A bill

to amend the South Carolina Code of Laws by adding Section 59-8-110 so as to define necessary terms; by adding Section 59-8-120 so as to provide timeline and scholarship application process guidelines; by adding Section 59-8-130 so as to establish the south carolina education scholarship trust fund; by adding Section 59-8-140 so as to establish an online electronic payment system; by adding Section 59-8-150 so as to provide guidelines for if a program of academic instruction is terminated before the end of the semester; by adding Section 59-8-160 so as to limit the number of scholarship students for specified school years; by adding Section 59-8-170 so as to provide for the application process and establishment of education service providers; by adding Section 59-8-180 so as to provide guidelines for informing students and their parents of program eligibility; by adding Section 59-8-190 so as to ensure equitable treatment and personal safety of all scholarship students; by adding Section 59-8-200 so as to require that a scholarship student's resident school district provide a parent and the education service provider with the student's school records; by adding Section 59-8-210 so as to establish the estf review panel; by adding Section 59-8-220 so as to provide that the provisions of the chapter do not restrict a school district's ability to enact or enforce a district's student transfer policy.

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

SECTION 1.Title 59 of the S.C. Code is amended by adding:

CHAPTER 8

Education Scholarship Trust Fund

Section 59-8-110. For purposes of this chapter:

(1) "Department" means the South Carolina Department of Education.

(2) "Education Scholarship Trust Fund," "ESTF," or "fund" means the individual account that is administered by the department to which funds are allocated to the parent of an eligible student to pay for qualifying expenses.

(3) "Eligible school" means a South Carolina public school or an independent school that chooses to participate in the program. An eligible school does not include charter schools.

(4)(a) "Eligible student" or "qualifying student" means a student who:

(i) is a resident of this State;

(ii) is enrolled in the Children's Health Insurance Program (CHIP) or Medicaid or is a member of a household with an income at or below the South Carolina upper income limit for CHIP; and

(iii) of which one or more of the following is true:

(A) is entering kindergarten or first grade;

(B) was previously enrolled in and attended a South Carolina public school during one of the three school years immediately preceding the school year in which the student would be enrolled under this program;

(C) received a scholarship pursuant to this chapter for the previous school year; or

(D) has a sibling living in the same household who receives a scholarship pursuant to this chapter.

(b) Students participating in the Educational Credit for Exceptional Needs Children's Fund program as provided in Section 12-6-3790 are not considered to be qualifying students for the purposes of this chapter.

(c) A qualifying student also includes up to five hundred students whose parent is an active duty member of the Armed Forces of the United States.

(d) A qualifying student also includes up to five hundred students that are entering kindergarten and were enrolled in the South Carolina Early Reading Development and Education program in the immediately previous school year.

(5) "IDEA" means the Individuals with Disabilities Education Act found in 20 U.S.C. Section 1400, et seq.

(6) "Independent school" means a school, other than a public school at which the compulsory attendance requirements of Section 59-65-10 may be met and:

(a) does not unlawfully discriminate in the admissions process on the basis of race, color, sex, religion, or national origin with the exception that schools serving a single sex may participate provided they meet all other requirements;

(b) is located in this State;

(c) has an educational curriculum that includes courses set forth in the state's diploma requirements, and where the students attending are administered national achievement or state standardized tests, or both, at progressive grade levels to determine student progress; and

(d) has school facilities that are subject to applicable federal, state, and local laws.

(7) "Parent" means a resident of this State who is the natural or adoptive parent, legal guardian, custodian, or other person with legal authority to act on behalf of an eligible student.

(8) "Education service provider" means an eligible school or organization approved by the department that receives payments from ESTF to provide educational goods and services to scholarship students.

(9) "Program" means the ESTF program created by this chapter.

(10) "Resident school district" means the public school district in which the student is domiciled.

(11) "Scholarship" means education funding allocated from an account established pursuant to this chapter.

(12) "Scholarship student" means an eligible student who is participating in the Education Scholarship Trust Fund program.

(13) "Substantial misuse" means willfully and knowingly receiving or spending any portion of a scholarship for any purpose other than a qualifying expense.

(14) "Qualifying expense" means:

(a) tuition and fees of an education service provider;

(b) textbooks, curricula, or other instructional materials including, but not limited to, any supplemental materials or associated online instruction required by either a curriculum or an education service provider;

(c) computer hardware or other technological devices that are used primarily for a scholarship student's educational needs and approved by the department or a licensed physician;

(d) tuition and fees for an approved nonpublic online education service provider or course;

(e) fees for approved:

(i) national norm-referenced examinations, advanced placement examinations, or similar assessments;

(ii) industry certification exams; or

(ii) examinations related to college or university admission;

(f) educational services for pupils with disabilities from a licensed or accredited practitioner or provider including, but not limited to, occupational, behavioral, physical, and speech-language therapies;

(g) approved contracted services from a public school district, including individual classes, after school tutoring services, transportation, or fees or costs associated with participation in extracurricular activities; or

(h) fees for transportation paid to a fee-for-service transportation provider for the scholarship student to travel to and from an eligible provider as defined in this section, but not to exceed seven hundred fifty dollars for each school year.

Section 59-8-120.(A) The department shall create a standard application process and establish the timeline for parents to establish the eligibility of their student for the Education Scholarship Trust Fund program. The application window established shall last at least forty-five days, opening no earlier than January fifteenth and closing no later than March fifteenth each calendar year.

(B) Pursuant to the timeline established pursuant to subsection (A), the department shall:

(1) use a lottery system to award scholarships in the event the number of eligible students exceeds five thousand by the deadline. Students already participating in the program are automatically approved for participation in the immediate subsequent year; and

(2) enroll and issue award letters within thirty days of the deadline for receipt of completed applications and all required documentation.

(C)(1) Before awarding a scholarship, the department shall document the student's eligibility with the following documentation:

(a) a card issued in the student's name from the Department of Health and Human Services for Medicaid eligibility or Children's Health Insurance Program (CHIP) eligibility;

(b) other documentation as the department may require to demonstrate that the family income is equal to the poverty level of Medicaid eligibility;

(c) a record to provide that the student's parent is an active member of the Armed Forces of the United States; or

(d) documentation that the child was enrolled in the South Carolina Early Reading Development and Education program.

(2) Before awarding a scholarship, the department shall have obtained evidence of the student's eligibility through the card issued in the student's name from the Department of Health and Human Services for Medicaid eligibility included as applicable with application documentation.

(D) The department shall approve an application for scholarship if:

(1) the parent submits an annual application for a scholarship in accordance with the application and procedures established by the department;

(2) the student on whose behalf the parent is applying is an eligible student;

(3) funds are available for the ESTF; and

(4) the parent signs an annual agreement with the department:

(a) to provide, at a minimum, a program of academic instruction for the eligible student in at least the subjects of English/language arts to include writing, mathematics, social studies, and science;

(b) to acknowledge and agree to comply with the education service provider's prescribed curriculum, dress code, and other requirements of enrolled students;

(c) to ensure the scholarship student takes assessments as referenced in Section 59-8-150 or provides assessments in a similar manner through other means if the scholarship student does not receive full-time instruction from an education service provider;

(d) to use program funds for qualifying expenses only for an approved provider to educate the scholarship student, subject to penalty;

(e) not to enroll their scholarship student in a public school as a full-time student in the resident school district, as defined in this chapter;

(f) not to participate in a home instruction program under Sections 59-65-40, 59-65-45, or 59-65-47;

(g) that includes documentation of the consultation process between the parent, the resident school district, the education service provider, and any school district that the education service provider contracts with under an IEP or services plan, for each scholarship student with a disability regarding the special education and related services, and the manner by which these services as listed in the student's IEP or services plan, will be provided to a scholarship student with a disability; and

(h) to confirm that, if the parent's child is a student with disabilities, the parent has received notice from the department that participation in the ESTF program is a parental placement of the scholarship student under IDEA, along with an explanation of the rights that parentally placed students possess under IDEA and any applicable state laws and regulations, including the consultation process provided for in 20 U.S.C. Section 1412(a)(10) and the Individual Education Program requirements described in Section 1414(d) of IDEA.

(E) The department shall make available on its website in a conspicuous location information in conformity with 34 C.F.R Sections 300.130 through 300.144, Assistance to States for the Education of Children with Disabilities, explaining to parents the rights of children with disabilities under IDEA both in public schools and as parentally placed students in private schools.

(F) A parent will be allowed to make payments for the cost of educational goods and services not covered by the funds in their student's ESTF; however, personal deposits into an ESTF account are prohibited.

(G) Funds received pursuant to this section do not constitute taxable income to the parent of the scholarship student or to the student.

(H) A parent's signed agreement under subsection (D)(4) satisfies the state's compulsory attendance law pursuant to Section 59-65-10.

(I) The State Board of Education shall promulgate regulations for the administration of the program as may be applicable.

(J) The department may contract with qualified organizations to administer the program application process or specific functions, maintenance, and monitoring of the program application process as required above.

Section 59-8-130.(A) There is established at the department, the "South Carolina Education Scholarship Trust Fund" that is separate and distinct from the general fund, consisting of monies appropriated to the department to provide scholarships to eligible students for qualifying expenses. The fund must receive and hold all monies allocated for it as well as all earnings until disbursed as provided in this section.

(B) The department shall administer the fund and is responsible for keeping records, managing accounts, and disbursing scholarships awarded pursuant to this section and as directed by the parent.

(C) There is allocated seventy-five million dollars from the contingency reserve fund to the South Carolina Education Scholarship Trust Fund to be used as described in this act. In the first year in which the account is funded, scholarships may be awarded in an amount not exceeding five thousand dollars to a qualifying student.

(D) The department shall create an individual online ESTF account for each scholarship student.

(1) The parent must be able to access the individual online account for the scholarship student using a secure portal.

(2) The individual scholarship student's account must be created within thirty days of the application approval.

(E) The department shall make payments to an individual scholarship student's account from the ETSF on a quarterly basis with the first payment being distributed by July thirty-first of each year.

(F) By September first of each school year and again on January fifteenth and March fifteenth of the school year, the department shall compare the list of scholarship students with the public school enrollment lists to avoid duplicate payments.

(G) Education service providers may not refund, rebate, or share a student's scholarship funds directly with a parent or the scholarship student. The funds in an account may only be used for qualifying expenses as defined in this chapter and provided by the department.

(H) The department may contract with qualified organizations to administer the program.

Section 59-8-140.(A) The department shall develop an online electronic system for payment for services authorized by participating parents pursuant to this chapter and the guidelines provided by the department. Parents may not be reimbursed for out-of-pocket expenses.

(B) The department may contract with qualified vendors to manage accounts and shall establish reasonable fees for private financial management firms participating in the program based upon market rates.

(C) The department may contract with qualified organizations to administer the program or specific functions of the program.

(D) Payments made by the department must remain in force until a parent or scholarship student is proven to have participated in a prohibited activity specified in this chapter, a scholarship student returns to a public school in his resident public school district, or a scholarship student graduates from high school or attains twenty-two years of age, whichever occurs first. A scholarship student who enrolls in his resident public school district is considered to have returned to a public school for the purpose of determining the end of the term.

(E) The department may suspend or deactivate an account for substantial misuse or the scholarship student leaves the program for any reason, at which time any remaining funds must revert to the ESTF.

(F) Unused funds must be rolled over to the following school year for a scholarship student who applies and continues to meet eligibility requirements to participate in the program.

(G) A scholarship terminates automatically if the student is no longer domiciled in this State, and any money remaining in the account reverts to the ESTF.

(H) Only one account may be established for a scholarship student.

Section 59-8-150.If a scholarship student's program of academic instruction is terminated for any reason before the end of the semester or school year and the student does not resume instruction within thirty days, then the parent shall notify the department and remaining funds in the account reverts to the ESTF.

Section 59-8-160.(A) Beginning with the 2024-2025 School Year, the annual number of ESTF students is limited by the following capacity:

(1) in School Year 2024-2025, the program is limited to five thousand scholarship students;

(2) in School Year 2025-2026, the program is limited to five thousand scholarship students;

(3) in School Year 2026-2027, the program is limited to five thousand scholarship students; and

(4) for all subsequent school years, the program is limited to fifteen thousand scholarship students.

(B) In 2027, and every five years thereafter, the department shall conduct an eligibility and use review of the program and shall make recommendations to the General Assembly to improve the program.

Section 59-8-170.(A)(1) The department must develop an application approval process for participation in the ESTF program for education service providers.

(2) The department must require an independent school that applies to be an education service provider to be located in the State, to have an educational curriculum that includes courses set forth in the state's diploma requirements, and to meet the compulsory attendance and State Board of Education approval requirements in Section 59-65-10.

(3) An education service provider that participated in the program in the previous school year and desires to participate in the program in the current school year shall reapply to the department. The education service provider reapplying shall certify to the department that it continues to meet all program requirements. An education service provider required to administer academic testing shall provide to the department test score data from the previous school year. If individual student test score data is not submitted, then the department shall remove the education service provider from the program.

(4) By February first of each year, the department will certify the list of approved education service providers for participation in the program that meet all program requirements. The department may waive the deadline requirement upon good cause shown by an education service provider.

(5) An education service provider that is denied approval pursuant to this section may seek review by filing a request for a contested case hearing with the Administrative Law Court in accordance with the court's rules of procedure.

(6) By February fifteenth of each year, the department shall publish on its website a comprehensive list of approved education service providers. The list must include the name, address, telephone number, and website address for each education service provider.

(B) If approved by the department, new education service providers may be added to the list of approved providers on a rolling basis. The providers will be added to the comprehensive list available on the department's website.

(C) The department may bar an education service provider from the program if the department establishes that the education service provider has:

(1) failed to comply with the accountability standards established in this section; or

(2) failed to provide the scholarship student with the educational services funded by the account.

(D) The department shall create procedures to ensure that a fair process exists to determine whether an education service provider should be barred from receiving payments from accounts.

(1) If the department decides to bar an education service provider from the program, it shall notify affected students and their parents of this decision as quickly as possible.

(2) Education service providers may appeal the department's decision to bar the education service provider from receiving payments from accounts pursuant to the Administrative Procedures Act.

(E) The State Board of Education shall promulgate regulations to allow scholarship students to return to their resident school districts during the course of their participation in the program.

Section 59-8-180.(A) The department shall adopt procedures to inform students and their parents annually of their eligibility for the program.

(B) The department shall adopt procedures to annually inform scholarship students and their parents of the approved education service providers.

(C) The department shall provide to parents of a scholarship student written instructions for the allowable uses of an account and the responsibilities of parents and the duties of the department.

(D) The department may declare that a parent is ineligible for continuation in the program due to substantial misuse of their account funds.

(E) The department may conduct or contract for the auditing of accounts and shall, at a minimum, conduct random audits of accounts on an annual basis.

(F) The department may refer cases of substantial misuse of funds to law enforcement agencies for investigation.

(G) The department may contract with one or more qualified organizations to administer some or all portions of this program.

(H) The department shall maintain a record of the number of applications received annually for the program, the number of students accepted into the program each year, and the number of students not accepted into the program each year with a corresponding explanation as to why the student was not accepted into the program. The department shall compile this information and provide a report to the General Assembly by December thirty-first of each year.

Section 59-8-190.(A) To ensure equitable treatment and personal safety of all scholarship students, all education service providers shall:

(1) comply with all applicable health and safety laws or codes;

(2) hold a valid occupancy permit if required by the municipality in which the education service provider is located;

(3) conduct criminal background checks on employees and exclude from employment anyone who:

(a) is not permitted by state law to work in a school;

(b) reasonably might pose a threat to the safety of students; or

(c) is listed on federal, state, or other central child abuse registries.

(B) To ensure that funds are spent appropriately, all education service providers shall provide parents with a receipt for all qualifying expenses.

(C)(1) In order to allow parents and the public to measure the achievements of the program, academic progress must be documented annually for each scholarship student.

(2) The department, or the appropriate organization chosen by the department, if any, must be informed of the scholarship student's graduation from high school.

(D) The department shall:

(1) comply with all student privacy laws;

(2) collect all test results; and

(3) annually provide individual student assessment results and information to the Education Oversight Committee. The transmission of the information must be made in a manner that safeguards the data to ensure student privacy.

(E) The Education Oversight Committee shall:

(1) comply with all student privacy laws;

(2) report on and publish associated learning gains and graduation rates to the public by means of a state website with data aggregated by grade level, gender, family income level, number of years participating in the program, and race and a report for any participating school if at least fifty-one percent of the total enrolled students in the private school participated in the ESTF program in the prior school year or if there are at least thirty participating students who have scores for tests administered. If the Education Oversight Committee determines that the thirty participating-student cell size may be reduced without disclosing the personally identifiable information of a participating student, the Education Oversight Committee may reduce the participating-student cell size, but the cell size may not be reduced to fewer than ten participating students;

(3) evaluate and report the academic performance of scholarship students compared to similar public school populations; and

(4) collaborate with the department to develop and administer an annual parental satisfaction survey for all parents of scholarship students on issues relevant to the ESTF program, to include effectiveness and length of the program participation. Results of this survey must be provided to the General Assembly by December thirty-first of each year.

(F) An education service provider, not a public school, is autonomous and not an agent of the State or federal government, therefore:

(1) the department or any other state agency may not regulate the educational program of an approved education provider that accepts funds from an account;

(2) the creation of the program does not expand the regulatory authority of the State, its officers, or a school district to impose regulation of education service providers beyond those necessary to enforce the requirements of the program;

(3) the freedom of education service providers to provide for the educational needs of scholarship students without governmental control must not be abridged;

(4) an education service provider that accepts payment by a parent from an ESTF account pursuant to this chapter is not an agent of the State or federal government; and

(5) education service providers shall not be required to alter their creeds, practices, admissions policies, or curricula in order to accept payments by a parent from an ESTF account.

Section 59-8-200.The scholarship student's resident school district shall provide a parent and the education service provider designated by the parent with a complete copy of the student's school records, while complying with the Family Educational Rights and Privacy Act of 1974, 20 U.S.C. Section 1232(g).

Section 59-8-210.(A) There is created the "ESTF Review Panel" that shall serve as an advisory panel to the department.

(B) The review panel shall consist of ten members, pursuant to the following:

(1) the Governor or his designee, who shall serve as the chair of the panel;

(2) three members to be appointed by the Governor;

(3) one member appointed by the Speaker of the House of Representatives;

(4) one member appointed by the President of the Senate;

(5) one member appointed by the Chairman of the House of Representatives Education and Public Works Committee;

(6) one member appointed by the Chairman of the Senate Education Committee; and

(7) two parents of scholarship students to be appointed by the Governor.

(C) The review panel may advise the department on whether certain expenses meet the requirements to be considered a qualified expense under this chapter when requested by the department. The review panel periodically may make recommendations to the General Assembly about improving the program.

(D) Members shall serve at the pleasure of their appointing authority. In making appointments to the panel, the appointing authorities, as appropriate, shall consider legal, financial, accounting, and marketing experience and race, gender, and other demographic factors to ensure nondiscrimination, inclusion, and representation of all segments of the State to the greatest extent possible.

(E) Members may not receive mileage or per diem.

Section 59-8-220.The provisions of the chapter do not restrict a school district's ability to enact or enforce a district's student transfer policy.

SECTION 2.If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this act, and each and every 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 hereof may be declared to be unconstitutional, invalid, or otherwise ineffective.

SECTION 3.This act takes effect thirty days after approval by the Governor, provided that upon approval of this act by the Governor, the Department of Education shall begin undertaking and executing responsibilities incidental to the implementation of this act so that the provisions of this act may be fully implemented thirty days after approval by the Governor.

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