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1
S.B. 1, P.N. 721
“OPPORTUNITY
SCHOLARSHIP AND EDUCATIONAL IMPROVEMENT TAX CREDIT
ACT”
 I. Overview
 
Includes scholarships for both public-to-public and public-to-private school choice
 
 
Includes an EITC funding increase bringing the program to $100 million and moves the EITC provisions back into the School Code
 
o
 
An increase of $25 million over the $75 million that will be in effect in fiscal year 2011-2012
 
 
Program will be administered by an Educational Choice Board (an independent board inside PDE)
 
Pennsylvania Supreme Court will have exclusive jurisdiction over challenges, with the ability to render adeclaratory judgment on
the law’s
constitutionality
 
 
Funding for the scholarship program will be subject to annual appropriation, with funds distributed on a pro ratabasis depending upon appropriations
 
o
 
Proposed amendment will cap aggregate scholarship awards at $250 million per year in year 3 and beyond, for children who do not reside within the attendance boundary of a persistently lowestachieving school and for children who did not qualify for the program in years 1 and 2
 II. Scope of Scholarship Program
 
Eligibility: All low-income children, phased in as follows:
 
o
 
Year 1 - low-income students
currently attending
persistently lowest-achieving schools only
 
o
 
Year 2 -
all
low-income students residing within the attendance boundary of a persistently lowest-achieving school
(Proposed amendment: Must reside there as of the first day of classes of a school year)
o
 
Year 3 -
all low-income students
regardless of school
 
 
Definition of “persistently lowest
-
achieving school”: A public elementary or secondary school in Pennsylvania
achieving within the lowest measured group of 5% on the most recent assessment for which data is posted on
PDE’s website
 
o
 
144 schools fall within this category
 
o
 
Excludes schools that students and their families choose (i.e., charter schools, cyber charter schools, areavo-tech schools, magnet schools and other schools without specific attendance boundaries)
o
 
Proposed amendment would change definition to include a public elementary or secondary school inPennsylvania that is among the lowest performing 5% of schools, excluding the same schools as wereexcluded before, and also excluding schools that have made adequate yearly progress in at least one of the two most recent years - this change will better capture the worst performing schools
 
Definition of 
“
low-income
child”
: 130% of federal poverty level ($28,665 for a family of four)
 III. Amount of Opportunity Scholarship
 
Amount of opportunity scholarship:
o
 
Base amount of 100% of the state
’s
per-pupil subsidy
to the child’s resident school district
 
 
 
2
o
 
Not to exceed the student’s actual tuition at the school district or private school attended
 
 
Excess scholarship fund for existing private school students:
o
 
During year 1, any amount awarded to a student over and above the student’s actual tuition charge will be
placed into a dedicated fund that will be used to help fund the scholarship program beginning in year 2
 IV. Implementation
 
For public-to-public enrollment:
 
o
 
In addition to the state-
funded opportunity scholarship, a student’s
resident school district may create alocally-funded scholarship equal to at least 35% of local per-pupil spending
 
 
An additional incentive for a district to receive nonresident students
 
o
 
School districts will not be required to accept scholarship students
, but instead will develop their ownadmissions policies requiring that, if any students are accepted, they are accepted on a first-come, first-served basis
 
 
Proposed amendment will require that students be accepted on a lottery basis, rather than first-come, first-served 
 
 
School districts may give priority to students whose resident school districts award a locally-funded scholarship
 
 
Enrollment applications: Students apply directly to the school district or private school desired, which notifies the
Educational Choice Board of the student’s enrollment
 
o
 
Athletic recruiting is prohibited
 
 
Scholarship applications: Students apply directly to the Educational Choice Board, which determines thescholarship amounts and distributes the awards
o
 
For students attending private school: Payment by check made payable to the parents, but endorseableonly to the private school the student attends
 
Proposed amendment will provide for enhanced penalties if the check is not endorsed asdirected by the Board (i.e., civil penalty of 300% of the voucher award, ineligibility for futureawards, and criminal prosecution); each check will contain a statement warning the endorserof the possible penalties
o
 
For students attending public school: Payment made by transfer from the Commonwealth directly to thepublic school the student attends
 
Education Choice Board:
 
o
 
3 members appointed by the governor with Senate confirmation
 
o
 
4-year terms
 
o
 
Develops guidelines for implementation of the program and administers the program
 
o
 
Board may hire an executive director and staff 
 
o
 
PDE provides office space, funding and equipment
 V. EITC
 
 
Increases EITC to $100 million
o
 
An increase of $25 million over the $75 million that will be in effect in fiscal year 2011-2012
 
o
 
$92 million available to scholarship organizations and educational improvement organizations
 
o
 
$8 million available to pre-kindergarten scholarship organizations
 
 
 
3
 
Of the $92 million available to scholarship organizations and educational improvement organizations, 75% willbe available to scholarship organizations, and 25% will be available to educational improvement organizations
o
 
Currently, 2/3 is available to scholarship organizations and 1/3 is available to educational improvementorganizations
 
Timing of applications:
o
 
All applications may be filed beginning May 15 for a fiscal year beginning on July 1
o
 
Applications will be accepted in the following order beginning on July 1 (to the extent insufficient creditsare available, applications will be accepted on a pro rata basis):
 
Group 1 firms that have applied by July 1 (Group 1: any business firm entering the second yearof a two-year commitment
or applying for tax credits for a contribution to an educationalimprovement organization that is also a school foundation
) --
Proposed amendment would eliminate priority treatment for school foundations in place of setting aside a certain amount of EITC funding for these groups (see more detailed explanation below)
 
Group 2 firms that have applied by July 1 (Group 2: any business firm renewing a two-yearcommitment or contributing to a pre-K scholarship organization in the same amount that itcontributed in the most recent fiscal year)
 
Group 3 firms that have applied by July 1 (Group 3: any business firm that is not in Group 1 orGroup 2)
o
 
If any credits remain, the applications of all firms that apply after July 1 will be considered on a dailybasis
 
Other proposed changes to EITC program:
o
 
Credits may be claimed on joint returns
o
 
Automatic increase mechanism:
o
 
Beginning in the 2014-2015 fiscal year (the fourth year of implementation of the opportunityscholarship program), the available EITC credit would automatically increase by 5% if, in anyfiscal year, the amount of credit approved equals or exceeds 90% of the amount of creditavailable
o
 
Increased available credit amount would be the base amount available going forward
VI. Amendments
 
 
Amendment A01335 (Piccola) - Omnibus amendment
o
 
Miscellaneous technical corrections and clarifications:
o
 
Electronic Notice: School districts will post notices regarding the scholarship program on their publicInternet websites, rather than send notices by mail
o
 
Enrollment Confirmations: The Education Choice Board will confirm enrollment decisions, ensuringthat schools and districts receive
timely notice of students’ enrollment decisions
 
o
 
Withdrawal from Nonresident Public School: Where a student withdraws from a nonresident publicschool, the Board shall pay the pro-rated voucher amount to the school in which the studentsubsequently enrolls (whether his resident district, another nonresident district, or a private school);
this provision mirrors language that was already in place in the bill for students who withdraw fromprivate school
 
o
 
Residence in More than One School District: Where a student lives within more than one schooldistrict within a school year, the amount of the scholarship will be charged against each residentschool district on a pro rata basis
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