2005-2006 Bill 3652: Put Parents in Charge Act - South Carolina Legislature Online

South Carolina General Assembly
116th Session, 2005-2006

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H. 3652

STATUS INFORMATION

General Bill
Sponsors: Reps. W.D. Smith, Vaughn, Merrill, Loftis, Tripp, Scarborough, Hinson, Young, Ceips, J.R. Smith, Viers, Leach, Harrison, Chellis, Edge, Herbkersman, Clemmons, Davenport, Delleney, Hagood, Limehouse, McGee, Altman, Chalk, Haskins, Hamilton, Cato, Duncan, Barfield, Owens, Stewart, Rice and Witherspoon
Document Path: l:\council\bills\pt\2388sj05.doc
Companion/Similar bill(s): 1166, 3012, 3204, 4054, 4534

Introduced in the House on February 24, 2005
Tabled by the House on May 4, 2005

Summary: Put Parents in Charge Act

HISTORY OF LEGISLATIVE ACTIONS

     Date      Body   Action Description with journal page number
-------------------------------------------------------------------------------
   2/24/2005  House   Introduced and read first time HJ-45
   2/24/2005  House   Referred to Committee on Ways and Means HJ-45
   4/19/2005  House   Committee report: Majority favorable with amend., 
                        minority unfavorable Ways and Means HJ-48
   4/27/2005  House   Debate adjourned until Tuesday, May 3, 2005 HJ-234
    5/4/2005  House   Tabled HJ-125
    5/4/2005  House   Roll call Yeas-60  Nays-53 HJ-145

View the latest legislative information at the LPITS web site

VERSIONS OF THIS BILL

2/24/2005
4/19/2005

(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

COMMITTEE REPORT

April 19, 2005

H. 3652

Introduced by Reps. W.D. Smith, Vaughn, Merrill, Loftis, Tripp, Scarborough, Hinson, Young, Ceips, J.R. Smith, Viers, Leach, Harrison, Chellis, Edge, Herbkersman, Clemmons, Davenport, Delleney, Hagood, Limehouse, McGee, Altman, Chalk, Haskins, Hamilton, Cato, Duncan, Barfield, Owens, Stewart, Rice and Witherspoon

S. Printed 4/19/05--H.

Read the first time February 24, 2005.

THE COMMITTEE ON WAYS AND MEANS

To whom was referred a Bill (H. 3652) to enact the "South Carolina Put Parents In Charge Act" by adding Chapter 18 to Title 12, Code of Laws of South Carolina, 1976, so as to provide, etc., respectfully

REPORT:

That they have duly and carefully considered the same and recommend that the same do pass with amendments:

Amend the bill, as and if amended, by deleting all after the enacting clause and inserting:

/ SECTION 1. A. Title 12 of the 1976 Code is amended by adding:

"CHAPTER 18

South Carolina Put Parents

in Charge Pilot Program

Article 1

General Provisions

Section 12-18-10. This chapter may be cited as the 'South Carolina Put Parents in Charge Pilot Program'.

Section 12-18-20. The purpose of this chapter is to create a pilot program to be implemented in certain school districts in this State to:

(1) restore parental control of education;

(2) improve public school performance; and

(3) expand educational opportunities for children of families in poverty.

Section 12-18-30. As used in this chapter, unless otherwise required by the context:

(1) 'Average state per pupil expenditure' means, as applicable, an amount determined annually by the budget office not later than December fifteenth of each year. It should be an estimate of spending for the current school year, but must not be lower than actual per pupil spending for the preceding school year. The budget office shall divide the state's total expenditures for public education by the total number of students. 'State's total expenditures for public education' means all direct and indirect expenditures by the State regardless of the source of funds but excluding federal funds and local funds, and including, but not limited to, expenditures pursuant to the Education Finance Act of 1977, the South Carolina Educational Improvement Act of 1984, the South Carolina Education Accountability Act of 1998, expenditures by the State Department of Education, reimbursements to school districts for the property tax exemption contained in Section 12-37-251, disbursements to school districts for capital improvements funded from sources other than state bond issues, and expenditures for debt service on state bonds issued to fund school district capital improvements. 'Total number of students' means the total number of public school students in the State determined on a headcount basis as of the most recent count for average daily membership as provided in Section 59-20-40.

(2) 'Budget office' means the Office of State Budget in the Budget and Analyses Division of the State Budget and Control Board.

(3) 'Department' means the South Carolina Department of Revenue.

(4) 'Independent school' means a school, other than a public school, at which the compulsory attendance requirements of Section 59-56-10 may be met and that does not discriminate based on the grounds of race, color, or national origin. 'Independent school' includes home schools as provided in Article 1, Chapter 65, Title 59.

(5) 'Public school' means a public school in one of two school districts to be determined by the Department of Education. In choosing these districts, the Department of Education shall choose one district from the bottom twenty-five percent and one district from the top twenty-five percent of districts based on data relating to median household income compiled by the Department of Education, Office of Research.

(6) 'Qualifying student' means an individual:

(a) who is:

(i) enrolled at an independent school as a full-time student, as determined by the school, for which the school has a release of information form;

(ii) taught at home pursuant to Article 1, Chapter 65, Title 59; or

(iii) a resident of this State, and, if enrolled in a public school, is not a resident of the area zoned for that public school;

(b) who is in kindergarten through grade twelve;

(d) whose parent's or legal guardian's taxable income for South Carolina income tax purposes for the immediately preceding tax year is seventy-five thousand dollars or less. For purposes of determining if an individual is a qualifying student, the seventy-five thousand dollar amount must be increased by five thousand dollars for each exemption in excess of two that is claimed on the income tax return of the parents or legal guardian. By December fifteenth of each year, the department shall adjust cumulatively the seventy-five thousand dollar amount and the five thousand dollar amount in the same manner that brackets are adjusted in Section 1(f) of the Internal Revenue Code.

(7) 'Receipt' means a document that a school issues to the person that makes a tuition payment on behalf of a qualifying student. The department shall develop the form of the document the content of which must be limited to and include, the name and address of the school; the name, address and social security number of the qualifying student on whose behalf the tuition was paid; the name of the person paying the tuition; the names of all other persons who have paid tuition, in chronological order, during the then current calendar year on behalf of the qualifying student prior to the payment for which the receipt is being issued and including the total tuition paid by the named person; and the date and amount of tuition paid and the aggregate amount of tuition paid for the qualifying student. The document also must contain in the chronological listing the date and amount of tuition paid, or to be paid as evidenced by the notice of scholarship award required to be submitted to the school as provided in Section 12-18-760(B), by a scholarship granting organization if the source of funds for the scholarship is monies for which a credit may be claimed pursuant to Article 5 of this chapter. For a student taught at home pursuant to Article 1, Chapter 65, Title 59, 'receipt' means a document issued by the entity receiving a payment for tuition, which contains the name of the entity receiving the payment; the identity of the goods or services purchased; the date and amount of tuition paid; and, if the receipt is for personal services, the person's taxpayer identification number.

(8) 'Release of information form' means a form developed by a school that states that a parent or the legal guardian of the qualifying student consents to the release of the information contained in the receipt and is consistent with the requirements of 20 U.S.C. Section 1232g, Family Educational Rights and Privacy Act of 1974.

(9) 'Scholarship granting organization' means an organization that is exempt from taxation pursuant to Section 501(c)(3) of the Internal Revenue Code, gives scholarships to qualifying students from contributions that may be claimed as a credit pursuant to Article 5 of this chapter, is organized pursuant to South Carolina law and has complied with the provisions of this chapter.

(10) 'School' means a public school or independent school.

(11) 'State' means the government of the State of South Carolina.

(12) 'Tuition' means the amount charged for attending a public school when the student is not zoned for the school or for attending an independent school. 'Tuition' includes fees necessary for attending the respective school including, but not limited to, enrollment fees and transportation fees. For students taught at home pursuant to Article 1, Chapter 65, Title 59, 'tuition' means expenses incurred for tutors; textbooks; school supplies; computers including hardware and software; fees for membership in an association that sets the academic standards for the student's home schooling program; and academic lessons including, but not limited to, science, math, music, and art. Expenses for tutors or academic lessons may be included in 'tuition' only if the person providing the tutoring or academic lessons is a person other than the student's parent or legal guardian and who meets the requirements for providing the service as set by the standard-setting entity for that student's home school program. 'Tuition' does not include athletic fees.

Section 12-18-40. The department may promulgate regulations to aid in the performance of its duties pursuant to this chapter.

Section 12-18-50. The department may conduct examinations and investigations whenever it believes that the provisions of this chapter have been evaded or violated in any manner. All powers possessed by the department as provided in Title 12 to conduct examinations and investigations apply to examinations and investigations conducted pursuant to this section.

Section 12-18-55. Entities receiving a distribution of insurance premium tax revenues are held harmless against a reduction in that distribution attributable to the provisions of this chapter. The Department of Revenue shall make an alternate calculation of the distributions from insurance premium tax revenues as if the provisions of this chapter were not in effect, and each entity shall receive the larger of the regular or alternate calculation.

Section 12-18-60. If a student wants to transfer to a different school, the board of trustees of the school district shall approve or disapprove the transfer. If the board of trustees approves the transfer, the board may estimate the tuition to charge the transferring student.

Section 12-18-70. The annual determinations required in this chapter to be made by the budget office must be used by the department to set the limits on the amount of credit that may be claimed pursuant to Section 12-18-310 for the tax year beginning after the December thirty-first immediately following the determinations and on the amount for scholarships awarded pursuant to Section 12-18-750 for the calendar year beginning immediately following the determinations.

Article 3

Tuition Tax Credits

Section 12-18-310. (A) A person is allowed a tax credit for tuition paid for qualifying students to attend a school. The credit may be applied against the person's liability for taxes imposed pursuant to Chapter 6 of this title, license fees imposed pursuant to Chapter 20 of this title, or insurance premium taxes imposed pursuant to Chapter 7 of Title 38. Limitations upon the total amount of liability for taxes or license fees that can be reduced by the use of another credit allowed for that tax or license fee must be computed after the credit allowed by this section is used to reduce a tax or license fee liability pursuant to Chapter 6 or 20 of this title or Chapter 7 of Title 38. The credit may be claimed only by the person who actually paid the tuition except that if the credit is earned by one member of a controlled group of corporations, the credit may be used and applied by that member and by another member of the controlled group of corporations. As used in this article, 'controlled group of corporations' has the same meaning as provided in Section 12-6-3480(5). More than one person may claim a credit for the payment of a portion of the qualifying student's total tuition but only if the person actually paid the portion and the total credit taken by all persons does not exceed, in the aggregate, the limits set in this section. If the person's receipt indicates that the aggregate tuition paid by all persons, including scholarships from scholarship granting organizations if the source of funds for the scholarship is monies for which a credit may be claimed pursuant to Article 5 of this chapter, for the qualifying student exceeds the credit which may be claimed pursuant to this article, then that person may claim the credit only to the extent that the person's tuition payment does not exceed the allowable credit. No credit may be claimed by a person without a receipt. The credit is nonrefundable. A credit claimed pursuant to this section but not used in a taxable year may be carried forward for five years from the taxable year in which the credit is earned by the taxpayer. Credits which are carried forward must be used in the order earned. As used in this article, 'person' has the same meaning as provided in Section 12-2-20.

(B)(1) Except as otherwise provided in this section, the credit claimed for each qualifying student pursuant to this article may not exceed the lesser of:

(a) eighty percent of the actual tuition paid; or

(b) fifty-one percent of the average state per pupil expenditure.

(2) Notwithstanding the provisions of item (1), if the qualifying student is classified as educable mentally handicapped, learning disabilities handicapped, or speech handicapped, then the credit claimed for the qualifying student must not exceed the lesser of either eighty percent of the actual tuition paid or seventy-one percent of the average state per pupil expenditure. If the qualifying student is classified as trainable mentally handicapped, emotionally handicapped, orthopedically handicapped, or homebound, then the credit claimed for the qualifying student must not exceed the lesser of either eighty percent of the actual tuition paid or eighty-nine percent of the average state per pupil expenditure. If the qualifying student is classified as visually handicapped, hearing handicapped, or autistic, then the credit claimed for the qualifying student must not exceed the lesser of either eighty percent of the actual tuition paid or one hundred twenty-seven percent of the average state per pupil expenditure. If the qualifying student may be classified in more than one classification, the classification with the higher limit must be used.

(C)(1) Notwithstanding the provisions of subsection (B), for qualifying students who are eligible for free or reduced price meals or for free milk, as determined in accordance with 7 CFR Part 245, Determining Eligibility for Free and Reduced Price Meals and Free Milk in Schools, the credit claimed for each of those qualifying students may not exceed the lesser of either:

(a) one hundred percent of the actual tuition paid; or

(b) sixty-four percent of the average state per pupil expenditure.

(2) Notwithstanding the provisions of subsection (B) and (C)(1), for qualifying students who are eligible for free or reduced price meals or for free milk, as determined in accordance with 7 CFR Part 245, Determining Eligibility for Free and Reduced Price Meals and Free Milk in Schools, and who are classified in a category identified in subsection (B)(2), the credit claimed for each of those qualifying students may not exceed the lesser of either:

(a) one hundred percent of the actual tuition paid; or

(b)(i) eighty-nine percent of the average state per pupil expenditure if the qualifying student is classified as educable mentally handicapped, learning disabilities handicapped, or speech handicapped;

(ii) one hundred twelve percent of the average state per pupil expenditure if the qualifying student is classified as trainable mentally handicapped, emotionally handicapped, orthopedically handicapped, or homebound; or

(iii) one hundred sixty percent of the average state per pupil expenditure if the qualifying student is classified as visually handicapped, hearing handicapped, or autistic.

If a qualifying student may be classified in more than one classification, the classification with the higher limit must be used.

Article 5

Scholarship Tax Credit

Section 12-18-510. A person is allowed a tax credit for contributions to a scholarship granting organization that will be used in accordance with Section 12-18-750(A). The credit may be applied against the person's liability for taxes imposed pursuant to Chapter 6 of this title, license fees imposed pursuant to Chapter 20 of this title, or insurance premium taxes imposed pursuant to Chapter 7 of Title 38. Limitations upon the total amount of liability for taxes or license fees that can be reduced by the use of another credit allowed for that tax or license fee must be computed after the credit allowed by this section is used to reduce a tax or license fee liability pursuant to Chapter 6 or 20 of this title or Chapter 7 of Title 38. The credit may be claimed only by the person who actually made the contribution except that if the credit is earned by one member of a controlled group of corporations, the credit may be used and applied by that member and by another member of the controlled group of corporations. As used in this article, 'controlled group of corporations' has the same meaning as provided in Section 12-6-3480(5) and 'person' has the same meaning as provided in Section 12-2-20. The credit is nonrefundable. A credit claimed pursuant to this section but not used in a taxable year may be carried forward for five years from the taxable year in which the credit is earned by the taxpayer. Credits which are carried forward must be used in the order earned.

Section 12-18-520. A scholarship granting organization receiving contributions for which the person claims a credit pursuant to this article must segregate the contributions from other funds of the scholarship granting organization.

Section 12-18-530. A person may not contribute more than ten thousand dollars to scholarship granting organizations in one tax year.

Article 6

Public Education Tax Credit

Section 12-18-610. A person is allowed a tax credit for a contribution, donation, or gift to any school district, as defined in Section 59-1-160, in the State of South Carolina that will be used in accordance with Section 12-18-630. The credit may be applied against the person's liability for taxes imposed pursuant to Chapter 6 of this title, license fees imposed pursuant to Chapter 20 of this title, or insurance premium taxes imposed pursuant to Chapter 7 of Title 38. Limitations upon the total amount of liability for taxes or license fees that can be reduced by the use of another credit allowed for that tax or license fee must be computed after the credit allowed by this section is used to reduce a tax or license fee liability pursuant to Chapter 6 or 20 of this title or Chapter 7 of Title 38. The credit may be claimed only by the person who actually made the contribution except that if the credit is earned by one member of a controlled group of corporations, the credit may be used and applied by that member and by another member of the controlled group of corporations. As used in this article, 'Controlled Group of Corporations' has the same meaning as provided in Section 12-6-3480(5) and 'person' has the same meaning as provided in Section 12-2-20. The credit is nonrefundable. A credit claimed pursuant to this section but not used in a taxable year may be carried forward for five years from the taxable year in which the credit is earned by the taxpayer.

Credits which are carried forward must be used in the order earned.

Section 12-18-620. a school district, as defined in Section 59-1-160, receiving contributions, donations, or gifts for which the person claims a credit pursuant to this article must segregate the contributions from other funds of the school district.

Section 12-18-630. Contributions, donations, or gifts to a school district, as defined in Section 59-1-160, which qualify for the credit provided in Article 6 of this Chapter, must be used by the school district for the purpose of providing a public education by providing for classroom instruction, equipment, administrative costs and expenses, transportation, offset the debit service millage or school district millage, classroom materials, supplies, services, maintenance, rent, utilities, and compensation of personnel. These funds from any contribution, donation, or gift to a school district must not be considered part of the funds subject to the maintenance of local effort requirement provided in Section 59-21-1030.

Article 7

Scholarship Granting Organizations

Section 12-18-710. (A) A scholarship granting organization, not later than thirty days after its organization, shall register with the department as provided in this section. After that, the scholarship granting organization, not later than January thirty-first of each year, shall renew its registration with the department. Each scholarship granting organization registering with the department, whether initial or renewal, shall pay a fee of one hundred dollars.

(B) The registration must be in a form developed by the department and available both electronically and in paper form and be limited to and include:

(1) the full name, address, and telephone number of the scholarship granting organization;

(2) the name, address, and telephone number of the chief administrative official of the scholarship granting organization;

(3) the names, addresses, and telephone numbers of the individuals who serve on the scholarship granting organization's governing body;

(4) the scholarship granting organization's federal taxpayer identification number;

(5) a statement of the scholarship granting organization's status as a 501(c)(3) organization pursuant to the Internal Revenue Code;

(6) a statement that the scholarship granting organization does not discriminate in hiring on the basis of race, color, national origin, or disability; and

(7) certification by an authorized official of the scholarship granting organization that the information contained on the registration statement is true and correct.

(C) A scholarship granting organization shall file a supplemental registration statement indicating a substantial change in the information contained in the prior registration statement within thirty days after the date of the change.

(D) The department may revoke or suspend the registration of a scholarship granting organization for a violation of this chapter in accordance with Article 3, Chapter 23, Title 1, the South Carolina Administrative Procedures Act.

(E) Contributions to a scholarship granting organization that is not registered with the department or during the time that the registration of the scholarship granting organization is revoked or suspended do not qualify for the credit provided in Article 5 of this chapter.

Section 12-18-720. (A) Each scholarship granting organization, not later than June thirtieth of each year, shall file a report with the department covering that scholarship granting organization's activities during the most recently completed calendar year.

(B) Each report must be in a form developed by the department and available both electronically and in paper form and be limited to and include:

(1) the full name, address, and telephone number of the reporting scholarship granting organization;

(2) the name, address, and telephone number of the chief administrative official of the scholarship granting organization;

(3) the names, addresses, and telephone numbers of the individuals who serve on the scholarship granting organization's governing body;

(4) the scholarship granting organization's federal taxpayer identification number;

(5) a statement of the scholarship granting organization's status as a 501(c)(3) organization pursuant to the Internal Revenue Code;

(6) a statement of the monies received for which a credit may be claimed pursuant to Article 5 of this chapter during the covered period including:

(a) a listing of the amounts expended by number and amount of scholarships awarded by the school attended by the scholarship recipient and by the public school district in which the qualifying student would attend if the qualifying student were attending a public school;

(b) the total number and total dollar amount of scholarships awarded, the total number and total dollar amount of scholarships awarded to students eligible for free or reduced price meals or for free milk, as determined pursuant to 7 CFR Part 245, Determining Eligibility for Free and Reduced Price Meals and Free Milk in Schools, and the percentage of first-time recipients of scholarships who were enrolled in a public school in the year prior to the award of the scholarship; and

(c) the beginning balance for monies held for administrative expenses, a listing of the expenditures, by category, for administrative expenses including, but not limited to, marketing materials, office supplies, legal services, accounting services, rent, utilities, and compensation of personnel, and the ending balance for monies held for administrative expenses;

(7) a copy of the scholarship granting organization's annual financial and compliance audit of its accounts and records conducted by an independent certified public accountant and in accordance with regulations adopted by the department; and

(8) certification by an authorized official of the scholarship granting organization that the information contained in the report is true and correct.

(C) Information provided to the department pursuant to this section and Section 12-18-710 is available for public inspection and copying pursuant to the Freedom of Information Act. The department shall make information provided to the department pursuant to this section or Section 12-18-710 accessible to the public through the department's website.

Section 12-18-730. A scholarship granting organization shall notify the department whenever the scholarship granting organization receives more than five hundred thousand dollars of contributions in the aggregate in a calendar quarter. The notification must be filed with the department not later than thirty days after the close of the calendar quarter and must inform the department of the total amount of contributions received by the scholarship granting organization for the reporting period.

Section 12-18-740. (A) Scholarship granting organizations that receive or expect to receive fifty thousands dollars or more of contributions in the aggregate in a calendar year shall file and maintain with the department a surety bond in favor of the State executed by a surety company authorized to transact business in this State. Instead of a surety bond, the scholarship granting organization may file with the department letters of credit and certificates of deposit of financial institutions located within the State in which deposits are guaranteed by the federal government or any other financial instrument that the department considers appropriate. The amount of the surety bond, letter of credit, certificate of deposit, or any other instrument filed with the department must be in an amount equal to the aggregate amount of contributions the scholarship granting organization expects to receive during the calendar year. The surety bond must be on a form approved by the department. A surety bond or financial instrument filed with the department must be conditioned to pay a person who sustains a loss as a result of:

(1) the scholarship granting organization's violation of or failure to comply with any requirement of this chapter;

(2) the scholarship granting organization's misapplication or misappropriation of funds received by it; or

(3) an act of fraud or dishonesty committed by the scholarship granting organization in the administration of a scholarship program.

(B) An aggrieved person may institute an action in the county of the person's residence against the scholarship granting organization or the surety, or both, to recover on the surety bond or to recover from the letters of credit, certificates of deposit or other financial instrument accepted by the department.

Section 12-18-750. (A) Contributions to a scholarship granting organization, which qualify for the credit provided in Article 5 of this chapter, must be used by the scholarship granting organization only for the purpose of providing scholarships to qualifying students except that not more than five percent of the contributions may be used for administrative expenses of the scholarship granting organization including, but not limited to, marketing materials, office supplies, legal services, accounting services, rent, utilities, and compensation of personnel. Students taught at home pursuant to Article 1, Chapter 65, Title 59, are eligible for scholarships provided for in this section.

(B)(1) Except as otherwise provided in this section, in a calendar year, a scholarship granting organization may not award a scholarship to a qualifying student, which exceeds the lesser of:

(a) eighty percent of the amount of the tuition at the qualifying student's school; or

(b) fifty-one percent of the average state per pupil expenditure.

(2) Notwithstanding the provisions of item (1), if the qualifying student is classified as educable mentally handicapped, learning disabilities handicapped, or speech handicapped, then a scholarship granting organization may not award a scholarship to the qualifying student, which exceeds the lesser of either eighty percent of the amount of the tuition at the qualifying student's school or seventy-one percent of the average state per pupil expenditure. If the qualifying student is classified as trainable mentally handicapped, emotionally handicapped, orthopedically handicapped, or homebound, then a scholarship granting organization may not award a scholarship to the qualifying student, which exceeds the lesser of either eighty percent of the amount of the tuition at the qualifying student's school or eighty-nine percent of the average state per pupil expenditure. If the qualifying student is classified as visually handicapped, hearing handicapped, or autistic, then a scholarship granting organization may not award a scholarship to the qualifying student, which exceeds the lesser of either eighty percent of the amount of the tuition at the qualifying student's school or one hundred twenty-seven percent of the average state per pupil expenditure. If the qualifying student may be classified in more than one classification, the classification with the higher limit must be used.

(C)(1) Notwithstanding the provisions of subsection (B), for a qualifying student who is eligible for free or reduced price meals or for free milk, as determined pursuant to 7 CFR Part 245, Determining Eligibility for Free and Reduced Price Meals and Free Milk in Schools, the scholarship from the scholarship granting organization may not exceed the lesser of either:

(a) one hundred percent of the amount of the tuition at the qualifying student's school; or

(b) sixty-four percent of the average state per pupil expenditure.

(2) Notwithstanding the provisions of subsection (B) and (C)(1), for qualifying students who are eligible for free or reduced price meals or for free milk, as determined in accordance with 7 CFR Part 245, Determining Eligibility for Free and Reduced Price Meals and Free Milk in Schools, and who are classified in a category identified in subsection (B)(2), the scholarship from the scholarship granting organization may not exceed the lesser of either:

(a) one hundred percent of the amount of the tuition at the qualifying student's school; or

(iii) one hundred sixty percent of the average state per pupil expenditure if the qualifying student is classified as visually handicapped, hearing handicapped, or autistic.

If a qualifying student may be classified in more than one classification, the classification with the higher limit must be used.

(D) A qualifying student may receive a scholarship from more than one scholarship granting organization; however, the total amount of the scholarships received from all scholarship granting organizations may not exceed the calendar year limits as established in this section.

Section 12-18-760. (A) A scholarship granting organization, within thirty days after the day on which a person makes a contribution to the scholarship granting organization, shall provide to the person a written statement containing the name and address of the scholarship granting organization, the name of the person making the contribution, the amount of the contribution, the date of the contribution and certifying that the contribution must be used in accordance with this chapter. The written statement must inform the person that the statement is provided pursuant to this section and that the scholarship granting organization is segregating the contribution from other funds of the scholarship granting organization as required by the provisions of Article 5 of this chapter relating to tax credits for contributions to scholarship granting organizations.

(B) When a scholarship granting organization makes a determination to award a scholarship to a qualifying student from monies for which a credit may be claimed pursuant to Article 5 of this chapter, the scholarship granting organization immediately shall notify the school, at which the scholarship will be applied, of the award of the scholarship. The school immediately shall enter the information from the notice of scholarship award on the receipt applicable to the qualifying student. The school shall return to the scholarship granting organization monies from the scholarship, which exceed the credit applicable to the qualifying student pursuant to Article 3 of this chapter. In deciding whether monies must be returned to the scholarship granting organization, the school shall review the chronological record of tuition payments by or on behalf of the qualifying student including the date and amount contained on the notice of scholarship award. If the chronological record reflects that the date and amount of payment of tuition by scholarship, including the date and amount indicated on the notice of scholarship award, and tuition payments received prior to the scholarship activity causes the credit applicable to the qualifying student to be exceeded, then the school shall return the scholarship monies that exceed the credit to the scholarship granting organization.

(C) Scholarship granting organizations shall make scholarship payments by check payable to the qualifying student's parents or legal guardian and to the school at which the scholarship is to be used. The check may be delivered or mailed by the scholarship granting organization to the school at which the scholarship is to be used. The check must be endorsed by all payees. The check may be endorsed by the school on behalf of the student's parents or legal guardian if the parents or legal guardian have placed on file with the school written authorization to endorse the check.

Section 12-18-770. Except for the portion of a contribution a scholarship granting organization retains to expend for administrative expenses pursuant to Section 12-18-750(A), a scholarship granting organization shall expend, pursuant to this chapter, a contribution by the end of the calendar quarter which is at least twelve months from the date on which the scholarship granting organization receives the contribution. The scholarship granting organization shall remit to the State, for deposit in the general fund, monies not expended within the time period provided in this section. The remittance to the State must be made within thirty days after the end of each calendar quarter.

Section 12-18-780. A scholarship received by a qualifying student is exempt from the tax imposed pursuant to Chapter 6 of this title.

Article 9

Accountability

Section 12-18-910. If a qualifying student's enrollment in an independent school is terminated before the end of the school year and the independent school charges tuition of one thousand dollars or more each school year, the independent school shall refund to the scholarship granting organization and other tuition payers any tuition paid that is applicable to a semester or term beyond the semester or term during which the qualifying student's enrollment is terminated. At the time of making the refund, the independent school shall issue a receipt reflecting the date, amount, and payee for each refund.

Section 12-18-920. (A) Annually, the State Budget and Control Board shall provide for the preparation of a report on the impact of the implementation of this chapter on school enrollment and state and local funding of public schools for the fiscal year most recently completed. The report must include, but need not be limited to, an analysis of and statement on the:

(1) change in public school enrollment, by school, attributable to this chapter;

(2) amount of credits claimed, by type, for state tax purposes; and

(3) amount of funds the State would have had to expend for public schools under the education funding formula in existence on or before the enactment of this chapter and the amount actually expended by the State.

(B) The report must be submitted by December first of each year to the Governor, the Chairman of the Senate Finance Committee, the Chairman of the Senate Education Committee, the Chairman of the House Ways and Means Committee, and the Chairman of the House Education and Public Works Committee.

Section 12-18-930. (A)(1) In addition to the annual report as provided in Section 12-18-920, the State Budget and Control Board shall provide for a long-term evaluation of the impact of this chapter. The evaluation must be conducted by contract with one or more qualified persons or entities with previous experience evaluating school choice programs and must be conducted for a minimum of twelve years. The evaluation must include an assessment of the:

(a) level of parental satisfaction for parents of students participating in the tuition credit or scholarship programs provided for in this chapter;

(b) level of parental satisfaction for parents of students in public schools;

(d) level of student satisfaction with the tuition credit or scholarship programs provided for in this chapter;

(e) level of student satisfaction for students attending public schools;

(f) impact of the provisions of this chapter on public schools, public school students, independent schools, independent school students, and the quality of life in a community; and

(g) impact of the provisions of this chapter on school capacity, availability, and quality.

(2) The evaluation must be conducted using appropriate analytical and behavioral science methodologies and must protect the identity of participating schools and students by, at a minimum, keeping anonymous all disaggregated data other than that for the categories of grade, gender, race and ethnicity. The evaluation of public and independent school students must compute the relative efficiency of public and independent schools, and a comparison of acceptance rates into college, while adjusting or controlling for student and family background.

(B) State and local government entities shall cooperate with the persons or entities conducting the evaluation provided for in subsection (A). Scholarship granting organizations shall cooperate with the persons or entities conducting the evaluation. Cooperation includes providing available student assessment results and other information needed to complete the evaluation.

(C) The State Budget and Control Board shall pay the cost of the evaluation from funds available to it for that purpose except that state funds must not be used to pay the cost of the evaluation.

(D) By January thirty-first each year, the State Budget and Control Board shall provide to each member of the General Assembly interim reports of the results of the evaluation. Upon completion of the evaluation, the State Budget and Control Board shall provide a final report to each member of the General Assembly. At the same time as the final report is made public, the persons or entities who conducted the evaluation must make their data and methodology available for public review and inspection, but only if the release of the data and methodology is in compliance with 20 U.S.C. Section 1232g, Family Educational Rights and Privacy Act of 1974.

Section 12-18-940. The pilot program established pursuant to this chapter expires July 1, 2017, at which time the General Assembly may extend the pilot program for an additional period of time or may extend the program statewide as it determines by law."

B. Notwithstanding any other provision of law, the credit that may be claimed for each qualifying student pursuant to Section 12-18-310, as added by subsection A. of this SECTION, for the 2006 tax year is limited to tuition paid for academic periods beginning after July 1, 2006, and for the 2006 tax year the credit may not exceed one-half of the amount applicable to the qualifying student as determined in accordance with Section 12-18-310(B) and (C). Notwithstanding any other provision of law, a scholarship granting organization may not award a scholarship to a qualifying student for academic periods beginning before July 1, 2006.

SECTION 2. If a section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, this holding does not affect the constitutionality or the validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this act, and each section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words thereof may be declared to be unconstitutional, invalid, or otherwise ineffective.

SECTION 3. This act takes effect upon approval by the Governor and the tax credits provided for in Section 1 begin with tax year 2006. Registration of scholarship granting organizations as required by Section 12-18-710 must begin not later than ninety days after the effective date of this act. /

Renumber sections to conform.

Amend title to conform.

Amend the bill, as and if amended, Section 12-18-310 as contained in SECTION 1.A., by adding after subsection (C) the following:

/ (D)(1) The credit may be taken for the 2006 tax year only for qualifying students in kindergarten through fourth grade as of the fall 2006 semester or term, except that the credit must not be taken for students who were enrolled in an independent school as of October 1, 2004.

(2) The credit may be taken for the 2007 tax year only for qualifying students in kindergarten through sixth grade as of the fall 2007 semester or term, except that the credit must not be taken for students who were enrolled in an independent school as of October 1, 2004.

(3) The credit may be taken for the 2008 tax year only for qualifying students who were in kindergarten through eighth grade as of the fall 2008 semester or term, except that the credit must not be taken for students who were enrolled in second through eighth grade in an independent school as of October 1, 2004.

(4) The credit may be taken for the 2009 tax year only for qualifying students who were in kindergarten through tenth grade as of the fall 2009 semester or term, except that the credit must not be taken for students who were enrolled in fifth through tenth grade in an independent school as of October 1, 2004.

(5) Beginning with the 2010 tax year, the credit may be taken each year for a qualifying student as provided in this section./

Renumber sections to conform.

Amend title to conform.

Majority favorable. Minority unfavorable.

ROBERT W. HARRELL, JR. GILDA COBB-HUNTER

For Majority. KENNETH KENNEDY

For Minority.

STATEMENT OF ESTIMATED FISCAL IMPACT

REVENUE IMPACT1/

This bill is expected to reduce general fund income tax, corporate license fee, and insurance premium tax revenues by $29,036,032 in FY 2006-07, $62,123,068 in FY 2007-08, $106,798,849 in FY 2008-09, $171,523,089 in FY 2009-10, and $231,590,070 in FY 2010-11.

Explanation

This bill creates tuition tax credits for tuition paid to public or independent schools and scholarship tax credits for contributions to scholarship granting organizations beginning in FY 2006-07. The proposed credits may not exceed the lesser of 80% of tuition paid or 51% of all state appropriations for K-12 operations on a per pupil basis, which is expected to total $4,810 in FY 2006-07. These appropriations are expected to grow at 3% annually. Tax credits claimed may exceed these limits for students that qualify for free or reduced priced meals or free milk and handicapped students as specified in the bill. Based on current classifications, we expect that parents of 80% of the students eligible for the credit will receive a tuition tax credit based on 51% of the average state per pupil expenditure and the remaining 20% of parents would receive an increased credit based on 100% of the average state per pupil expenditure due to free or reduced priced meal eligibility or a handicapped classification. Tax credits for contributions to scholarship granting organizations are for 100% of the contribution; however, scholarship granting organizations would be constrained as to the amount of their scholarship awards by the same restrictions imposed on the tuition tax credit. We estimate that expenditures on home school students will not reach the full credits allowed in this bill and their yearly expenses would be $750, $1,250, and $1,750 per student for the lower, middle and upper grades, respectively. The credits have two phase-in restrictions. Students that attend non-public schools as of October 1, 2004 are not eligible until tax year 2008. Public school students in K-4 are eligible in tax year 2006, K-6 in tax year 2007, K-8 in tax year 2008, K-10 in tax year 2009, and all students in public and non-public schools are eligible in tax year 2010. It is estimated for FY 2006-07, with the phase-in restrictions, the tuition and scholarship tax credits will be claimed on 3,790 students currently in public schools, 2,021 home-school students, 6,713 private school students, and 136 students that are in-migrants, or not currently residing in South Carolina. These estimated 12,661 students will generate tuition tax credits of $12,437,875. Based on actual experience in Arizona and Florida, we expect donations to scholarship granting organizations for scholarship tax credits to total $16,598,157. The total revenue reduction is expected to be $29,036,032 in FY 2006-07. By FY 2010-11, we anticipate that 77,253 students, 10,071 from public schools, 16,198 from home schools, 50,824 from private schools, and 160 in-migrants to claim $145,392,616 in tuition tax credits. Contributions from individuals and corporation to scholarship granting organizations are expected to create scholarship tax credits that total $86,197,454, for a total revenue reduction of $231,590,070 in that fiscal year.

Approved By:

William C. Gillespie

Board of Economic Advisors

1/ This statement meets the requirement of Section 2-7-71 for a state revenue impact by the BEA.

STATEMENT OF ESTIMATED FISCAL IMPACT

REVENUE IMPACT1/

This bill is expected to increase local school district revenues by $354,407 in FY 2006-07, after anticipated state expenditure reductions on a per pupil basis. These estimates are based on an anticipated reduction of 3,790 public school students. By FY 2010-11, we expect 10,071 public school students to move to independent schools due to the availability of the tax credits. This would increase local school district revenues by $1,538,290. The table below provides details of the estimated expenditure increases by fiscal year.

Explanation

We expect the potential local school district expenditure savings to be based on the anticipated reduction in the number of teachers and a small amount of the remaining fixed costs. Other expenditures for counseling, libraries, building upkeep, and leadership positions would generally not be reduced for the anticipated marginal reduction in the number of students. Once the act is fully implemented in FY 2010-11, we estimate that a total of 10,071 students would move from public schools to independent. This expected reduction amounts to less than 1.5% of the expected 675,000 public school students in FY 2010-11. Based on the marginal reduction in the number of students, we anticipate that the school districts could eliminate 1 teacher for every 20 students moving to independent schools. This anticipates that school districts will maintain the current student teacher ratio and not try to reduce the number of students per teacher below the current estimated ratio of 20 to 1. In addition, we expect that the school districts would be able to reduce expenditures on the remaining fixed costs by 5%. Local revenues will also be impacted by the actions taken at the state level in their funding of K-12 operations. Expenditure savings taken at the state level will reduce the total revenues used to fund K-12 operations at the school district level. The estimated potential state expenditure savings, based on expenditures directly related to students are included in the table below.

Fiscal Students Estimated Estimated Estimated Estimated Estimated

Year Moving Reduction SC Potential Potential Potential

to in the Average Local State Local

Independent Number Teacher Expenditure Appropriation Revenue

Schools of Teachers Salary Reductions Reductions Increase

from 20 to 1 (Teacher Net of State

Public Student to Salaries plus

Schools Teacher Ratio 5% of total

local expenditures

FY 2006

-07 3,790 190 $43,805 $10,218,935 $10,573,342 $354,407

FY 2007

-08 5,431 272 $44,901 $14,974,082 $15,605,946 $631,864

FY 2008

-09 7,802 390 $46,023 $22,142,076 $23,091,570 $949,494

FY 2009

-10 8,882 444 $47,174 $25,861,275 $27,076,686 $1,215,411

FY 2010

-11 10,071 504 $48,353 $30,084,091 $31,622,381 $1,538,290

Approved By:

William C. Gillespie

Board of Economic Advisors

1/ This statement meets the requirement of Section 2-7-76 for a local revenue impact by the Office of Economic Research.

A BILL

TO ENACT THE "SOUTH CAROLINA PUT PARENTS IN CHARGE ACT" BY ADDING CHAPTER 18 TO TITLE 12, CODE OF LAWS OF SOUTH CAROLINA, 1976, SO AS TO PROVIDE CREDITS FOR CERTAIN TAXES AND LICENSE FEES FOR TUITION PAID TO PUBLIC OR INDEPENDENT SCHOOLS, TO PROVIDE CREDITS FOR CERTAIN TAXES AND LICENSE FEES FOR CONTRIBUTIONS TO SCHOLARSHIP GRANTING ORGANIZATIONS, TO PROVIDE FOR THE REGULATION, REGISTRATION, AND REPORTING OF SCHOLARSHIP GRANTING ORGANIZATIONS, AND TO PROVIDE FOR REPORTING AND ACCOUNTABILITY OF THE IMPLEMENTATION OF THIS CHAPTER.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION 1. A. Title 12 of the 1976 Code is amended by adding:

"CHAPTER 18

South Carolina Put Parents in Charge Act

Article 1

General Provisions

Section 12-18-10. This chapter may be cited as the 'South Carolina Put Parents in Charge Act'.

Section 12-18-20. The purpose of this chapter is to:

(1) restore parental control of education;

(2) improve public school performance; and

(3) expand educational opportunities for children of families in poverty.

Section 12-18-30. As used in this chapter, unless otherwise required by the context:

(2) 'Budget office' means the Office of State Budget in the Budget and Analyses Division of the State Budget and Control Board.

(3) 'Department' means the South Carolina Department of Revenue.

(5) 'Public school' means a public school as defined in Section 59-1-120.

(6) 'Qualifying student' means an individual:

(a) who is:

(i) enrolled at an independent school as a full-time student, as determined by the school, for which the school has a release of information form;

(ii) taught at home pursuant to Article 1, Chapter 65, Title 59; or

(iii) a resident of this State, and, if enrolled in a public school, is not a resident of the school district operating that public school;

(b) who is in kindergarten through grade twelve; and

(c) whose parent's or legal guardian's taxable income for South Carolina income tax purposes for the immediately preceding tax year is seventy-five thousand dollars or less. For purposes of determining if an individual is a qualifying student, the seventy-five thousand dollar amount must be increased by five thousand dollars for each exemption in excess of two that is claimed on the income tax return of the parents or legal guardian. By December fifteenth of each year, the department shall adjust cumulatively the seventy-five thousand dollar amount and the five thousand dollar amount in the same manner that brackets are adjusted in Section 1(f) of the Internal Revenue Code.

(10) 'School' means a public school or independent school.

(11) 'State' means the government of the State of South Carolina.

(12) 'Tuition' means the amount charged for attending a public school when the student is not a resident of the school district or for attending an independent school. 'Tuition' includes fees necessary for attending the respective school including, but not limited to, enrollment fees and transportation fees. For students taught at home pursuant to Article 1, Chapter 65, Title 59, 'tuition' means expenses incurred for tutors; textbooks; school supplies; computers including hardware and software; fees for membership in an association that sets the academic standards for the student's home schooling program; and academic lessons including, but not limited to, science, math, music, and art. Expenses for tutors or academic lessons may be included in 'tuition' only if the person providing the tutoring or academic lessons is a person other than the student's parent or legal guardian and who meets the requirements for providing the service as set by the standard-setting entity for that student's home school program. 'Tuition' does not include athletic fees.

Section 12-18-40. The department may promulgate regulations to aid in the performance of its duties pursuant to this chapter.

Section 12-18-60. If a student wants to transfer to a different school district, the board of trustees of the school district to which the student wishes to transfer shall approve or disapprove the transfer. If the board of trustees approves the transfer, the board may estimate the tuition to charge the transferring student.

Article 3

Tuition Tax Credits

(B)(1) Except as otherwise provided in this section, the credit claimed for each qualifying student pursuant to this article may not exceed the lesser of:

(a) eighty percent of the actual tuition paid; or

(b) fifty-one percent of the average state per pupil expenditure.

(a) one hundred percent of the actual tuition paid; or

(b) sixty-four percent of the average state per pupil expenditure.

(a) one hundred percent of the actual tuition paid; or

(iii) one hundred sixty percent of the average state per pupil expenditure if the qualifying student is classified as visually handicapped, hearing handicapped, or autistic.

If a qualifying student may be classified in more than one classification, the classification with the higher limit must be used.

(D)(1) The credit may be taken for the 2006 tax year only for qualifying students in kindergarten through fourth grade as of the fall 2006 semester or term, except that the credit must not be taken for students who were enrolled in an independent school as of October 1, 2004.

(5) Beginning with the 2010 tax year, the credit may be taken each year for a qualifying student as provided in this section.