
EDUCATIONAL IMPROVEMENT OPPORTUNITY SCHOLARSHIP TAX CREDIT
Section 1701-F.1. Scope of article.
This article establishes the educational improvement
opportunity scholarship tax credit.
Section 1702-F.1. Definitions.
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The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Assessment." The Pennsylvania System of School Assessment
test, the Keystone Exam, an equivalent local assessment or
another test established by the State Board of Education to meet
the requirements of section 2603-B(d)(10)(i) of the Public
School Code of 1949 and required under the No Child Left Behind
Act of 2001 (Public Law 107-110, 115 Stat. 1425) or its
successor statute or any other test required to achieve other
standards established by the Department of Education for the
public school or school district under 22 Pa. Code § 403.3
(relating to single accountability system).
"Business firm." An entity authorized to do business in this
Commonwealth and subject to a tax under Article XVI of the act
of May 17, 1921 (P.L.682, No.284), known as The Insurance
Company Law of 1921, or taxes imposed under Article III, IV, VI,
VII, VIII, IX or XV. The term includes a pass-through entity.
"Contribution." A donation of cash, personal property or
services, the value of which is the net cost of the donation to
the donor or the pro rata hourly wage, including benefits, of
the individual performing the services.
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Educational improvement initiative." An initiative
implemented by a school district under section 1710-F.1.
"Educational improvement organization." A nonprofit entity
which:
(1) is exempt from Federal taxation under section 501(c)
(3) of the Internal Revenue Code of 1986 (Public Law 99-514,
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26 U.S.C. § 1 et seq.); and
(2) contributes at least 80% of its annual receipts as
grants to a public school for educational improvement
initiatives.
For purposes of this definition, a nonprofit entity
"contributes" its annual cash receipts when it expends or
otherwise irrevocably encumbers those funds for expenditure
during the then current fiscal year of the nonprofit entity or
during the next succeeding fiscal year of the nonprofit entity.
A nonprofit entity shall include a school district foundation
and public school foundation.
"Low-achieving school." A public school that ranked in the
lowest 15% of its designation as an elementary school or a
secondary school based on combined mathematics and reading
scores from the annual assessment administered in the previous
school year and for which the Department of Education has posted
results on its publicly accessible Internet website. The term
does not include a charter school, cyber charter school or area
vocational-technical school.
"Pass-through entity." A partnership as defined in section
301(n.0), a single-member limited liability company treated as a
disregarded entity for Federal income tax purposes or a
Pennsylvania S corporation as defined in section 301(n.1).
"Program." The Educational Improvement Opportunity
Scholarship Tax Credit Program established under this article.
"Public School Code of 1949." The act of March 10, 1949
(P.L.30, No.14), known as the Public School Code of 1949.
"Tax credit." The educational improvement opportunity
scholarship tax credit provided under this article.
Section 1703-F.1. Qualification and application.
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(a) Establishment.–-The Educational Improvement Opportunity
Tax Credit Scholarship Program is established. The program shall
provide tax credits to entities that provide contributions to
educational improvement organizations. Contributions to the
educational improvement organizations shall be used to provide
grants to school districts with low-achieving schools to improve
students' academic performance through educational improvement
initiatives under section 1710-F.1.
(b) Information.--In order to qualify under this article, an
educational improvement organization must submit information to
the department that enables the department to confirm that the
educational improvement organization is exempt from taxation
under section 501(c)(3) of the Internal Revenue Code of 1986
(Public Law 99-514, 26 U.S.C. § 1 et seq.).
(c) Application.--An application submitted by an educational
improvement organization must certify to the department that the
organization is eligible to participate in the program. The
application must include a description of the educational
improvement initiatives under section 1710-F.1 that are being
funded by the educational improvement organization. The
department shall prescribe the form of the application.
(d) Annual certification of eligibility.--By August 15,
2015, and by February 15, 2016, and each February 15 thereafter,
an educational improvement organization must certify to the
department that the organization is eligible to participate in
the program.
(e) Report.--
(1) An educational improvement organization must agree
to report the following information on a form provided by the
department by September 1, 2016, and each September 1
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thereafter:
(i) The names of the school districts and the low-
achieving schools that received grants and the total
amount of the grants made to school districts during the
immediately preceding school year.
(ii) A description of how each grant was utilized
during the immediately preceding school year and a
description of any demonstrated or expected improvements
in academic performance of students.
(iii) Where the educational improvement organization
collects information on a county-by-county basis, the
total number and the total amount of grants made during
the immediately preceding school year for initiatives at
public schools in each county in which the educational
improvement organization made grants.
(iv) The organization's Federal Form 990 or other
Federal form indicating the tax status of the
organization for Federal tax purposes, if any, and a copy
of a compilation, review or audit of the organization's
financial statements conducted by a certified public
accounting firm.
(2) The information required under paragraph (1) shall
be submitted on a form provided by the department. No later
than September 1, 2015, and May 1 of each year thereafter,
the department shall annually distribute such sample forms,
together with the forms on which the reports are required to
be made, to each listed educational improvement organization.
(3) The department may not require any other information
to be provided by educational improvement organizations,
except as expressly authorized in this article.
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(f) Notification.--The department shall notify the
educational improvement organization that the organization meets
the requirements of this article for that fiscal year no later
than 60 days after the organization has submitted the
information required under this section.
(g) Publication.--The department shall annually publish a
list of each educational improvement organization qualified
under this section in the Pennsylvania Bulletin. The list shall
also be posted and updated as necessary on the department's
publicly accessible Internet website.
Section 1704-F.1. Tax credit application.
(a) Educational improvement organization.--A business firm
shall apply to the department for a tax credit under section
1705-F.1. A business firm shall receive a tax credit if the
educational improvement organization that receives the
contribution appears on the list published under section 1703-
F.1(g).
(b) Availability of tax credits.--Tax credits shall be made
available by the department on a first-come, first-served basis
within the limitation established under section 1706-F.1(a).
(c) Contributions.--A contribution by a business firm to an
educational improvement organization shall be made no later than
60 days following the approval of an application under
subsection (a).
Section 1705-F.1. Tax credit.
(a) Educational improvement organizations.--
(1) In accordance with section 1706-F.1(a), the
Department of Revenue shall grant a tax credit against any
tax due under Article XVI of the act of May 17, 1921
(P.L.682, No.284), known as The Insurance Company Law of
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1921, or under Article III, IV, VI, VII, VIII, IX or XV to a
business firm providing proof of a contribution to an
educational improvement organization in the taxable year in
which the contribution is made, which shall not exceed 75% of
the total amount contributed during the taxable year by the
business firm.
(2) For the fiscal year 2015-2016 and each fiscal year
thereafter, the tax credit shall not exceed $750,000 annually
per business firm for contributions made to educational
improvement organizations.
(b) Additional amount.--
(1) The Department of Revenue shall grant a tax credit
of up to 90% of the total amount contributed during the
taxable year if the business firm provides a written
commitment to provide the educational improvement
organization with the same amount of contribution for two
consecutive tax years.
(2) The business firm must provide the written
commitment under this subsection to the department at the
time of application.
(c) Combination of tax credits.--
(1) A business firm may receive tax credits from the
Department of Revenue in any tax year for any combination of
contributions under subsection (a) or (b).
(2) In no case may a business firm receive tax credits
in any tax year in excess of $750,000 for contributions under
subsections (a) and (b) made during fiscal year 2015-2016 or
any fiscal year thereafter.
(d) Pass-through entity.--
(1) If a pass-through entity does not intend to use all
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approved tax credits under this section, it may elect in
writing to transfer all or a portion of the credit to
shareholders, members or partners in proportion to the share
of the entity's distributive income to which the shareholder,
member or partner is entitled for use in the taxable year in
which the contribution is made or in the taxable year
immediately following the year in which the contribution is
made. The election shall designate the year in which the
transferred credits are to be used and shall be made
according to procedures established by the Department of
Revenue.
(2) A pass-through entity and a shareholder, member or
partner of a pass-through entity shall not claim the credit
under this section for the same contribution.
(3) The shareholder, member or partner may not carry
forward, carry back, obtain a refund of or sell or assign the
credit.
(e) Restriction on applicability of credits.--No credits
granted under this section shall be applied against any tax
withheld by an employer from an employee under Article III.
(f) Time of application for credits.--
(1) Except as provided in paragraph (2), the department
may accept applications for tax credits available during a
fiscal year no earlier than July 1 of each fiscal year.
(2) The application of any business firm for tax credits
available during a fiscal year as part of the second year of
a two-year commitment or as a renewal of a two-year
commitment that was fulfilled in the previous fiscal year may
be accepted no earlier than May 15 preceding the fiscal year.
Section 1706-F.1. Tax credit limitations.
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(a) Amount.--The total aggregate amount of all tax credits
approved shall not exceed $50,000,000 in a fiscal year.
(b) Activities.--No tax credit shall be approved for
activities that are part of a business firm's normal course of
business.
(c) Tax liability.--
(1) Except as provided in paragraph (2), a tax credit
granted for any one taxable year may not exceed the tax
liability of a business firm.
(2) In the case of a credit granted to a pass-through
entity which elects to transfer the credit according to
section 1705-F.1(d), a tax credit granted for any one taxable
year and transferred to a shareholder, member or partner may
not exceed the tax liability of the shareholder, member or
partner.
(d) Use.--A tax credit not used by the applicant in the
taxable year the contribution was made or in the year designated
by the shareholder, member or partner to whom the credit was
transferred under section 1705-F.1(d) may not be carried forward
or carried back and is not refundable or transferable.
Section 1707-F.1. Tax credit lists.
The Department of Revenue shall provide a list of all
educational improvement organizations receiving contributions
from business firms granted a tax credit under this article to
the General Assembly by June 30 of each year.
Section 1708-F.1. Department notice.
By August 15, 2015, and by February 1 of each year
thereafter, the department shall provide all educational
improvement organizations with a list of the low-achieving
schools located within each school district.
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Section 1709-F.1. List of low-achieving schools.
(a) List of low-achieving schools.--By September 1, 2015,
and by February 1 of each year thereafter, the Department of
Education shall publish on its publicly accessible Internet
website and in the Pennsylvania Bulletin a list of the low-
achieving schools for the following school year.
(b) Notice.--By August 1, 2015, and by February 1 of each
year thereafter, the Department of Education shall notify every
school district identified as having at least one low-achieving
school of its designation and shall furnish the school district
with a list of the low-achieving schools located within the
school district.
Section 1710-F.1. Educational improvement initiatives.
The following initiatives designed by a school district to
improve the academic performance of students in a low-achieving
school in meeting State academic standards are eligible for
grant funding under this article:
(1) Targeted tutoring in reading and mathematics
provided during the normal school day to increase student
academic achievement on State assessments.
(2) Targeted interventions, both after-school programs
and summer-school programs, that include tutoring by
Department of Education-approved providers, mentoring and
family support for at-risk students addressing truancy,
parenting skills and intensive social services.
(3) Community partnerships and wraparound programs that
provide health and human services to students and their
families, which may include trauma-informed education and
positive behavioral support.
(4) Other programs or activities, as approved by the
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Department of Education, which the board of school directors
of a school district determines are essential to improving
academic performance of students in a low-achieving school.
Section 2. This act shall take effect immediately.
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