II 

116TH CONGRESS 

2D SESSION S. 4505 

To provide one-time grants to parents and guardians for student education 

expenses, to establish emergency education freedom grants, and to provide tax credits for donations to eligible scholarship-granting organizations, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

AUGUST 6, 2020 

Mr. CRUZ introduced the following bill; which was read twice and referred to 

the Committee on Finance 

A BILL 

To provide one-time grants to parents and guardians for 

student education expenses, to establish emergency education freedom grants, and to provide tax credits for 

donations to eligible scholarship-granting organizations, 

and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Coronavirus Emer5 gency Education Grants Act’’. 


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1 SEC. 2. GRANTS TO PARENTS AND GUARDIANS FOR STU2 DENT EDUCATION EXPENSES. 

3 (a) IN GENERAL.—The Secretary, in consultation 

4 with the Secretary of Education, shall establish a program 

5 to make one-time direct payments to parents or guardians 

6 to offset the educational expenses that such individuals in7 curred in educating their children during the period of 

8 March 2020 to June 2021. 

9 (b) CONTENTS OF PROGRAM.—The program carried 

10 out under subsection (a) shall have the following require11 ments: 

12 (1) The Secretary shall make only one payment 

13 for each child. Such payment will be made to the 

14 child’s legal parent or guardian. Such payment shall 

15 be the lesser of $10,000 or the combined actual past 

16 and future out-of-pocket educational expenses in17 curred, or that will be incurred, by the legal parent 

18 or guardian for his or her child’s education during 

19 the period of March 2020 to June 2021. 

20 (2) The Secretary shall only make a payment to 

21 a parent or guardian who is a citizen of the United 

22 States or lawfully residing in the United States. 

23 (3) The Secretary shall only make a payment to 

24 a parent or guardian who is the legal parent or 

25 guardian of the child. 


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1 (4) The Secretary, in consultation with the Sec2 retary of Education, shall establish a web portal in 

3 which the legal parent or guardian of a child may 

4 apply to receive this one-time payment. The Sec5 retary shall request such information as is necessary 

6 to— 

7 (A) establish a parent or guardian’s total 

8 out-of-pocket costs for educating his or her 

9 child during the period of March 2020 to June 

10 2021; 

11 (B) establish the parent or guardian’s 

12 identity, establish the parent or guardian’s citi13 zenship or lawful resident status; 

14 (C) establish that parent or guardian is 

15 the legal parent or guardian of the child and 

16 the child’s identity; and 

17 (D) establish and maintain the program 

18 and prevent fraud, waste, or abuse of program 

19 payments and funds. 

20 (5) The Secretary shall only make payments to 

21 legal parents and guardians that have applied 

22 through the web portal and provided such informa23 tion as required by the Secretary, in consultation 

24 with the Secretary of Education. The web portal 


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1 shall be established within 60 days of the date of en2 actment of this Act. 

3 (6) The Secretary shall require parents or 

4 guardians who have received a payment from the 

5 program to maintain records of how such individuals 

6 spent the payment. The Secretary shall develop pro7 cedures to audit such records, mitigate fraud, waste, 

8 and abuse within the program, and recoup program 

9 funds and payments from individuals who have com10 mitted fraud, waste, or abuse. 

11 (c) DEFINITIONS.—In this section: 

12 (1) EDUCATIONAL EXPENSES.—The term ‘‘edu13 cational expenses’’— 

14 (A) means— 

15 (i) tuition for elementary or secondary 

16 education; 

17 (ii) elementary or secondary education 

18 curriculum and curricular materials; 

19 (iii) books or other instructional mate20 rials for elementary or secondary edu21 cation; 

22 (iv) online elementary or secondary 

23 education educational materials and ex24 penses incurred to access these online edu25 cational materials; 


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1 (v) tuition for tutoring or elementary 

2 or secondary educational classes outside of 

3 the home, including at a tutoring facility, 

4 but only if the tutor or instructor is not re5 lated to the student and— 

6 (I) is licensed as a teacher in any 

7 State; 

8 (II) has taught at an eligible edu9 cational institution as established by 

10 the Secretary; or 

11 (III) is a subject matter expert in 

12 the relevant subject as established by 

13 the Secretary; 

14 (vi) fees for a nationally standardized 

15 norm-referenced achievement test, an ad16 vanced placement examination, or any ex17 amination related to admission to an insti18 tution of higher education; 

19 (vii) fees for dual enrollment in an in20 stitution of higher education; and 

21 (viii) educational therapies for stu22 dents with disabilities provided by a li23 censed or accredited practitioner or pro24 vider, including occupational, behavioral, 


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1 physical, and speech-language therapies; 

2 and 

3 (B) includes expenses for the purposes de4 scribed in clauses (i) through (viii) of subpara5 graph (A) in connection with a homeschool 

6 (whether treated as a homeschool or a private 

7 school for purposes of applicable State law). 

8 (2) SECRETARY.—The term ‘‘Secretary’’ means 

9 the Secretary of the Treasury or the Secretary’s del10 egate. 

11 (d) AUTHORIZATION AND APPROPRIATION.— 

12 (1) IN GENERAL.—There are authorized to be 

13 appropriated, and there are appropriated, out of any 

14 amounts in the Treasury not otherwise appropriated, 

15 such sums as are necessary to enable the Secretary, 

16 in consultation with the Secretary of Education, to 

17 establish and carry out this program. 

18 (2) EMERGENCY DESIGNATION.— 

19 (A) IN GENERAL.—The amounts provided 

20 by this section are designated as an emergency 

21 requirement pursuant to section 4(g) of the 

22 Statutory Pay-As-You-Go Act of 2010 (2 

23 U.S.C. 933(g)). 

24 (B) DESIGNATION IN SENATE.—In the 

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1 gency requirement pursuant to section 4112(a) 

2 of H. Con. Res. 71 (115th Congress), the con3 current resolution on the budget for fiscal year 

4 2018. 

5 SEC. 3. EDUCATION FREEDOM SCHOLARSHIPS AND OPPOR6 TUNITY. 

7 (a) EMERGENCY EDUCATION FREEDOM GRANTS.— 

8 (1) DEFINITIONS.—In this subsection: 

9 (A) DEFINITIONS FROM THE INTERNAL

10 REVENUE CODE OF 1986.—The definitions in 

11 section 25E(c) of the Internal Revenue Code of 

12 1986, as added by subsection (b), shall apply to 

13 this subsection, except as otherwise provided. 

14 (B) EMERGENCY EDUCATION FREEDOM

15 GRANT FUNDS.—The term ‘‘emergency edu16 cation freedom grant funds’’ means the amount 

17 of funds available under paragraph (2)(A) for 

18 this subsection that are not reserved under 

19 paragraph (3)(A)(i). 

20 (C) SECRETARY.—The term ‘‘Secretary’’ 

21 means the Secretary of Education. 

22 (D) STATE.—The term ‘‘State’’ means 

23 each of the 50 States, the District of Columbia, 

24 and the Commonwealth of Puerto Rico. 

25 (2) GRANTS.— 


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1 (A) PROGRAM AUTHORIZED.—From any 

2 amounts appropriated for section 18003 of divi3 sion B of the CARES Act (Public Law 116– 

4 136) on or after the date of enactment of this 

5 Act, the Secretary shall, notwithstanding any 

6 other provision of title XVIII of division B of 

7 the CARES Act, use 10 percent of such 

8 amounts to carry out paragraph (3) and award 

9 emergency education freedom grants to States 

10 with approved applications, in order to enable 

11 the States to award subgrants to eligible schol12 arship-granting organizations under paragraph 

13 (4). 

14 (B) TIMING.—The Secretary shall make 

15 the allotments required under this paragraph by 

16 not later than 30 days after the date of enact17 ment of this Act. 

18 (3) RESERVATION AND ALLOTMENTS.— 

19 (A) IN GENERAL.—From the amounts 

20 made available under paragraph (2)(A), the 

21 Secretary shall— 

22 (i) reserve— 

23 (I) one-half of 1 percent for allot24 ments for the United States Virgin Is25 lands, Guam, American Samoa, and 


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1 the Commonwealth of the Northern 

2 Mariana Islands, to be distributed 

3 among those outlying areas on the 

4 basis of their relative need, as deter5 mined by the Secretary, in accordance 

6 with the purpose of this subsection; 

7 and 

8 (II) one-half of 1 percent of such 

9 amounts for the Secretary of the Inte10 rior, acting through the Bureau of In11 dian Education, to be used to provide 

12 subgrants described in paragraph (4) 

13 to eligible scholarship-granting organi14 zations that serve students attending 

15 elementary schools or secondary 

16 schools operated or funded by the Bu17 reau of Indian Education; and 

18 (ii) subject to subparagraph (B), allot 

19 each State that submits an approved appli20 cation under this subsection the sum of— 

21 (I) the amount that bears the 

22 same relation to 20 percent of the 

23 emergency education freedom grant 

24 funds as the number of individuals 

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1 termined by the Secretary on the 

2 basis of the most recent satisfactory 

3 data, bears to the number of those in4 dividuals, as so determined, in all 

5 such States that submitted approved 

6 applications; and 

7 (II) an amount that bears the 

8 same relationship to 80 percent of the 

9 emergency education freedom grant 

10 funds as the number of individuals 

11 aged 5 through 17 from families with 

12 incomes below the poverty line in the 

13 State, as determined by the Secretary 

14 on the basis of the most recent satis15 factory data, bears to the number of 

16 those individuals, as so determined, in 

17 all such States that submitted ap18 proved applications. 

19 (B) MINIMUM ALLOTMENT.—No State 

20 shall receive an allotment under this paragraph 

21 for a fiscal year that is less than one-half of 1 

22 percent of the emergency education freedom 

23 grant funds available for such fiscal year. 

24 (4) SUBGRANTS TO ELIGIBLE SCHOLARSHIP25 GRANTING ORGANIZATIONS.— 


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1 (A) IN GENERAL.—A State that receives 

2 an allotment under this subsection shall use the 

3 allotment to award subgrants, on a basis deter4 mined appropriate by the State, to eligible 

5 scholarship-granting organizations in the State. 

6 (B) INITIAL TIMING.— 

7 (i) STATES WITH EXISTING TAX

8 CREDIT SCHOLARSHIP PROGRAM.—By not 

9 later than 30 days after receiving an allot10 ment under paragraph (3)(A)(ii), a State 

11 with an existing, as of the date of applica12 tion for an allotment under this subsection, 

13 tax credit scholarship program shall use 

14 not less than 50 percent of the allotment 

15 to award subgrants to eligible scholarship16 granting organizations in the State. 

17 (ii) STATES WITHOUT TAX CREDIT

18 SCHOLARSHIP PROGRAMS.—By not later 

19 than 60 days after receiving an allotment 

20 under paragraph (3)(A)(ii), a State with21 out a tax credit scholarship program shall 

22 use not less than 50 percent of the allot23 ment to award subgrants to eligible schol24 arship-granting organizations in the State. 


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1 (C) USES OF FUNDS.—An eligible scholar2 ship-granting organization that receives a 

3 subgrant under this paragraph— 

4 (i) may reserve not more than 5 per5 cent of the subgrant funds for public out6 reach, student and family support activi7 ties, and administrative expenses related to 

8 the subgrant; and 

9 (ii) shall use not less than 95 percent 

10 of the subgrant funds to provide qualifying 

11 scholarships for qualified expenses only to 

12 individual elementary school and secondary 

13 school students who reside in the State in 

14 which the eligible scholarship-granting or15 ganization is recognized. 

16 (5) REALLOCATION.—A State shall return to 

17 the Secretary any amounts of the allotment received 

18 under this subsection that the State does not award 

19 as subgrants under paragraph (4) by March 30, 

20 2021, and the Secretary shall reallocate such funds 

21 to the remaining eligible States in accordance with 

22 paragraph (3)(A)(ii). 

23 (6) RULES OF CONSTRUCTION.—The rules of 

24 construction under section 25E(d) of the Internal 

25 Revenue Code of 1986, as added by subsection (b), 


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1 shall apply to this subsection in the same manner as 

2 such rules apply to section 25E of such Code, as so 

3 added. 

4 (b) TAX CREDITS FOR CONTRIBUTIONS TO ELIGIBLE

5 SCHOLARSHIP-GRANTING ORGANIZATIONS.— 

6 (1) CREDIT FOR INDIVIDUALS.—Subpart A of 

7 part IV of subchapter A of chapter 1 of the Internal 

8 Revenue Code of 1986 is amended by adding after 

9 section 25D the following new section: 

10 ‘‘SEC. 25E. CONTRIBUTIONS TO ELIGIBLE SCHOLARSHIP11 GRANTING ORGANIZATIONS. 

12 ‘‘(a) ALLOWANCE OF CREDIT.—Subject to section 

13 3(c)(3) of the Coronavirus Emergency Education Grants 

14 Act, in the case of an individual, there shall be allowed 

15 as a credit against the tax imposed by this chapter for 

16 the taxable year an amount equal to the sum of any quali17 fied contributions made by the taxpayer during the taxable 

18 year. 

19 ‘‘(b) AMOUNT OF CREDIT.—The credit allowed under 

20 subsection (a) for any taxable year shall not exceed 10 

21 percent of the taxpayer’s adjusted gross income for the 

22 taxable year. 

23 ‘‘(c) DEFINITIONS.—For purposes of this section— 


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1 ‘‘(1) ELIGIBLE SCHOLARSHIP-GRANTING ORGA2 NIZATION.—The term ‘eligible scholarship-granting 

3 organization’ means— 

4 ‘‘(A) an organization that— 

5 ‘‘(i) is described in section 501(c)(3) 

6 and exempt from taxation under section 

7 501(a), 

8 ‘‘(ii) provides qualifying scholarships 

9 to individual elementary and secondary 

10 students who— 

11 ‘‘(I) reside in the State in which 

12 the eligible scholarship-granting orga13 nization is recognized, or 

14 ‘‘(II) in the case of the Bureau of 

15 Indian Education, are members of a 

16 federally recognized tribe, 

17 ‘‘(iii) a State identifies to the Sec18 retary as an eligible scholarship-granting 

19 organization under section 3(c)(3)(E)(ii) of 

20 the Coronavirus Emergency Education 

21 Grants Act, 

22 ‘‘(iv) allocates at least 90 percent of 

23 qualified contributions to qualifying schol24 arships on an annual basis, and 


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1 ‘‘(v) provides qualifying scholarships 

2 to— 

3 ‘‘(I) more than 1 eligible student, 

4 ‘‘(II) more than 1 eligible family, 

5 and 

6 ‘‘(III) different eligible students 

7 attending more than 1 education pro8 vider, or 

9 ‘‘(B) an organization that— 

10 ‘‘(i) is described in section 501(c)(3) 

11 and exempt from taxation under section 

12 501(a), and 

13 ‘‘(ii) pursuant to State law, was able, 

14 as of January 1, 2021, to receive contribu15 tions that are eligible for a State tax credit 

16 if such contributions are used by the orga17 nization to provide scholarships to indi18 vidual elementary and secondary students, 

19 including scholarships for attending private 

20 schools. 

21 ‘‘(2) QUALIFIED CONTRIBUTION.—The term 

22 ‘qualified contribution’ means a contribution of cash 

23 to any eligible scholarship-granting organization. 


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1 ‘‘(3) QUALIFIED EXPENSE.—The term ‘quali2 fied expense’ means any educational expense that 

3 is— 

4 ‘‘(A) for an individual student’s elementary 

5 or secondary education, as recognized by the 

6 State, or 

7 ‘‘(B) for the secondary education compo8 nent of an individual elementary or secondary 

9 student’s career and technical education, as de10 fined by section 3(5) of the Carl D. Perkins Ca11 reer and Technical Education Act of 2006 (20 

12 U.S.C. 2302(5)). 

13 ‘‘(4) QUALIFYING SCHOLARSHIP.—The term 

14 ‘qualifying scholarship’ means a scholarship granted 

15 by an eligible scholarship-granting organization to 

16 an individual elementary or secondary student for a 

17 qualified expense. 

18 ‘‘(5) STATE.—The term ‘State’ means each of 

19 the 50 States, the District of Columbia, the Com20 monwealth of Puerto Rico, the outlying areas (as de21 fined in section 1121(c) of the Elementary and Sec22 ondary Education Act of 1965 (20 U.S.C. 6331(c)), 

23 and the Department of the Interior (acting through 

24 the Bureau of Indian Education)). 

25 ‘‘(d) RULES OF CONSTRUCTION.— 


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1 ‘‘(1) IN GENERAL.—A qualifying scholarship 

2 awarded to a student from the proceeds of a quali3 fied contribution under this section shall not be con4 sidered assistance to the school or other educational 

5 provider that enrolls, or provides educational services 

6 to, the student or the student’s parents. 

7 ‘‘(2) EXCLUSION FROM INCOME.—Gross income 

8 shall not include any amount received by an indi9 vidual as a qualifying scholarship and such amount 

10 shall not be taken into account as income or re11 sources for purposes of determining the eligibility of 

12 such individual or any other individual for benefits 

13 or assistance, or the amount or extent of such bene14 fits or assistance, under any Federal program or 

15 under any State or local program financed in whole 

16 or in part with Federal funds. 

17 ‘‘(3) PROHIBITION OF CONTROL OVER NON18 PUBLIC EDUCATION PROVIDERS.— 

19 ‘‘(A)(i) Nothing in this section shall be 

20 construed to permit, allow, encourage, or au21 thorize any Federal control over any aspect of 

22 any private, religious, or home education pro23 vider, whether or not a home education provider 

24 is treated as a private school or home school 

25 under State law. 


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1 ‘‘(ii) This section shall not be construed to 

2 exclude private, religious, or home education 

3 providers from participation in programs or 

4 services under this section. 

5 ‘‘(B) Nothing in this section shall be con6 strued to permit, allow, encourage, or authorize 

7 an entity submitting a list of eligible scholar8 ship-granting organizations on behalf of a State 

9 pursuant to section 3(c)(3)(E) of the 

10 Coronavirus Emergency Education Grants Act 

11 to mandate, direct, or control any aspect of a 

12 private or home education provider, regardless 

13 of whether or not a home education provider is 

14 treated as a private school under State law. 

15 ‘‘(C) No participating State or entity act16 ing on behalf of a State pursuant to section 

17 3(c)(3)(E) of the Coronavirus Emergency Edu18 cation Grants Act shall exclude, discriminate 

19 against, or otherwise disadvantage any edu20 cation provider with respect to programs or 

21 services under this section based in whole or in 

22 part on the provider’s religious character or af23 filiation, including religiously based or mission24 based policies or practices. 


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1 ‘‘(4) PARENTAL RIGHTS TO USE SCHOLAR2 SHIPS.—No participating State or entity acting on 

3 behalf of a State pursuant to section 3(c)(3)(E) of 

4 the Coronavirus Emergency Education Grants Act 

5 shall disfavor or discourage the use of qualifying 

6 scholarships for the purchase of elementary and sec7 ondary education services, including those services 

8 provided by private or nonprofit entities, such as 

9 faith-based providers. 

10 ‘‘(5) STATE AND LOCAL AUTHORITY.—Nothing 

11 in this section shall be construed to modify a State 

12 or local government’s authority and responsibility to 

13 fund education. 

14 ‘‘(e) DENIAL OF DOUBLE BENEFIT.—The Secretary 

15 shall prescribe such regulations or other guidance to en16 sure that the sum of the tax benefits provided by Federal, 

17 State, or local law for a qualified contribution receiving 

18 a Federal tax credit in any taxable year does not exceed 

19 the sum of the qualified contributions made by the tax20 payer for the taxable year. 

21 ‘‘(f) CARRYFORWARD OF CREDIT.—If a tax credit al22 lowed under this section is not fully used within the appli23 cable taxable year because of insufficient tax liability on 

24 the part of the taxpayer, the unused amount may be car25 ried forward for a period not to exceed 5 years. 


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1 ‘‘(g) ELECTION.—This section shall apply to a tax2 payer for a taxable year only if the taxpayer elects to have 

3 this section apply for such taxable year. 

4 ‘‘(h) ALTERNATIVE MINIMUM TAX.—For purposes of 

5 calculating the alternative minimum tax under section 55, 

6 a taxpayer may use any credit received for a qualified con7 tribution under this section.’’. 

8 (2) CLERICAL AMENDMENT.—The table of sec9 tions for subpart A of part IV of subchapter A of 

10 chapter 1 of the Internal Revenue Code of 1986 is 

11 amended by inserting after the item relating to sec12 tion 25D the following new item: 

‘‘Sec. 25E. Contributions to eligible scholarship-granting organizations.’’. 

13 (3) CREDIT FOR CORPORATIONS.—Subpart D 

14 of part IV of subchapter A of chapter 1 of the Inter15 nal Revenue Code of 1986 is amended by adding at 

16 the end the following new section: 

17 ‘‘SEC. 45U. CONTRIBUTIONS TO ELIGIBLE SCHOLARSHIP18 GRANTING ORGANIZATIONS. 

19 ‘‘(a) ALLOWANCE OF CREDIT.—Subject to section 

20 3(c)(3) of the Coronavirus Emergency Education Grants 

21 Act, for purposes of section 38, in the case of a domestic 

22 corporation, there shall be allowed as a credit against the 

23 tax imposed by this chapter for the taxable year an 

24 amount equal to the sum of any qualified contributions 


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1 (as defined in section 25E(c)(2)) made by such corpora2 tion taxpayer during the taxable year. 

3 ‘‘(b) AMOUNT OF CREDIT.—The credit allowed under 

4 subsection (a) for any taxable year shall not exceed 5 per5 cent of the taxable income (as defined in section 

6 170(b)(2)(D)) of the domestic corporation for such taxable 

7 year. 

8 ‘‘(c) ADDITIONAL PROVISIONS.—For purposes of this 

9 section, any qualified contributions made by a domestic 

10 corporation shall be subject to the provisions of section 

11 25E (including subsection (d) of such section), to the ex12 tent applicable. 

13 ‘‘(d) ELECTION.—This section shall apply to a tax14 payer for a taxable year only if the taxpayer elects to have 

15 this section apply for such taxable year.’’. 

16 (4) CREDIT PART OF GENERAL BUSINESS

17 CREDIT.—Section 38(b) is amended— 

18 (A) by striking ‘‘plus’’ at the end of para19 graph (32); 

20 (B) by striking the period at the end of 

21 paragraph (33) and inserting ‘‘, plus’’; and 

22 (C) by adding at the end the following new 

23 paragraph: 

24 ‘‘(34) the credit for qualified contributions de25 termined under section 45U(a).’’. 


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1 (5) CLERICAL AMENDMENT.—The table of sec2 tions for subpart D of part IV of subchapter A of 

3 chapter 1 is amended by adding at the end the fol4 lowing new item: 

‘‘Sec. 45U. Contributions to eligible scholarship-granting organizations.’’. 

5 (6) EFFECTIVE DATE.—The amendments made 

6 by this subsection shall apply to taxable years begin7 ning after December 31, 2020. 

8 (c) EDUCATION FREEDOM SCHOLARSHIPS WEB POR9 TAL AND ADMINISTRATION.— 

10 (1) IN GENERAL.—The Secretary of the Treas11 ury shall, in coordination with the Secretary of Edu12 cation, establish, host, and maintain a web portal 

13 that— 

14 (A) lists all eligible scholarship-granting 

15 organizations; 

16 (B) enables a taxpayer to make a quali17 fying contribution to 1 or more eligible scholar18 ship-granting organizations and to immediately 

19 obtain both a pre-approval of a tax credit for 

20 that contribution and a receipt for tax filings; 

21 (C) provides information about the tax 

22 benefits under sections 25E and 45U of the In23 ternal Revenue Code of 1986; and 

24 (D) enables a State to submit and update 

25 information about its programs and its eligible 


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1 scholarship-granting organizations for informa2 tional purposes only, including information 

3 on— 

4 (i) student eligibility; 

5 (ii) allowable educational expenses; 

6 (iii) the types of allowable education 

7 providers; 

8 (iv) the percentage of funds an orga9 nization may use for program administra10 tion; and 

11 (v) the percentage of total contribu12 tions the organization awards in a calendar 

13 year. 

14 (2) NONPORTAL CONTRIBUTIONS.—A taxpayer 

15 may opt to make a contribution directly to an eligi16 ble scholarship-granting organization, instead of 

17 through the web portal described in paragraph (1), 

18 provided that the taxpayer, or the eligible scholar19 ship-granting organization on behalf of the taxpayer, 

20 applies for, and receives, pre-approval for a tax cred21 it from the Secretary of the Treasury in coordina22 tion with the Secretary of Education. 

23 (3) NATIONAL AND STATE LIMITATIONS ON

24 CREDITS.— 


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1 (A) NATIONAL LIMITATION.—For each fis2 cal year, the total amount of qualifying con3 tributions for which a credit is allowed under 

4 sections 25E and 45U of the Internal Revenue 

5 Code of 1986 shall not exceed $5,000,000,000. 

6 (B) ALLOCATION OF LIMITATION.— 

7 (i) INITIAL ALLOCATIONS.—For each 

8 calendar year, with respect to the limita9 tion under subparagraph (A), the Sec10 retary of the Treasury, in consultation 

11 with the Secretary of Education, shall— 

12 (I) allocate to each State an 

13 amount equal to the sum of the quali14 fying contributions made in the State 

15 in the previous year; and 

16 (II) from any amounts remaining 

17 following allocations made under sub18 clause (I), allocate to each partici19 pating State an amount equal to the 

20 sum of— 

21 (aa) an amount that bears 

22 the same relationship to 20 per23 cent of such remaining amount 

24 as the number of individuals 

25 aged 5 through 17 in the State, 


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1 as determined by the Secretary of 

2 Education on the basis of the 

3 most recent satisfactory data, 

4 bears to the number of those in5 dividuals in all such States, as so 

6 determined; and 

7 (bb) an amount that bears 

8 the same relationship to 80 per9 cent of such remaining amount 

10 as the number of individuals 

11 aged 5 through 17 from families 

12 with incomes below the poverty 

13 line in the State, as determined 

14 by the Secretary of Education, on 

15 the basis of the most recent sat16 isfactory data, bears to the num17 ber of those individuals in all 

18 such States, as so determined. 

19 (ii) MINIMUM ALLOCATION.—Notwith20 standing clause (i), no State receiving an 

21 allocation under this subsection may re22 ceive less than one-half of 1 percent of the 

23 amount allocated for a fiscal year. 

24 (iii) ALTERNATIVE ALLOCATION.— 


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1 (I) IN GENERAL.—Not later than 

2 the end of the fifth year of the pro3 gram or 1 year after the end of the 

4 first fiscal year for which the total 

5 amount of credits claimed under sec6 tion 25E and section 45U of the In7 ternal Revenue Code of 1986 is 

8 $2,500,000,000 or more, whichever 

9 comes first, the Secretary of the 

10 Treasury, in consultation with the 

11 Secretary of Education, shall, by reg12 ulation, provide for an alternative al13 location method that shall take effect 

14 beginning with the first fiscal year 

15 after such regulation takes effect. 

16 (II) ALTERNATIVE ALLOCATION

17 METHOD.—The alternative allocation 

18 method shall be expressed as a for19 mula based on a combination of the 

20 following data for each State, as re21 ported by the State to the Secretary 

22 of the Treasury: 

23 (aa) The relative percentage 

24 of students in the State who re25 ceive an elementary or secondary 


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1 scholarship through a State pro2 gram that is financed through 

3 State tax-credited donations or 

4 appropriations and that permits 

5 the elementary or secondary 

6 scholarship to be used to attend 

7 a private school. 

8 (bb) The total amount of all 

9 elementary and secondary schol10 arships awarded through a State 

11 program that is financed through 

12 State tax-credited donations or 

13 appropriations compared to the 

14 total amount of current State 

15 and local expenditures for free 

16 public education in the State. 

17 (III) ALLOCATION FORMULA.— 

18 For any fiscal year to which subclause 

19 (I) applies, the Secretary of the 

20 Treasury, in consultation with the 

21 Secretary of Education, shall— 

22 (aa) for each State, allocate 

23 an amount equal to the sum of 

24 the qualifying contributions made 

25 in the State in the previous year; 


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(bb) allocate 2 1 ⁄3 of the re2 maining amount (after applica3 tion of item (aa)) of the national 

4 limitation for that year using the 

5 alternative allocation method 

6 under subclause (II); and 

(cc) allocate 1 7 ⁄3 of the re8 maining amount (after applica9 tion of item (aa) and (bb)) in ac10 cordance with clause (i)(II). 

11 (IV) INELIGIBILITY.—For any 

12 fiscal year to which subclause (I) ap13 plies, a State that does not provide 

14 the Secretary of the Treasury with in15 formation described in subclause (II) 

16 is not eligible to receive an allocation 

17 through the alternative allocation 

18 method under such subclause. 

19 (C) ALLOWABLE PARTNERSHIPS.—A State 

20 may choose to administer the allocation it re21 ceives under subparagraph (B) in partnership 

22 with 1 or more States, provided that the eligible 

23 scholarship-granting organizations in each part24 ner State serve students who reside in all 

25 States in the partnership. 


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1 (D) TOTAL ALLOCATION.—A State’s allo2 cation, for any fiscal year, is the sum of the 

3 amount determined for such State under 

4 clauses (i) and (ii) of subparagraph (B), except 

5 as provided in subparagraph (B)(iii). 

6 (E) ALLOCATION AND ADJUSTMENTS.— 

7 (i) INITIAL ALLOCATION TO

8 STATES.—Not later than November 1 of 

9 the year preceding a year for which there 

10 is a national limitation on credits under 

11 subparagraph (A) (referred to in this sub12 section as the ‘‘applicable year’’), or as 

13 early as practicable with respect to the 

14 first year, the Secretary of the Treasury 

15 shall announce the State allocations under 

16 subparagraph (B) for the applicable year. 

17 (ii) LIST OF ELIGIBLE SCHOLARSHIP18 GRANTING ORGANIZATIONS.— 

19 (I) IN GENERAL.—Not later than 

20 January 1 of each applicable year, or 

21 as early as practicable with respect to 

22 the first year, each State shall provide 

23 the Secretary of the Treasury a list of 

24 eligible scholarship-granting organiza25 tions, including a certification that the 


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1 entity submitting the list on behalf of 

2 the State has the authority to perform 

3 this function. 

4 (II) RULE OF CONSTRUCTION.— 

5 Neither this subsection nor any other 

6 Federal law shall be construed as lim7 iting the entities that may submit the 

8 list on behalf of a State. 

9 (iii) REALLOCATION OF UNCLAIMED

10 CREDITS.—The Secretary of the Treasury 

11 shall reallocate a State’s allocation to other 

12 States, in accordance with subparagraph 

13 (B), if the State— 

14 (I) chooses not to identify schol15 arship-granting organizations under 

16 clause (ii) in any applicable year; or 

17 (II) does not have an existing eli18 gible scholarship-granting organiza19 tion. 

20 (iv) REALLOCATION.—On or after 

21 April 1 of any applicable year, the Sec22 retary of the Treasury may reallocate, to 1 

23 or more other States that have eligible 

24 scholarship-granting organizations in the 

25 States, without regard to subparagraph 


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1 (B), the allocation of a State for which the 

2 State’s allocation has not been claimed. 

3 (4) DEFINITIONS.—Any term used in this sub4 section which is also used in section 25E of the In5 ternal Revenue Code of 1986 shall have the same 

6 meaning as when used in such section. 

Æ 


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