program of a provider of educational services
needs to carry out its responsibilities.
that accepts payments from eligible students
under this program. The creation of the
E) The department shall adopt rules and proce-
Public Education Tax Credit program does
dures consistent with this act as necessary to
not expand the regulatory authority of the
implement the Public Education Tax Credit Act.
state, its officers, or any local school district
to impose any additional regulation on edu-
F) The department shall annually report to
cation service providers.
the legislature on the number of parents
claiming the tax credit, the dollar amount of
Section 10: Effective Date
the credits claimed by parents, the number of
schools accepting eligible students who
The Public Education Tax Credit may first be
received a tax credit or educational scholarship,
claimed in the next calendar year.31
the number of scholarship organizations, the
number and dollar amount of contributions
to a scholarship organization, and the number
Notes on the Public
and dollar amount of educational scholar-
Education Tax Credit Act
ships given to eligible students.
These notes are intended to provide guidance to
G) The department shall have the authority
legislators on some of the key policy questions
to conduct either a financial review or audit
they will encounter in drafting and debating
school choice tax credit legislation.
of a scholarship organization if possessing
evidence of fraud.
1. The model legislation has been drafted to make
the tax credits for tuition and scholarship assistance
H) The department may bar a scholarship
immediately available in the next tax year. This may
represent too great a transition for the state to make
organization from participating in the pro-
at one time. To increase competitive density and
gram if the department establishes that the
help maintain fiscal neutrality, both the personal
organization has intentionally and substantial-
use and donation credits can be phased in by age
ly failed to comply with the requirements in
group, starting with the youngest children. It is
Section 8.
important to use students' age rather than school
grade as a phase-in metric, since some schools do
not use a rigid age-based grading system.
I) If the department decides to bar a scholar-
ship organization from the program, it shall
2. The definition of "educational expenses" has
notify affected scholarship students and
been left intentionally broad. Parents should be
allowed to choose the combination of education-
their parents of this decision as quickly as
al products and services that best serves their chil-
possible.
dren. Limiting education tax credits to tuition at
a traditional brick-and-mortar school significant-
J) The department shall allow a taxpayer to
ly compromises consumer freedom, inhibiting
the use of alternative educational services and the
divert a prorated amount of state income tax
development of a truly innovative education mar-
withholdings to a scholarship organization
ket. It is particularly important to allow room for,
of the taxpayer's choice up to the maximum
rather than to discourage, the further develop-
credit allowed by law, including carry-over
ment of educational services such as distance
learning, tutoring, and education support net-
credits. The department shall have the
works such as those for home schooling.
authority to develop a procedure to facilitate
Legislators should clearly define categories of
this process.30
expenses that they wish to allow because experi-
ence has shown that some hostile revenue agen-
cies have disallowed legitimate homeschooling
K) A qualifying school is autonomous and
expenses such as music and language lessons.
not an agent of the state or federal govern-
When enumerating such legitimate expenditure
ment. Neither the department nor any other
categories, the legislation should note that such
state agency may regulate the educational
lists are not meant to be exclusive, using language
40