Bill Text: IN HB1003 | 2013 | Regular Session | Introduced
Bill Title: Nonpublic school scholarships.
Spectrum: Partisan Bill (Republican 3-0)
Status: (Passed) 2013-05-13 - Public Law 211 [HB1003 Detail]
Download: Indiana-2013-HB1003-Introduced.html
Citations Affected: IC 6-3-2-22; IC 6-3.1; IC 12-7-2; IC 12-17.3;
IC 20-51.
Effective: January 1, 2013 (retroactive); July 1, 2013.
January 15, 2013, read first time and referred to Committee on Education.
Digest Continued
income requirement of being a member of a household with an income
that does not exceed 150% of the amount required to qualify for the
free and reduced lunch program continues to qualify for the choice
scholarship as long as the individual is a member of a household with
an income that does not exceed 300% of the amount required to qualify
for the free and reduced lunch program. Provides that an individual
who: (1) is in foster care; (2) attended a public school the previous year
and is a member of a household with an annual income not exceeding
the amount necessary to qualify for the free or reduced lunch program;
(3) attended an eligible school at the time the individual first met the
income requirements and is a member of a household with an annual
income not exceeding the amount necessary to qualify for the free or
reduced lunch program; (4) is a child with a disability who requires
special education; (5) is a sibling of an individual who previously
received a choice scholarship or a scholarship from a scholarship
granting organization; or (6) has a parent who has received an
honorable discharge from the armed forces of the United States or
national guard or is currently serving in the armed forces of the United
States or national guard; may receive up to 90% of the amount that the
state tuition support that the public school in the student's legal
settlement would receive for the student if the student attended the
public school. Provides that an eligible student who is subject to certain
income requirements may receive up to 50% of the amount of state
tuition support a public school would receive for the student if the
student attended the public school and the student's household has an
annual income of not more than 300% of the amount required to
qualify for the free or reduced lunch program. Increases the choice
scholarship cap for students enrolled in grades 1 through 8. Removes
a requirement, for purposes of receiving a scholarship from a
scholarship granting organization, that the individual either: (1) is
entering kindergarten or attended a public school the previous year; or
(2) received a scholarship in a previous year from a scholarship
granting organization. Provides that a taxpayer making a contribution
to a scholarship granting organization may designate a participating
school for which the taxpayer's contribution must be used as
scholarships. Requires a scholarship granting organization to use not
more than 10% of total contributions received for administrative
expenses. Removes a provision that allows the department to make
only a partial choice scholarship grant. Make conforming amendments.
Makes technical amendment.
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in
Additions: Whenever a new statutory provision is being enacted (or a new constitutional provision adopted), the text of the new provision will appear in this style type. Also, the word NEW will appear in that style type in the introductory clause of each SECTION that adds a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or
A BILL FOR AN ACT to amend the Indiana Code concerning
education and tax.
(1) "Dependent child" means an individual who:
(A) is eligible to receive a free elementary or high school education in an Indiana school corporation;
(B) qualifies as a dependent (as defined in Section 152 of the Internal Revenue Code) of the taxpayer; and
(C) is the natural or adopted child of the taxpayer or, if custody of the child has been awarded in a court proceeding to someone other than the mother or father, the court appointed guardian or custodian of the child.
If the parents of a child are divorced, the term refers to the parent who is eligible to take the exemption for the child under Section 151 of the Internal Revenue Code.
(2) "Education expenditure" refers to any expenditures made in
connection with enrollment, attendance, or participation of the
taxpayer's dependent child in a private elementary or high school
education program. The term includes tuition, fees, computer
software, textbooks, workbooks, curricula, school supplies (other
than personal computers), and other written materials used
primarily for academic instruction or for academic tutoring, or
both.
(3) "Private elementary or high school education program" means
attendance at:
(A) a nonpublic school (as defined in IC 20-18-2-12); or
(B) an accredited nonpublic school;
in Indiana that satisfies a child's obligation under IC 20-33-2 for
compulsory attendance at a school. The term does not include the
delivery of instructional service in a home setting to a dependent
child who is enrolled in a school corporation or a charter school.
(b) This section applies to taxable years beginning after December
31, 2010.
(c) A taxpayer who makes an unreimbursed education expenditure
during the taxpayer's taxable year is entitled to a deduction against the
taxpayer's adjusted gross income in the taxable year.
(d) The amount of the deduction is:
(1) one three thousand dollars ($1,000); ($3,000); multiplied by
(2) the number of the taxpayer's dependent children for whom the
taxpayer made education expenditures in the taxable year.
A husband and wife are entitled to only one (1) deduction under this
section.
(e) To receive the deduction provided by this section, a taxpayer
must claim the deduction on the taxpayer's annual state tax return or
returns in the manner prescribed by the department.
(b) A taxpayer is not entitled to a carryover, carryback, or refund of an unused credit.
(c) This section expires January 1, 2017.
2012.
(b) If the credit provided by this chapter exceeds the taxpayer's
state tax liability for the taxable year for which the credit is first
claimed, the excess may be carried forward to succeeding taxable
years and used as a credit against the taxpayer's state tax liability
during those taxable years. Each time the credit is carried forward
to a succeeding taxable year, the credit is reduced by the amount
that was used as a credit during the immediately preceding taxable
year. The credit provided by this chapter may be carried forward
and applied to succeeding taxable years for nine (9) taxable years
following the unused credit year.
(c) A taxpayer is not entitled to a carryback or refund of any
unused credit.
Chapter 34. Preschool Education Scholarship Tax Credit
Sec. 1. As used in this chapter, "credit" refers to a credit granted under this chapter.
Sec. 2. As used in this chapter, "pass through entity" has the meaning set forth in IC 6-3-1-35.
Sec. 3. As used in this chapter, "preschool scholarship granting organization" has the meaning set forth in IC 12-17.3-1-9.
Sec. 4. As used in this chapter, "preschool scholarship program" refers to a preschool scholarship program certified by the division of family resources under IC 12-17.3.
Sec. 5. As used in this chapter, "state tax liability" means a taxpayer's total tax liability that is incurred under:
(1) IC 6-3-1 through IC 6-3-7 (the adjusted gross income tax);
(2) IC 6-5.5 (the financial institutions tax); and
(3) IC 27-1-18-2 (the insurance premiums tax);
as computed after the application of the credits that under IC 6-3.1-1-2 are to be applied before the credit provided by this chapter.
Sec. 6. As used in this chapter, "taxpayer" means an individual or entity that has any state tax liability.
Sec. 7. A taxpayer that makes a contribution to a preschool scholarship granting organization for use by the preschool scholarship granting organization in a preschool scholarship program is entitled to a credit against the taxpayer's state tax liability in the taxable year in which the taxpayer makes the contribution.
Sec. 8. The amount of a taxpayer's credit is equal to fifty percent (50%) of the amount of the contribution made to the preschool scholarship granting organization for a preschool scholarship program.
Sec. 9. A taxpayer is not entitled to a carryover, carryback, or refund of an unused credit.
Sec. 10. If a pass through entity is entitled to a credit under section 7 of this chapter but does not have state tax liability against which the tax credit may be applied, a shareholder, partner, or member of the pass through entity is entitled to a tax credit equal to:
(1) the tax credit determined for the pass through entity for the taxable year; multiplied by
(2) the percentage of the pass through entity's distributive income to which the shareholder, partner, or member is entitled.
Sec. 11. To apply a credit against the taxpayer's state tax liability, a taxpayer must claim the credit on the taxpayer's annual state tax return or returns in the manner prescribed by the department. The taxpayer shall submit to the department the information that the department determines is necessary for the department to determine whether the taxpayer is eligible for the credit.
Sec. 12. A contribution to a preschool scholarship granting organization shall be treated as having been made for use in a preschool scholarship program if:
(1) the contribution is made directly to a preschool scholarship granting organization; and
(2) either:
(A) not later than the date of the contribution, the taxpayer designates in writing to the preschool scholarship granting organization that the contribution is to be used only for a preschool scholarship program; or
(B) the preschool scholarship granting organization provides the taxpayer with written confirmation that the contribution will be dedicated solely for use in a preschool scholarship program.
Sec. 13. The total amount of tax credits awarded under this chapter may not exceed five million dollars ($5,000,000) in a state fiscal year.
Sec. 14. The department, on an Internet web site used by the department to provide information to the public, shall provide the
following information:
(1) The application for the credit provided in this chapter.
(2) A timeline for receiving the credit provided in this chapter.
(3) The total amount of credits awarded under this chapter
during the current state fiscal year.
Sec. 15. The department shall adopt rules under IC 4-22-2 to
implement this chapter.
(1) for purposes of IC 12-17-12, has the meaning set forth in IC 12-17-12-2; or
(2) for purposes of IC 12-17.3, has the meaning set forth in IC 12-17.3-1-3.
(1) The division of disability and rehabilitative services established by IC 12-9-1-1.
(2) The division of aging established by IC 12-9.1-1-1.
(3) The division of family resources established by IC 12-13-1-1.
(4) The division of mental health and addiction established by IC 12-21-1-1.
(b) The term refers to the following:
(1) For purposes of the following statutes, the division of disability and rehabilitative services established by IC 12-9-1-1:
(A) IC 12-9.
(B) IC 12-11.
(C) IC 12-12.
(D) IC 12-12.5.
(E) IC 12-12.7.
(F) IC 12-15-46-2.
(G) IC 12-28-5.
(2) For purposes of the following statutes, the division of aging established by IC 12-9.1-1-1:
(A) IC 12-9.1.
(B) IC 12-10.
(3) For purposes of the following statutes, the division of family
resources established by IC 12-13-1-1:
(A) IC 12-13.
(B) IC 12-14.
(C) IC 12-15.
(D) IC 12-16.
(E) IC 12-17.2.
(E) IC 12-17.3.
(F) (F) IC 12-18.
(G) (G) IC 12-19.
(H) (H) IC 12-20.
(4) For purposes of the following statutes, the division of mental
health and addiction established by IC 12-21-1-1:
(A) IC 12-21.
(B) IC 12-22.
(C) IC 12-23.
(D) IC 12-25.
(c) With respect to a particular state institution, the term refers to
the division whose director has administrative control of and
responsibility for the state institution.
(d) For purposes of IC 12-24, IC 12-26, and IC 12-27, the term
refers to the division whose director has administrative control of and
responsibility for the appropriate state institution.
[EFFECTIVE JULY 1, 2013]: Sec. 144.1. "Preschool education
scholarship", for purposes of IC 12-17.3, has the meaning set forth
in IC 12-17.3-1-8.
ARTICLE 17.3. PRESCHOOL EDUCATION SCHOLARSHIPS
Chapter 1. Definitions
Sec. 1. The definitions in this chapter apply throughout this article.
Sec. 2. "Agreement" refers to an agreement between the division and an applicant that applies for certification of a preschool scholarship program.
Sec. 3. "Contribution" refers to a contribution to a preschool scholarship granting organization for use in a preschool scholarship program.
Sec. 4. "Eligible preschool" refers to a preschool, including a preschool operated or administered by a school corporation, a charter school, or an accredited nonpublic school, that:
(1) is located in Indiana;
(2) is a program of early education services that:
(A) meets the standards of quality recognized by a Level 3 or Level 4 Paths to QUALITY program rating; or
(B) is nationally accredited by an accrediting body recognized by the division;
(3) requires an eligible individual to pay tuition or fees to attend;
(4) voluntarily agrees to enroll an eligible individual;
(5) administers a test that measures each eligible preschool student's progress toward kindergarten readiness; and
(6) submits to the division data required by the division.
Sec. 5. "Eligible preschool student" refers to an individual who:
(1) is a legal resident of Indiana;
(2) is at least three (3) years of age and less than five (5) years of age on the date in the school year specified in IC 20-33-2-7;
(3) is a member of a household with an annual income of not
more than two hundred percent (200%) of the household
income required for the individual to qualify for a free or
reduced price lunch under the household income guidelines
established under 42 U.S.C. 1758(b) for a child who is school
age; and
(4) meets at least one (1) of the following conditions:
(A) The individual is enrolling in an eligible preschool for
the first time.
(B) The individual received a preschool education
scholarship in the previous year from a nonprofit
preschool scholarship granting organization that qualifies
for certification as a preschool scholarship program.
Sec. 6. "Participating preschool" refers to an eligible preschool
that:
(1) an eligible preschool student is required to pay tuition or
fees to attend; and
(2) voluntarily agrees to enroll an eligible preschool student.
Sec. 7. "Paths to QUALITY program" refers to a voluntary
quality rating and improvement system for child care
administered:
(1) statewide by the division; and
(2) under the trademark "Paths to QUALITY".
Sec. 8. "Preschool education scholarship" refers to a grant to
pay only the cost of preschool education for an eligible preschool
student as determined for the school year for which the preschool
education scholarship will be granted.
Sec. 9. "Preschool scholarship granting organization" refers to
an organization that:
(1) is exempt from federal income taxation under Section
501(c)(3) of the Internal Revenue Code; and
(2) is organized at least in part to grant preschool education
scholarships without limiting the availability of preschool
education scholarships to students of only one (1)
participating preschool.
Chapter 2. Administrative Provisions
Sec. 1. The division shall maintain a publicly available list of the
preschool scholarship programs certified by the division. The list
must contain names, addresses, and any other information that the
department determines is necessary for the public to determine
which preschool scholarship granting organizations conduct
preschool scholarship programs. A current list must be posted on
an Internet web site used by the division to provide information to
the public.
Sec. 2. The division shall adopt rules under IC 4-22-2 to
implement this article.
Chapter 3. Preschool Scholarship Granting Organizations;
Certification; Administration of Contributions
Sec. 1. A program qualifies for certification as a preschool
scholarship program:
(1) if:
(A) the program:
(i) is administered by a preschool scholarship granting
organization; and
(ii) has the primary purpose of providing preschool
education scholarships to eligible students; and
(B) the preschool scholarship granting organization
administering the program:
(i) applies to the division on the form and in the manner
prescribed by the division; and
(ii) enters into an agreement with the division to comply
with this article; or
(2) if the program is certified by the department of education
under IC 20-51-3-2 on July 1, 2013.
Sec. 2. The division shall certify all programs that meet the
qualifications under section 1 of this chapter as preschool
scholarship programs.
Sec. 3. An agreement entered into under section 1 of this chapter
between the division and a preschool scholarship granting
organization must require the preschool scholarship granting
organization to do the following:
(1) Provide a receipt to taxpayers for contributions made to
the preschool scholarship granting organization that will be
used in a preschool scholarship program. The department of
state revenue shall prescribe a standardized form for the
receipt issued under this subdivision. The receipt must
indicate the value of the contribution and the part of the
contribution being designated for use in a preschool
scholarship program.
(2) Allow a taxpayer to designate a participating preschool for
which the taxpayer's contribution must be used as
scholarships.
(3) Use not more than ten percent (10%) of the total amount
of contributions for administrative costs.
(4) Conduct criminal background checks on all the preschool
scholarship granting organization's employees and board
members and exclude from employment or governance any
individual who might reasonably pose a risk to the
appropriate use of contributed funds.
(5) Make the reports required by this chapter.
Sec. 4. An agreement entered into under section 1 of this chapter
may not prohibit a preschool scholarship granting organization
from receiving contributions other than contributions used in a
preschool scholarship program.
Sec. 5. (a) An agreement entered into under section 1 of this
chapter must prohibit a preschool scholarship granting
organization from distributing preschool education scholarships
for use by an eligible preschool student to:
(1) enroll in a preschool that has:
(A) paid staff or board members; or
(B) relatives of paid staff or board members;
in common with the preschool scholarship granting
organization; or
(2) enroll in a preschool that the preschool scholarship
granting organization knows does not qualify as a
participating preschool.
(b) An agreement entered into under section 1 of this chapter
must prohibit a preschool scholarship granting organization from
limiting the availability of preschool education scholarships to
students of only one (1) participating preschool.
Sec. 6. (a) A preschool scholarship granting organization
certified under this chapter must report publicly to the department
by August 1 of each year the following information regarding the
organization's preschool education scholarships that were awarded
in the previous school year:
(1) The name and address of the preschool scholarship
granting organization.
(2) The total number and total dollar amount of contributions
received during the previous school year.
(3) The:
(A) total number and total dollar amount of preschool
education scholarships awarded during the previous school
year; and
(B) total number and total dollar amount of preschool
education scholarships awarded during the previous school
year.
The report must be certified under penalties of perjury by the chief
executive officer of the preschool scholarship granting
organization.
(b) A preschool scholarship granting organization certified
under this chapter shall contract with an independent certified
public accountant for an annual financial audit of the preschool
scholarship granting organization. The preschool scholarship
granting organization shall provide a copy of the annual financial
audit to the division and shall make the annual financial audit
available to a member of the public upon request.
Sec. 7. The division shall prescribe a standardized form for
preschool scholarship granting organizations to report information
required under this chapter.
Sec. 8. The division may, in a proceeding under IC 4-21.5,
suspend or terminate the certification of an organization as a
preschool scholarship granting organization if the division
establishes that the preschool scholarship granting organization
has intentionally and substantially failed to comply with the
requirements of this article or an agreement entered into under
this article.
Sec. 9. If the division suspends or terminates the certification of
an organization as a preschool scholarship granting organization,
the division shall notify affected eligible preschool students and
their parents of the decision as quickly as possible. An eligible
preschool student affected by a suspension or termination of a
preschool scholarship granting organization's certification remains
an eligible preschool student under this article until the end of the
school year in which the preschool scholarship granting
organization's certification is suspended or terminated, regardless
of whether the preschool scholarship student meets the definition
of an eligible preschool student at the time the preschool
scholarship granting organization's certification was suspended or
terminated.
Sec. 10. The division may conduct either a financial review or an
audit of a preschool scholarship granting organization certified
under this chapter if the department of state revenue has evidence
of fraud.
(1) has legal settlement in Indiana;
(2) is at least five (5) years of age and less than twenty-two
(22) years of age on the date in the school year specified in
IC 20-33-2-7; and
(3) meets at least one (1) of the following conditions:
(A) The individual is a child with a disability who requires
special education under IC 20-35.
(B) The individual is in foster care.
(C) The individual's parent:
(i) has served in the armed forces of the United States or
national guard and has received an honorable discharge;
or
(ii) is currently serving on active duty service in the
armed forces of the United States or national guard.
(D) The individual:
(i) was enrolled in grade 1 through grade 12 in a public
school within or outside Indiana before the first semester
for which the individual receives a choice scholarship
under IC 20-51-4; and
(ii) except as provided in IC 20-51-4-2.5, is a member of
a household with an annual income of not more than one
hundred fifty percent (150%) of the amount required for
the individual to qualify for the federal free or reduced
price lunch program.
(E) The individual or a sibling of the individual:
(i) received a scholarship from a scholarship granting
organization under IC 20-51-3 or a choice scholarship
under IC 20-51-4 in a preceding school year, including a
school year that does not immediately precede a school
year in which the individual receives a scholarship from
a scholarship granting organization under IC 20-51-3 or
a choice scholarship under IC 20-51-4; and
(ii) except as provided in IC 20-51-4-2.5, is a member of
a household with an annual income of not more than one
hundred fifty percent (150%) of the amount required for
the individual to qualify for the federal free or reduced
price lunch program.
(F) The individual:
(i) is enrolled in an eligible school at the time the
individual first meets the income requirements set forth
in item (ii); and
(ii) except as provided in IC 20-51-4-2.5, is a member of
a household with an annual income of not more than one
hundred fifty percent (150%) of the amount required for
the individual to qualify for the federal free or reduced
price lunch program.
(1) is located in Indiana;
(2) requires an eligible
(3) voluntarily agrees to enroll an eligible
(4) is accredited by either the state board or a national or regional accreditation agency that is recognized by the state board;
(5) administers the Indiana statewide testing for educational progress (ISTEP) program under IC 20-32-5;
(6) is not a charter school or the school corporation in which an eligible
(7) submits to the department data required for a category designation under IC 20-31-8-3.
(1) has legal settlement in Indiana;
(2) is at least five (5) years of age and less than twenty-two (22) years of age on the date in the school year specified in IC 20-33-2-7;
(3) either has been or is currently enrolled in a participating school; and
(4) is a member of a household with an annual income of not more than two hundred percent (200%) of the amount required for the individual to qualify for the federal free or reduced price lunch program.
(1) Provide a receipt to taxpayers for contributions made to the scholarship granting organization that will be used in a school scholarship program. The department of state revenue shall prescribe a standardized form for the receipt issued under this subdivision. The receipt must indicate the value of the contribution and part of the contribution being designated for use in a school scholarship program.
(2) Allow a taxpayer to designate a participating school for which the taxpayer's contribution must be used as scholarships.
(3) Use not more than ten percent (10%) of the total amount of contributions for administrative costs.
(b) The department may not award more than:
(1) seven thousand five hundred (7,500) choice scholarships for the school year beginning July 1, 2011, and ending June 30, 2012; and
(2) fifteen thousand (15,000) choice scholarships for the school year beginning July 1, 2012, and ending June 30, 2013.
The department shall establish the standards used to allocate choice scholarships among eligible choice scholarship students.
percent (300%) of the amount required for the individual to
qualify for the federal free or reduced price lunch program.
(1) The sum of the tuition, transfer tuition, and fees required for enrollment or attendance of the eligible choice scholarship student at the eligible school selected by the eligible
(2) An amount equal to:
(A) ninety percent (90%) of the state tuition support amount determined under section 5 of this chapter if the eligible
(i) an eligible choice scholarship student described in IC 20-51-1-4.3(3)(A) through IC 20-51-1-4.3(3)(C); or
(ii) for an individual described in IC 20-51-1-4.3(3)(D) through IC 20-51-1-4.3(3)(F), a member of a household with an annual income of not more than the amount required for the
(B) an eligible choice scholarship student described in IC 20-51-1-4.3(3)(D) through IC 20-51-1-4.3(3)(F), fifty percent (50%) of the state tuition support amount determined under section 5 of this chapter if the eligible
(3) If the eligible individual is enrolled in grade 1 through 8, the maximum choice scholarship that the eligible individual may receive for a school year:
(A) for a school year beginning before July 1, 2013,
(B) for a school year beginning after June 30, 2013, and before July 1, 2014, five thousand five hundred dollars ($5,500); or
(C) for a school year beginning after June 30, 2014, six thousand five hundred dollars ($6,500).
STEP ONE: Determine the school corporation in which the eligible
STEP TWO: Determine the amount of state tuition support that the school corporation identified under STEP ONE is eligible to receive under IC 20-43 for the calendar year in which the current school year begins, excluding amounts provided for special education grants under IC 20-43-7 and career and technical education grants under IC 20-43-8.
STEP THREE: Determine the result of:
(A) the STEP TWO amount; divided by
(B) the current ADM (as defined in IC 20-43-1-10) for the school corporation identified under STEP ONE for the calendar year used in STEP TWO.
(b) An eligible
eligible individual) choice scholarship student (or the parent of the
eligible choice scholarship student) for the purpose of paying the
educational costs described in section 4(1) of this chapter. For the
distribution to be valid, the distribution must be endorsed by both the
eligible individual (or the parent of the eligible individual) choice
scholarship student (or the parent of the eligible choice scholarship
student) and the eligible school providing educational services to the
eligible individual. choice scholarship student.
(b) This SECTION expires January 1, 2015.
