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PRINTER'S NO. 516
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
522
Session of
2019
INTRODUCED BY TOBASH, B. MILLER, SCHLOSSBERG, MURT, LONGIETTI,
QUINN, KAUFFMAN, FEE, KAUFER, HICKERNELL, IRVIN, BERNSTINE,
HEFFLEY, SIMMONS, McNEILL, PICKETT, DUSH, JONES, JOZWIAK,
FREEMAN, STAATS, MILLARD, PYLE, GROVE, BARRAR, STRUZZI,
OWLETT, SAYLOR, ZIMMERMAN, DeLUCA, ECKER, RYAN, GOODMAN,
SOLOMON, HERSHEY, HELM, MIZGORSKI AND KLUNK,
FEBRUARY 19, 2019
REFERRED TO COMMITTEE ON EDUCATION, FEBRUARY 19, 2019
AN ACT
Amending the act of March 10, 1949 (P.L.30, No.14), entitled "An
act relating to the public school system, including certain
provisions applicable as well to private and parochial
schools; amending, revising, consolidating and changing the
laws relating thereto," providing for the Career and
Technical Education Investment Incentive Program.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The act of March 10, 1949 (P.L.30, No.14), known
as the Public School Code of 1949, is amended by adding an
article to read:
ARTICLE XX-I
CAREER AND TECHNICAL EDUCATION
INVESTMENT INCENTIVE PROGRAM
Section 2001-I. Scope of article.
This article relates to the Career and Technical Education
Investment Incentive Program.
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Section 2002-I. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Applicable tax." The liability for taxes imposed under
Articles III, IV, VI, VII, VIII, IX, XV or XX of the Tax Reform
Code of 1971 or 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. The term shall not include a tax withheld by an employer
from an employee under Article III of the Tax Reform Code of
1971.
"Area career and technical education school." A specialized
public secondary school established under subarticle (c) of
Article XVIII which is used exclusively or principally for the
provision of career and technical education programs to
individuals preparing to enter the labor market or pursue
postsecondary education.
"Business firm." An entity authorized to do business in this
Commonwealth and subject to taxes imposed under Article III, IV,
VI, VII, VIII, IX, XV or XX of the Tax Reform Code of 1971 or a
tax under Article XVI of The Insurance Company Law of 1921. The
term includes a pass-through entity, including a pass-through
entity whose purpose is the making of contributions under this
article and whose shareholders, partners or members are composed
of owners or employees of other business firms.
"Career and technical education partnership organization." A
nonprofit entity which meets all of the following:
(1) Is exempt from Federal taxation under section 501(c)
(3) of the Internal Revenue Code of 1986 (Public Law 99-514,
26 U.S.C. § 501(c)(3)).
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(2) Provides support or expands access to career and
technical education programs.
(3) Contributes based on one of the following:
(i) At least 80% of its annual cash receipts as
contributions to a participating school for program-
related costs. For purposes of this subparagraph, 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 also include a school district foundation, public
school foundation, charter school foundation or area
career and technical education school foundation.
(ii) At least 80% of its annual cash receipts to an
enrollment expansion program. For purposes of this
subparagraph, a nonprofit entity "contributes" its annual
cash receipts to a scholarship program when it expends or
otherwise irrevocably encumbers those funds for
distribution during the then-current fiscal year of the
nonprofit entity or during the next succeeding fiscal
year of the nonprofit entity.
(iii) At least 80% of its annual cash receipts to a
combination of expenditures under subparagraphs (i) and
(ii).
"Career and technical education program."
(1) A vocational education program approved by the
Department of Education under 22 Pa. Code Ch. 339 (relating
to vocational education); and
(2) A program that provides educational activities which
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meet all of the following:
(i) Offer a sequence of courses that:
(A) Provide individuals with content aligned
with academic standards and technical knowledge and
skills needed to prepare for further education and
careers in a high-priority occupation.
(B) Provide technical skill proficiency, an
industry-recognized credential, a certificate or an
associate degree.
(ii) Include competency-based applied learning that
contributes to the academic knowledge, higher-order
reasoning and problem-solving skills, work attitudes,
general employability skills, technical skills,
occupation-specific skills and knowledge of all aspects
of an industry, including entrepreneurship, of an
individual.
"Charter school." As defined in section 1703-A.
"Contribution." The donation of any of the following:
(1) Cash to a career and technical education partnership
organization to be used to pay program-related costs.
(2) Cash to a career and technical education partnership
organization to be used for an enrollment expansion program.
(3) Personal property, including equipment and supplies,
as approved by the participating school.
(4) 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 service, as
approved by the participating school.
"Cyber charter school." As defined in section 1703-A.
"Department." The Department of Community and Economic
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Development of the Commonwealth.
"Eligible student." An individual who:
(1) Is of school age, as defined in section 2002-B.
(2) Is enrolled in a school entity.
(3) Intends to enroll in an age-appropriate career and
technical education program.
(4) Is a current resident of this Commonwealth.
"Enrollment expansion program." A program established to pay
the fees associated with increasing the enrollment of eligible
students in a career and technical education program at
participating schools.
"High-priority occupation." A profession that:
(1) Is high-wage and high-skill for which there is
excess employer demand as identified in the Department of
Labor and Industry's current year's high-priority or in-
demand occupations list or the State System of Higher
Education's workforce needs assessment.
(2) Requires a credential, certification, licensing,
postsecondary training, associate's degree, bachelor's
degree, master's degree or doctoral or first professional
degree.
"Participating school." A public school, area career and
technical education school, charter school or regional charter
school that chooses to participate in the program.
"Pass-through entity." A partnership as defined in section
301(n.0) of the Tax Reform Code of 1971, a single-member limited
liability company treated as a disregarded entity for Federal
income tax purposes or a Pennsylvania S corporation as defined
in section 301(n.1) of the Tax Reform Code of 1971. The term
includes a pass-through entity that owns an interest in a pass-
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through entity.
"Program." The Career and Technical Education Investment
Incentive Program established under this article.
"Program-related costs." Cost and fees for rental or
purchase of equipment, materials or supplies used in instructing
a career and technical education program at a participating
school.
"Public school." A public elementary school or a public
secondary school at which a resident of this Commonwealth may
legally fulfill the compulsory school attendance requirements of
this act and which meets the applicable requirements of Title VI
of the Civil Rights Act of 1964.
"Regional charter school." As defined in section 1703-A.
"School entity." A public school, area career and technical
education school, charter school, regional charter school or
cyber charter school.
"Secondary school." A school with an eleventh grade.
"Tax Reform Code of 1971." The act of March 4, 1971 (P.L.6,
No.2), known as the Tax Reform Code of 1971.
Section 2003-I. Declaration of policy.
The Commonwealth recognizes that businesses need educated and
trained workers. It is the intent of the General Assembly to
foster and encourage private investment in career and technical
education programs and the repair, upkeep, replacement and
upgrading of industry-grade materials and instructional
equipment. Furthermore, it is the intent of the General Assembly
that private investment will open doors of opportunity for
students and enable them to develop the knowledge and skills for
high-demand careers under this article.
Section 2004-I. School participation in program.
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(a) Election to participate.--By October 1, 2019, and each
January 1 thereafter, a school entity other than a cyber charter
school may elect to participate in the program under this
article for the following school year.
(b) Notice.--A school entity that elects to participate
under subsection (a) shall notify the department of the intent
to participate on a form developed by the department. The notice
under this subsection shall specify all of the following:
(1) That the school entity intends to be a participating
school.
(2) The amount of program-related costs attributable to
each eligible student. The amount under this paragraph shall
not exceed the amount that would have been attributed to a
student outside of the enrollment expansion program.
(c) Participating school responsibilities.--The following
responsibilities shall apply to a participating school:
(1) Prior to enrollment of a student, a participating
school shall inform the parent of a student of the rules,
policies and procedures of the participating school,
including any academic policies, disciplinary rules or
administrative procedures. Enrollment of a student in a
participating school shall constitute acceptance of any
rules, policies or procedures of the participating school.
(2) A participating school may enroll an eligible
student in a career and technical education program until the
participating school's available seats are filled.
(d) Transportation.--
(1) Transportation of students of school age, as defined
in section 2002-B, shall be provided under section 1361.
(2) Reimbursement shall be as follows:
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(i) Transportation of a student of school age, as
defined in section 2002-B, attending a participating
public school shall be subject to reimbursement under
section 2541.
(ii) Transportation of a student of school age, as
defined in section 2002-B, attending a participating area
career and technical education school, participating
charter school or participating regional charter school
shall be subject to reimbursement under section 2541.
(3) A participating school may provide transportation to
an eligible cyber charter school student. Transportation
shall be subject to reimbursement under section 2541.
Section 2005-I. Establishment and qualification by
organizations.
(a) Qualification.--
(1) In order to qualify for contributions under this
article, a career and technical education partnership
organization must certify to the department that the
organization is eligible to participate in the program.
(2) A career and technical education partnership
organization must agree to annually report by October 1,
2019, and each September 1 thereafter, on a form provided by
the department, the following information:
(i) The 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. § 501(c)(3)) or is formed
as a nonprofit corporation under the laws of this
Commonwealth.
(ii) The total number of eligible students and the
total amount of contributions awarded per participating
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school during the immediately preceding school year
through an enrollment expansion program.
(iii) Where the career and technical education
partnership organization collects information on a
county-by-county basis, the total number of eligible
students and the total amount of contributions awarded
during the immediately preceding school year through an
enrollment expansion program to residents of each county.
(iv) The names and descriptions of career and
technical education programs and the total amount of the
contributions made to those programs during the
immediately preceding school year.
(v) The name of each participating school that works
with businesses that offer internships, apprenticeships
and mentoring programs.
(vi) The name of each participating school where
career and technical education programs that received
contributions were implemented as a result of the
contribution during the immediately preceding school
year.
(vii) Where the career and technical education
partnership organization collects information on a
county-by-county basis, the total number and the total
amount of contributions made during the immediately
preceding school year for career and technical education
programs at participating schools in each county in which
the contributions were made.
(viii) The number of credentials earned, including,
but not limited to, a certificate, industry certification
or State license, and the industry or occupation to which
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the credential is linked to this program during the
immediately preceding school year.
(ix) The number of students employed in high-
priority occupations as a result of participating in the
program.
(x) The number of students who secured internships
or apprenticeships for high-priority occupations.
(xi) The organization's Federal Form 990 or other
Federal or State form indicating the tax status of the
organization for Federal and State 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, including an itemized
list of expenditures.
(3) A career and technical education partnership
organization shall provide information under paragraph (2) to
the best of the career and technical education partnership
organization's ability.
(4) The department shall provide forms to interested
career and technical education partnership organizations and
shall post the forms on its publicly accessible Internet
website.
(5) The department may not require any other information
to be provided by career and technical education partnership
organizations, except as expressly authorized under this
article.
(6) A career and technical education partnership
organization that does not meet the certification
requirements of this article shall not be eligible to
participate in the program.
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(b) Publication.--The department shall post and update as
necessary a list of each career and technical education
partnership organization qualified under this section on the
department's publicly accessible Internet website.
Section 2006-I. Contributions.
(a) Designation of contribution.--A contribution made by a
business firm under this article shall be designated for:
(1) an enrollment expansion program; or
(2) program-related costs in a career and technical
education program.
(b) Use of cash contributions.--A participating school shall
keep all cash contributions received under this article in a
restricted account which shall only be used for program-related
costs and enrollment expansion programs.
Section 2007-I. Tax credit.
(a) Application.--A business firm may apply to the
department for a tax credit certificate for contributions made
to a career and technical education partnership organization
under section 2006-I. A business firm that receives a tax credit
under this article shall be subject to the limitations in this
section and section 2008-I.
(b) Time of application for credits.--
(1) Except as provided in paragraph (2), the department
may accept applications for tax credits for a two-year
commitment available during fiscal year 2019-2020 beginning
no earlier than January l, 2020, and for tax credits
available each fiscal year thereafter, no earlier than July
1.
(2) The application of a business firm for tax credits
available during a fiscal year as part of the third year of a
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three-year commitment or as a renewal of a three-year
commitment which was fulfilled in the previous fiscal year
may be accepted no earlier than May 15 preceding the fiscal
year.
(c) Tax credit.--The Department of Revenue shall on a first-
come, first-served basis grant a tax credit against an
applicable tax to a business firm providing proof of a
contribution to a career and technical education partnership
organization in the taxable year in which the contribution is
made in accordance with the following:
(1) The tax credit shall not exceed 75% of the total
amount contributed during the taxable year by the business
firm.
(2) Except as provided under subsection (i), the tax
credit may not exceed $750,000 annually per business firm for
contributions made to career and technical partnership
organizations.
(d) Priority.--Priority for a tax credit certificate under
subsection (c) shall be given to:
(1) A business firm that did not receive a tax credit
under Article XX-B in the prior fiscal year.
(2) A business firm that makes a contribution to a
career and technical education partnership organization
located in the business firm's workforce development area as
described in the Workforce Innovation and Opportunity Act
(Public Law 113-128, 128 Stat. 1425).
(e) Additional amount.--Subject to the limitations of
section 2008-I, and in accordance with this section, the
department shall grant a tax credit certificate of up to 90% of
the total amount contributed during the taxable year if the
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business firm demonstrates a written commitment to provide the
career and technical education partnership organization with the
same amount for at least three consecutive tax years at the time
of application.
(f) Restriction on applicability of credits.--No tax credit
granted under this section shall be applied against tax withheld
by an employer from an employee under Article III of the Tax
Reform Code of 1971.
(g) Approval of tax credits.--Unless all authorized tax
credits have already been awarded, the department shall give
written notice of its approval to each business firm that
submits a completed application within 30 days following the
date postmarked on the envelope of the completed application.
(h) Waiting list.--The department shall maintain a waiting
list of each business firm whose application has not been
approved because all available tax credits have been awarded. A
business firm that is not awarded a tax credit due to a lack of
available tax credits shall be notified of a place on the
waiting list. When a tax credit becomes available, the
department shall award the tax credit to the business firms in
the order in which the business firms were placed on the waiting
list.
(i) Temporary increase in maximum tax credits available.--
(1) If all tax credits authorized under this section for
contributions to career and technical education partnership
organizations have not been awarded as of October 1 of a
fiscal year, the limitations specified in subsection (c)
shall not apply. The following shall apply:
(i) The department may accept applications from
October 1 through November 30 from a business firm,
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including a business firm that already applied for the
maximum tax credits available under subsections (a) and
(e).
(ii) Tax credits awarded under this subsection shall
not exceed 75% of the total amount contributed during the
taxable year by a business firm pursuant to an
application filed under this subsection.
(iii) The provisions of subsection (b) shall not
apply to applications for tax credits made under this
subsection.
(2) The tax credits awarded under this subsection shall
be awarded on a first-come, first-served basis.
(j) Timing of contribution.--A contribution by a business
firm to a career and technical education partnership
organization shall be made no later than 30 days following the
approval of an application under subsection (a).
Section 2008-I. Limitations.
(a) Amount.--The total aggregate amount of all tax credits
approved for contributions from business firms to career and
technical education partnership organizations may not exceed
$10,000,000 in a fiscal year. The following shall apply:
(1) Ten percent of the total aggregate amount of tax
credits under this subsection shall be distributed to a
business making a contribution to be used for an enrollment
expansion program.
(2) Ninety percent of the total aggregate amount of tax
credits under this subsection shall be distributed to a
business making a contribution to pay program-related costs.
(b) Activities.--No tax credit shall be approved for
activities that are a part of a business firm's normal course of
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business.
(c) Tax liability.--
(1) Except as provided under paragraph (2), a tax credit
granted for a 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 distribute the tax credit under this
article, a tax credit granted for a taxable year and
distributed 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 this article may not be carried forward or
carried back and is not refundable or transferable.
(e) Activities.--No tax credit shall be approved for
activities that are not a part of a business firm's normal
course of business.
Section 2009-I. Notice of participating schools.
By November l, 2019, and each February 1 thereafter, the
department shall provide all career and technical education
partnership organizations with a list of each participating
school in this Commonwealth located within each county.
Section 2010-I. Guidelines.
Within 45 days of the effective date of this section, in
consultation with the Department of Education, Department of
Revenue and the Department of Labor and Industry, the department
shall develop guidelines to implement the program.
Section 2011-I. Annual report to General Assembly.
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(a) Submittal.--The following shall apply:
(1) No later than December 1, 2020, and each December 1
thereafter, the Secretary of Community and Economic
Development shall submit a report to the General Assembly
summarizing the impact of the program provided under this
article. The department shall post the report on its publicly
accessible Internet website.
(2) The report shall be submitted to all of the
following:
(i) The chairperson and minority chairperson of the
Appropriations Committee of the Senate.
(ii) The chairperson and minority chairperson of the
Appropriations Committee of the House of Representatives.
(iii) The chairperson and minority chairperson of
the Education Committee of the Senate.
(iv) The chairperson and minority chairperson of the
Education Committee of the House of Representatives.
(b) Contents.--The report shall include the following
information:
(1) The amount of tax credits claimed for contributions
to a career and technical education partnership organization
during the fiscal year.
(2) The total cash, personal property and service
contributions made from business firms to career and
technical education partnership organizations.
(3) The number of students employed in a high-priority
occupation as a result of participating in the program.
(4) The number of students who secured internships or
apprenticeships for high-priority occupations.
(5) The number of students that secured certifications,
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industry-recognized occupational or skill credentials for
high-demand occupations.
(6) A list of all career and technical education
partnership organizations receiving contributions from a
business firm granted a tax credit under this article.
(7) The number of high-priority industries participating
in the program.
(8) The regional disbursement of tax credits.
(9) Other data points deemed relevant or necessary by
the department administering the program.
(10) A funding evaluation of the program and
recommendations.
(c) The department shall provide information under
subsection (b) to the best of the department's ability.
Section 2. Within 10 days of the development of the
guidelines under section 2010-I of the act, the Department of
Community and Economic Development shall transmit notice of the
development of the guidelines to the Legislative Reference
Bureau for publication in the Pennsylvania Bulletin.
Section 3. The addition of Article XX-I of the act shall
apply to taxable years commencing after December 31, 2019.
Section 4. This act shall take effect as follows:
(1) The following shall take effect immediately:
(i) This section.
(ii) Section 2 of this act.
(iii) Section 3 of this act.
(iv) The addition of sections 2001-I, 2002-I and
2010-I of the act.
(2) The remainder of this act shall take effect
immediately upon publication in the Pennsylvania Bulletin of
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the notice under section 2 of this act.
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