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A02527
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1642
Session of
2021
INTRODUCED BY WHITE, ROTHMAN, RYAN, KAUFFMAN, GROVE, DRISCOLL,
ZIMMERMAN, THOMAS, PENNYCUICK AND LEWIS, JUNE 16, 2021
REFERRED TO COMMITTEE ON EDUCATION, JUNE 16, 2021
AN ACT
Amending the act of March 10, 1949 (P.L.30, No.14), entitled "An
act relating to the public school system, including certain
provisions applicable as well to private and parochial
schools; amending, revising, consolidating and changing the
laws relating thereto," in educational tax credits, further
providing for definitions, for qualification and application
by organizations, for application by business firms, for tax
credits, for limitations and for opportunity scholarships.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The definition of "economically disadvantaged
school" in section 2002-B of the act of March 10, 1949 (P.L.30,
No.14), known as the Public School Code of 1949, is amended and
the section is amended by adding definitions to read:
Section 1. The definitions of "economically disadvantaged
school," "educational improvement organization," "opportunity
scholarship organization," "pre-kindergarten scholarship
organization" and "scholarship organization" in section 2002-B
of the act of March 10, 1949 (P.L.30, No.14), known as the
Public School Code of 1949, are amended and the section is
amended by adding definitions to read:
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Section 2002-B. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
* * *
"Economically disadvantaged school." Any school within this
Commonwealth at which at least [75%] 51% of the students
attending the school in the immediately preceding school year
received a scholarship pursuant to this article.
"Educational improvement organization." A nonprofit entity
which:
(1) is exempt from Federal taxation under section 501(c)
(3) of the Internal Revenue Code of 1986 (Public Law 99-514,
26 U.S.C. § 1 et seq.); and
(2) contributes at least [80%] 90% of its annual
receipts as grants to a public school, a chartered school as
defined in section 1376.1, or a private school approved under
section 1376, for innovative educational programs.
For purposes of this definition, a nonprofit entity
"contributes" its annual cash receipts when it expends or
otherwise irrevocably encumbers those funds for expenditure
during the then-current fiscal year of the nonprofit entity or
during the next succeeding fiscal year of the nonprofit entity.
A nonprofit entity shall include a school district foundation,
public school foundation, charter school foundation or cyber
charter school foundation.
* * *
"Fiscal year." The Commonwealth's fiscal year beginning July
1 and ending June 30.
* * *
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"Opportunity scholarship organization." A nonprofit entity
which:
(1) Is exempt from Federal taxation under section 501(c)
(3) of the Internal Revenue Code of 1986 (Public Law 99-514,
26 U.S.C. § 1 et seq.); and
(2) Contributes at least [80%] 90% of the entity's
annual cash receipts to an opportunity scholarship program.
For the purposes of this definition, a nonprofit entity
contributes the entity's cash receipts to an opportunity
scholarship program when the entity 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.
* * *
"Pre-kindergarten scholarship organization." A nonprofit
entity which:
(1) is exempt from Federal taxation under section 501(c)
(3) of the Internal Revenue Code of 1986 or is operated as a
separate segregated fund by a scholarship organization that
has been qualified under section 2003-B; and
(2) contributes at least [80%] 90% of its annual cash
receipts to a pre-kindergarten scholarship program by
expending or otherwise irrevocably encumbering those funds
for distribution during the then-current fiscal year of the
organization or during the next succeeding fiscal year of the
organization.
* * *
"Scholarship organization." A nonprofit entity which:
(1) is exempt from Federal taxation under section 501(c)
(3) of the Internal Revenue Code of 1986; and
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(2) contributes at least [80%] 90% of its annual cash
receipts to a scholarship program.
For purposes of this definition, a nonprofit entity
"contributes" its annual cash receipts to a scholarship program
when it expends or otherwise irrevocably encumbers those funds
for distribution during the then-current fiscal year of the
nonprofit entity or during the next succeeding fiscal year of
the nonprofit entity.
* * *
"Taxable year." A taxpayer's annual accounting period or, if
a return is made for a period of less than 12 months, the period
for which the return is made.
Section 2. Sections 2003-B(d.3) and 2004-B(a)(2) of the act
are amended to read:
Section 2003-B. Qualification and application by organizations.
* * *
(d.3) [Opportunity scholarship] Scholarship organization for
economically disadvantaged schools.--
(1) [In] Effective July 1, 2020, in addition to the
other requirements of this article, [an opportunity] a
scholarship organization that intends to provide
[opportunity] scholarship awards to applicants of
economically disadvantaged schools must demonstrate a history
of serving schools throughout this Commonwealth and the
capacity to distribute [opportunity] scholarships Statewide
to applicants of economically disadvantaged schools.
(2) [An opportunity] A scholarship organization must
agree to distribute [opportunity] scholarships to applicants
of economically disadvantaged schools not later than
[December] February 1 of the applicable school year.
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(3) Notwithstanding any other provision of this article
to the contrary, the department may not for any school year
qualify more than one [opportunity] scholarship organization
for the provision of [opportunity] scholarships to applicants
of economically disadvantaged schools.
* * *
Section 2004-B. Application by business firms.
(a) Scholarship organization, pre-kindergarten scholarship
organization or opportunity scholarship organization.--
* * *
(2) A business firm that intends to apply to the
department for a tax credit for contributions [to the
opportunity scholarship organization that qualifies under
section 2003-B(d.3)] for students attending an economically
disadvantaged school must submit an application separate from
an application for tax credits to a scholarship organization,
pre-kindergarten scholarship organization or [other]
opportunity scholarship organization. The contribution shall
be made to the designated scholarship organization for the
economically disadvantaged schools and shall be separately
accounted for and distributed by the designated scholarship
organization.
* * *
Section 3. Section 2005-B(b), (c)(2), (d), (i)(5) and (j)(1)
and (2) of the act are amended and subsection (i) is amended by
adding a paragraph to read:
Section 2005-B. Tax credits.
* * *
(b) Additional amount.--In accordance with section 2006-B,
the Department of Revenue shall grant a tax credit of up to 90%
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of the total amount contributed during the taxable year if the
business firm provides a written commitment to provide the
scholarship organization, educational improvement organization
or opportunity scholarship organization with the same amount of
contribution for two consecutive [tax] taxable years. The
business firm must provide the written commitment under this
subsection to the department at the time of application.
(c) Pre-kindergarten scholarship organizations.--In
accordance with section 2006-B, the Department of Revenue shall
grant a tax credit against any applicable tax to a business firm
providing proof of a contribution to a pre-kindergarten
scholarship organization in the taxable year in which the
contribution is made in accordance with the following:
* * *
(2) [The] For each fiscal year, the tax credit shall not
exceed $200,000 annually per business firm for contributions
made to pre-kindergarten scholarship organizations, except as
provided in subsection (i).
(d) Combination of tax credits.--In accordance with section
2006-B, a business firm may receive tax credits from the
Department of Revenue in any [tax] fiscal year for any
combination of contributions under subsection (a), (a.1), (b) or
(c). Except as provided in subsection (i), in no case may a
business firm receive tax credits in any [tax] fiscal year in
excess of the following:
(1) $750,000 for combined contributions to scholarship
and educational improvement organizations under subsections
(a) and (b).
(2) $750,000 for contributions to opportunity
scholarship organizations under subsections (a.1) and (b).
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(3) $200,000 for contributions to pre-kindergarten
scholarship organizations under subsection (c).
* * *
(i) Temporary increase in maximum tax credits available.--
* * *
(4.1) If all tax credits authorized under this article
for contributions to the category of scholarship
organizations, opportunity scholarship organizations or pre-
kindergarten scholarship organizations have not been awarded
as of November 30 of any fiscal year, then for applications
accepted by the department from December 1 through the end of
the fiscal year, the limitations set forth in subsections
(a), (a.1), (c) and (d) relating to the maximum amount of tax
credits a business firm can receive during a fiscal year for
contributions to each such category of organizations shall
not apply. Under this paragraph, the department may accept
applications under section 2004-B from December 1 through the
end of the fiscal year and shall award tax credits under this
article for contributions to the category of scholarship
organizations, opportunity scholarship organizations or pre-
kindergarten scholarship organizations on a first-come,
first-served basis until all tax credits available for the
fiscal year have been exhausted.
(5) Notwithstanding a temporary increase in maximum tax
credits available under this subsection, the limitations set
forth in subsections (a), (a.1), (c) and (d) relating to the
maximum amount of tax credits a business firm can receive
during a year for contributions to a category of scholarship
organizations, opportunity scholarship organizations or pre-
kindergarten scholarship organizations shall be reinstated
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for all applications accepted by the department [on or] after
[December 1] June 30 of the fiscal year.
(j) Reallocation of tax credits.--
(1) Beginning on January 1 of any fiscal year, if any
tax credits authorized under this article for contributions
to any of the categories of scholarship organizations,
opportunity scholarship organizations or pre-kindergarten
scholarship organizations remain unawarded, such unawarded
tax credits may be reallocated to any of the categories of
scholarship organizations, opportunity scholarship
organizations or pre-kindergarten scholarship organizations
for which all available tax credits have been awarded. The
department shall, within 10 business days, inform each
business firm on the waiting list maintained by the
department under subsection (h) that tax credits remain
available under another category for which the business firm
has not yet applied. If a business firm notified under this
paragraph elects, the department shall reallocate available
tax credits for award to the business firm in the business
firm's preferred tax credit category, notwithstanding the
limitations contained in section 2006-B(a). [The amount of
tax credits to be awarded to a business firm under this
paragraph shall not exceed the amount of tax credits
available for reallocation or the maximum amount of tax
credits for which a business firm is eligible under
subsections (a), (a.1), (c) and (d).] Each business firm
shall have 10 business days from the date of the department's
notice to elect a reallocation of tax credits under this
paragraph. The department shall award tax credits on a first-
come, first-served basis.
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(2) After the department has awarded tax credits under
paragraph (1), the department shall accept new applications
for reallocation of tax credits from any of the categories of
scholarship organizations, opportunity scholarship
organizations or pre-kindergarten scholarship organizations
for which tax credits remain available to the applicant's
preferred category of scholarship organizations, opportunity
scholarship organizations or pre-kindergarten scholarship
organizations for which all available tax credits have been
awarded, notwithstanding any limitations contained in section
2006-B(a)[. The amount of tax credits to be awarded to a
business firm under this paragraph shall not exceed the
amount of tax credits available for reallocation or the
maximum amount of tax credits for which a business firm is
eligible under] or the limitations in subsections (a), (a.1),
(c) and (d). The department shall award tax credits on a
first-come, first-served basis.
* * *
Section 4. Section 2006-B(a) of the act, amended June 30,
2021 (P.L.158, No.26), is amended and the section is amended by
adding a subsection to read:
Section 2006-B. Limitations.
(a) Amount.--
(1) The total aggregate amount of all tax credits
approved for contributions from business firms to scholarship
organizations, educational improvement organizations and pre-
kindergarten scholarship organizations shall not exceed
$185,000,000 $225,000,000 plus an amount to meet the
obligations of subsection (d.2) in a fiscal year.
(i) No less than $135,000,000 $175,000,000 of the
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total aggregate amount plus an amount to meet the
obligations of subsection (d.2) shall be used to provide
tax credits for contributions from business firms to
scholarship organizations.
(ii) No less than $37,500,000 of the total aggregate
amount shall be used to provide tax credits for
contributions from business firms to educational
improvement organizations.
(iii) The total aggregate amount of all tax credits
approved for contributions from business firms to pre-
kindergarten scholarship organizations shall not exceed
$12,500,000 in a fiscal year.
(2) The total aggregate amount of all tax credits
approved for contributions from business firms to opportunity
scholarship organizations shall not exceed [$55,000,000 in a
fiscal year and no less than $5,000,000 of the total
aggregate amount shall be used to provide tax credits for
contributions from business firms to increase the scholarship
amount to students attending an economically disadvantaged
school by up to $1,000 more than the amount provided during
the immediately preceding school year.] $50,000,000.
* * *
(d.2) Economically disadvantaged school.-- For a student
attending an economically disadvantaged school, to the extent
that the total amount of scholarships, pre-kindergarten
scholarships and opportunity scholarships will not exceed the
lesser of $8,500 or the school's tuition, the amount of the
scholarship or pre-kindergarten scholarship granted under this
article shall be increased by $2,000 or, in the case of a
scholarship for a student attending a secondary school, by
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$4,000.
* * *
Section 5. Section 2009-B(e) and (f)(1) and (5) of the act
are amended to read:
Section 2009-B. Opportunity scholarships.
* * *
(e) Amount.--
(1) [(i) Except as otherwise provided in subparagraph
(ii), the] The maximum amount of an opportunity scholarship
awarded to an applicant without a disability shall be $8,500.
[(ii) For a student attending an economically
disadvantaged school, the maximum amount of an
opportunity scholarship awarded to an applicant without a
disability shall be $9,500.]
(2) [(i) Except as otherwise provided in subparagraph
(ii), the] The maximum amount of an opportunity scholarship
awarded to an applicant with a disability shall be $15,000.
[(ii) For a student attending an economically
disadvantaged school, the maximum amount of an
opportunity scholarship awarded to an applicant with a
disability shall be $16,000.]
(3) In no case shall the combined amount of the
opportunity scholarship awarded to a recipient and any
additional financial assistance provided to the recipient
exceed the tuition rate and school-related fees for the
participating public school or participating nonpublic school
that the recipient will attend.
(f) Designation, reports and notices.--For purposes of
section 2006-B(d.2):
(1) Each school that desires to be designated as an
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economically disadvantaged school for a school year shall
report the following information to the department by the
January 1 preceding the applicable school year:
(i) The total number of students who attend the
school as of the date of the report and are the
recipients of a scholarship under this article.
(ii) The total number of students attending the
school as of the date of the report.
(iii) For start-up fiscal year 2019-2020, the
information in the report required under this paragraph
shall be based upon the 2019-2020 school year.
* * *
(5) (i) Each school that has been designated by the
department as an economically disadvantaged school for an
applicable school year shall notify the department by no
later than October 15 of the applicable school year of
the following information for each recipient of a
scholarship registered to attend the school for the
applicable school year:
(A) The recipient's name and address.
(B) The grade of the recipient for the school
year with respect to which the scholarship and
tuition grant shall be received.
(C) The type and amount of [scholarship]
scholarships under this article entitled to
educational tax credits that were received by the
recipient.
(D) The names and address of the recipient's
parents or guardians.
(E) The amount of tuition charged.
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(ii) The information submitted in this paragraph
shall be provided to the [opportunity] scholarship
organization for economically disadvantaged schools who
shall distribute the money in accordance with section
2006-B(d.2).
(iii) Information submitted by a school designated
by the department as an economically disadvantaged school
shall remain confidential and shall not be subject to the
act of February 14, 2008 (P.L.6, No.3), known as the
Right-to-Know Law. The information can be used for
administration of the program.
Section 6. This act shall take effect in 60 days.
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