I 

116TH CONGRESS 

2D SESSION H. R. 8100 

To provide for emergency education freedom grants, to amend the Internal 

Revenue Code of 1986 to establish tax credits to encourage individual 

and corporate taxpayers to contribute to scholarships for students 

through eligible scholarship-granting organizations, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

AUGUST 25, 2020 

Mr. BYRNE (for himself, Mr. LIPINSKI, and Mr. WALKER) introduced the following bill; which was referred to the Committee on Ways and Means, 

and in addition to the Committee on Education and Labor, for a period 

to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee 

concerned 

A BILL 

To provide for emergency education freedom grants, to 

amend the Internal Revenue Code of 1986 to establish 

tax credits to encourage individual and corporate taxpayers to contribute to scholarships for students through 

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, 


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘School Choice Now 

3 Act’’. 

4 TITLE I—EMERGENCY 

5 EDUCATION FREEDOM GRANTS 

6 SEC. 101. EMERGENCY EDUCATION FREEDOM GRANTS. 

7 (a) DEFINITIONS.—In this title: 

8 (1) DEFINITIONS FROM THE INTERNAL REV9 ENUE CODE OF 1986.—The definitions in section 

10 25E(c) of the Internal Revenue Code of 1986, as 

11 added by section 201, shall apply to this section, ex12 cept as otherwise provided. 

13 (2) ELIGIBLE SCHOLARSHIP-GRANTING ORGANI14 ZATION.—The term ‘‘eligible scholarship-granting 

15 organization’’ means— 

16 (A) an organization that— 

17 (i) is described in section 501(c)(3) of 

18 the Internal Revenue Code of 1986 and ex19 empt from taxation under section 501(a) 

20 of such Code; 

21 (ii) provides qualifying scholarships to 

22 an eligible student who— 

23 (I) resides in the State in which 

24 the eligible scholarship-granting orga25 nization is recognized; or 


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1 (II) in the case of funds provided 

2 to the Secretary of the Interior, at3 tending elementary schools or sec4 ondary schools operated or funded by 

5 the Bureau of Indian Education; 

6 (iii) is identified by a Governor to re7 ceive an allotment under subsection (b); 

8 (iv) agrees to allocate at least 95 per9 cent of its allotment under subsection (c) 

10 to qualifying scholarships; 

11 (v) implements robust policies and 

12 procedures to prevent waste, fraud, and 

13 abuse in the program that it administers; 

14 and 

15 (vi) provides qualifying scholarships 

16 to— 

17 (I) more than 1 eligible student; 

18 (II) more than 1 eligible family; 

19 and 

20 (III) different eligible students 

21 attending more than 1 education pro22 vider; or 

23 (B) an organization that— 

24 (i) is described in section 501(c)(3) of 

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1 empt from taxation under section 501(a) 

2 of such Code; 

3 (ii) pursuant to State law, was able, 

4 as of January 1, 2020, to receive contribu5 tions that are eligible for a State tax credit 

6 if such contributions are used by the orga7 nization to provide scholarships to indi8 vidual elementary and secondary students, 

9 including scholarships for attending private 

10 schools; 

11 (iii) agrees to allocate at least 95 per12 cent of its allotment under subsection (c) 

13 to qualifying scholarships; 

14 (iv) implements robust policies and 

15 procedures to prevent waste, fraud, and 

16 abuse in the program that it administers; 

17 and 

18 (v) provides qualifying scholarships 

19 to— 

20 (I) more than 1 eligible student; 

21 (II) more than 1 eligible family; 

22 and 

23 (III) different eligible students 

24 attending more than 1 education pro25 vider. 


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1 (3) EMERGENCY EDUCATION FREEDOM GRANT

2 FUNDS.—The term ‘‘emergency education freedom 

3 grant funds’’ means the amount of funds available 

4 under subsection (b) or (c)(1)(A). 

5 (4) GOVERNOR.—The term ‘‘Governor’’ means 

6 the Governor of a State, the chief executive officer 

7 of the United States Virgin Islands, Guam, Amer8 ican Samoa, and the Commonwealth of the Northern 

9 Mariana Islands, and the Secretary of the Interior. 

10 (5) SECRETARY.—The term ‘‘Secretary’’ means 

11 the Secretary of Education. 

12 (6) STATE.—The term ‘‘State’’ means each of 

13 the 50 States, the District of Columbia, and the 

14 Commonwealth of Puerto Rico. 

15 (b) GRANTS.— 

16 (1) PROGRAM AUTHORIZED.— 

17 (A) RESERVATIONS.—From any amounts 

18 appropriated for section 18003 of division B of 

19 the CARES Act on or after the date of enact20 ment of this Act, the Secretary shall reserve— 

21 (i) of the amount reserved for the 

22 Outlying Areas in section 18001(a)(1) of 

23 Part B of the CARES Act on or after en24 actment, 10 percent for allotments for the 

25 United States Virgin Islands, Guam, 


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1 American Samoa, and the Commonwealth 

2 of the Northern Mariana Islands, to be dis3 tributed among those outlying areas on the 

4 basis of their relative need, as determined 

5 by the Secretary, in accordance with the 

6 purpose of this title; and 

7 (ii) of the amount reserved for the 

8 Bureau of Indian Education in section 

9 18001(a)(2) of part B of the CARES Act 

10 on or after enactment, 10 percent of such 

11 amounts for the Secretary of the Interior, 

12 acting through the Bureau of Indian Edu13 cation, to be used to provide subgrants de14 scribed in subsection (c) to eligible scholar15 ship-granting organizations that serve stu16 dents attending elementary schools or sec17 ondary schools operated or funded by the 

18 Bureau of Indian Education. 

19 (B) STATE RESERVATION.—From any 

20 amount appropriated for section 18003 of divi21 sion B of the CARES Act on or after the date 

22 of enactment of this Act that a State receives, 

23 a State shall reserve 10 percent of those funds 

24 to award emergency education freedom grant 


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1 funds to eligible scholarship granting organiza2 tions in the State. 

3 (c) SUBGRANTS TO ELIGIBLE SCHOLARSHIP-GRANT4 ING ORGANIZATIONS.— 

5 (1) IN GENERAL.—A Governor shall use funds 

6 reserved under subsection (b) to award subgrants to 

7 eligible scholarship-granting organizations in the 

8 State. 

9 (2) INITIAL TIMING.— 

10 (A) STATES WITH EXISTING TAX CREDIT

11 SCHOLARSHIP PROGRAM.— 

12 (i) By not later than 15 days after re13 ceiving an allotment from any amounts re14 ceived for section 18003 of division B of 

15 the CARES Act under, a State with an ex16 isting, as of the date of enactment of this 

17 Act, tax credit scholarship program shall 

18 distribute not less than 50 percent of the 

19 allotment to award subgrants to eligible 

20 scholarship-granting organizations under 

21 subsection (a)(1)(B) in the State in pro22 portion to the contributions received in cal23 endar year 2019 that were eligible for a 

24 State tax credit if such contributions are 

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1 arships to eligible students, including 

2 scholarships for attending private schools. 

3 (ii) By not later than 60 days after 

4 receiving an allotment from any amount 

5 received for section 18003 of division B of 

6 the CARES Act, a Governor with an exist7 ing tax credit scholarship program shall 

8 use the balance of the total allotment to 

9 award subgrants to eligible scholarship10 grant organizations under subsection 

11 (a)(1)(B). 

12 (B) STATES WITHOUT TAX CREDIT SCHOL13 ARSHIP PROGRAMS.— 

14 (i) By not later than 30 days after re15 ceiving an allotment from any amounts re16 ceived for section 18003 of division B of 

17 the CARES Act, a State without a tax 

18 credit scholarship program shall distribute 

19 not less than 50 percent of the allotment 

20 to award subgrants to eligible scholarship21 granting organizations in the State. 

22 (ii) By not later than 90 days after 

23 receiving an allotment from any amounts 

24 received for section 18003 of division B of 

25 the CARES Act, a Governor in a State 


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1 without an existing tax credit scholarship 

2 program shall use the balance of the allot3 ment to award subgrants to eligible schol4 arship-grant organizations under sub5 section (a)(1)(A). 

6 (3) USES OF FUNDS.—An eligible scholarship7 granting organization that receives a subgrant under 

8 this subsection— 

9 (A) may reserve not more than 5 percent 

10 of the subgrant funds for public outreach, stu11 dent and family support activities, and adminis12 trative expenses related to the subgrant; and 

13 (B) shall use not less than 95 percent of 

14 the subgrant funds to provide qualifying schol15 arships for qualified expenses only to eligible 

16 students who reside in the State in which the 

17 eligible scholarship-granting organization is rec18 ognized. 

19 (d) REALLOCATION.—A State shall return to the Sec20 retary any amounts of the allotment reserved under this 

21 Act that the Governor does not award as subgrants under 

22 subsection (c) within 120 days of receipt of that allotment, 

23 and the Secretary shall reallocate such funds to the re24 maining eligible States. 

25 (e) RULES OF CONSTRUCTION.— 


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1 (1) Education providers that accept scholarship 

2 funds from students under this section shall not, by 

3 reason of such participation, be considered recipients 

4 of Federal financial assistance, nor shall they, by 

5 reason of such participation, be required to comply 

6 with provisions of federal law not otherwise in effect 

7 as of the date of the passage of this Act. 

8 (2) The rules of construction under section 

9 25E(d) of the Internal Revenue Code of 1986, as 

10 added by section 201, shall apply to this section in 

11 the same manner as such rules apply to section 25E 

12 of such Code, as so added. 

13 TITLE II—TAX CREDITS FOR 

14 CONTRIBUTIONS TO ELIGI15 BLE SCHOLARSHIP-GRANT16 ING ORGANIZATIONS 

17 SEC. 201. TAX CREDITS FOR CONTRIBUTIONS TO ELIGIBLE 

18 SCHOLARSHIP-GRANTING ORGANIZATIONS. 

19 (a) CREDIT FOR INDIVIDUALS.—Subpart A of part 

20 IV of subchapter A of chapter 1 of the Internal Revenue 

21 Code of 1986 is amended by adding after section 25D the 

22 following new section: 


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1 ‘‘SEC. 25E. CONTRIBUTIONS TO ELIGIBLE SCHOLARSHIP2 GRANTING ORGANIZATIONS. 

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

4 202(c) of the School Choice Now Act, in the case of an 

5 individual, there shall be allowed as a credit against the 

6 tax imposed by this chapter for the taxable year an 

7 amount equal to the sum of any qualified contributions 

8 made by the taxpayer during the taxable year. 

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

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

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

12 taxable year. 

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

14 ‘‘(1) ELIGIBLE SCHOLARSHIP-GRANTING ORGA15 NIZATION.—The term ‘eligible scholarship-granting 

16 organization’ means— 

17 ‘‘(A) an organization that— 

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

19 and exempt from taxation under section 

20 501(a), 

21 ‘‘(ii) provides qualifying scholarships 

22 to an eligible student who— 

23 ‘‘(I) resides in the State in which 

24 the eligible scholarship-granting orga25 nization is recognized, or 


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

2 Indian Education, are members of a 

3 federally recognized tribe, 

4 ‘‘(iii) a State identifies to the Sec5 retary as an eligible scholarship-granting 

6 organization under section 202(c)(5)(B) of 

7 the School Choice Now Act, 

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

9 qualified contributions to qualifying schol10 arships on an annual basis, 

11 ‘‘(v) implements robust policies and 

12 procedures to prevent waste, fraud, and 

13 abuse in the program that it administers, 

14 and 

15 ‘‘(vi) provides qualifying scholarships 

16 to— 

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

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

19 and 

20 ‘‘(III) different eligible students 

21 attending more than 1 education pro22 vider, or 

23 ‘‘(B) an organization that— 


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

2 and exempt from taxation under section 

3 501(a), 

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

5 as of January 1, 2021, to receive contribu6 tions that are eligible for a State tax credit 

7 if such contributions are used by the orga8 nization to provide scholarships to indi9 vidual elementary and secondary students, 

10 including scholarships for attending private 

11 schools, 

12 ‘‘(iii) agrees to allocate at least 905 

13 percent of its allotment under subsection 

14 (c) to qualifying scholarships on an annual 

15 basis, 

16 ‘‘(iv) implements robust policies and 

17 procedures to prevent waste, fraud, and 

18 abuse in the program that it administers, 

19 and 

20 ‘‘(v) provides qualifying scholarships 

21 to— 

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

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

24 and 


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1 ‘‘(III) different eligible students 

2 attending more than 1 education pro3 vider. 

4 ‘‘(2) ELIGIBLE STUDENT.—The term ‘eligible 

5 student’ means— 

6 ‘‘(A) a child, as that term is defined in sec7 tion 8101(3) of the Elementary and Secondary 

8 Education Act of 1965, who comes from a fam9 ily whose household income is no more than 

10 200 percent of the median household income for 

11 that State, as determined by the Bureau of the 

12 Census in compiling the most recent data for 

13 the American Community Survey, or 

14 ‘‘(B) a child with a disability, as that term 

15 is defined in section 602 of the Individuals with 

16 Disabilities Education Act. 

17 ‘‘(3) QUALIFIED CONTRIBUTION.—The term 

18 ‘qualified contribution’ means a contribution of cash 

19 to any eligible scholarship-granting organization. 

20 ‘‘(4) QUALIFIED EXPENSE.—The term ‘quali21 fied expense’ means any educational expense that 

22 is— 

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

24 or secondary education, as recognized by the 

25 State, or 


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1 ‘‘(B) for the secondary education compo2 nent of an individual elementary or secondary 

3 student’s career and technical education, as de4 fined by section 3(5) of the Carl D. Perkins Ca5 reer and Technical Education Act of 2006 (20 

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

7 ‘‘(5) QUALIFYING SCHOLARSHIP.—The term 

8 ‘qualifying scholarship’ means a scholarship granted 

9 by an eligible scholarship-granting organization to 

10 an individual elementary or secondary student for a 

11 qualified expense. 

12 ‘‘(6) STATE.—The term ‘State’ means each of 

13 the 50 States, the District of Columbia, the Com14 monwealth of Puerto Rico, the outlying areas (as de15 fined in section 1121(c) of the Elementary and Sec16 ondary Education Act of 1965 (20 U.S.C. 6331(c)), 

17 and the Department of the Interior (acting through 

18 the Bureau of Indian Education). 

19 ‘‘(d) RULES OF CONSTRUCTION.— 

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

21 awarded to a student from the proceeds of a quali22 fied contribution under this section shall not be con23 sidered assistance to the school or other educational 

24 provider that enrolls, or provides educational services 

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


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

2 shall not include any amount received by an indi3 vidual as a qualifying scholarship and such amount 

4 shall not be taken into account as income or re5 sources for purposes of determining the eligibility of 

6 such individual or any other individual for benefits 

7 or assistance, or the amount or extent of such bene8 fits or assistance, under any Federal program or 

9 under any State or local program financed in whole 

10 or in part with Federal funds. 

11 ‘‘(3) PROHIBITION OF CONTROL OVER NON12 PUBLIC EDUCATION PROVIDERS.— 

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

14 construed to permit, allow, encourage, or au15 thorize any Federal control over any aspect of 

16 any private, religious, or home education pro17 vider, whether or not a home education provider 

18 is treated as a private school or home school 

19 under State law. 

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

21 exclude private, religious, or home education 

22 providers from participation in programs or 

23 services under this section. 

24 ‘‘(B) Nothing in this section shall be con25 strued to permit, allow, encourage, or authorize 


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1 an entity submitting a list of eligible scholar2 ship-granting organizations on behalf of a State 

3 pursuant to section 202(c)(5) of the School 

4 Choice Now Act to mandate, direct, or control 

5 any aspect of a private or home education pro6 vider, regardless of whether or not a home edu7 cation provider is treated as a private school 

8 under State law. 

9 ‘‘(C) No participating State or entity act10 ing on behalf of a State pursuant to section 

11 202(c)(5) of the School Choice Now Act shall 

12 exclude, discriminate against, or otherwise dis13 advantage any education provider with respect 

14 to programs or services under this section based 

15 in whole or in part on the provider’s religious 

16 character or affiliation, including religiously 

17 based or mission-based policies or practices. 

18 ‘‘(4) PARENTAL RIGHTS TO USE SCHOLAR19 SHIPS.—No participating State or entity acting on 

20 behalf of a State pursuant to section 202(c)(5) of 

21 the School Choice Now Act shall disfavor or discour22 age the use of qualifying scholarships for the pur23 chase of elementary and secondary education serv24 ices, including those services provided by private or 

25 nonprofit entities, such as faith-based providers. 


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

2 in this section shall be construed to modify a State 

3 or local government’s authority and responsibility to 

4 fund education. 

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

6 shall prescribe such regulations or other guidance to en7 sure that the sum of the tax benefits provided by Federal, 

8 State, or local law for a qualified contribution receiving 

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

10 the sum of the qualified contributions made by the tax11 payer for the taxable year. 

12 ‘‘(f) CARRYFORWARD OF CREDIT.—If a tax credit al13 lowed under this section is not fully used within the appli14 cable taxable year because of insufficient tax liability on 

15 the part of the taxpayer, the unused amount may be car16 ried forward for a period not to exceed 5 years. 

17 ‘‘(g) ELECTION.—This section shall apply to a tax18 payer for a taxable year only if the taxpayer elects to have 

19 this section apply for such taxable year. 

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

21 calculating the alternative minimum tax under section 55, 

22 a taxpayer may use any credit received for a qualified con23 tribution under this section.’’. 

24 (b) CLERICAL AMENDMENT.—The table of sections 

25 for subpart A of part IV of subchapter A of chapter 1 


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1 of the Internal Revenue Code of 1986 is amended by in2 serting after the item relating to section 25D the following 

3 new item: 

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

4 (c) CREDIT FOR CORPORATIONS.—Subpart D of part 

5 IV of subchapter A of chapter 1 of the Internal Revenue 

6 Code of 1986 is amended by adding at the end the fol7 lowing new section: 

8 ‘‘SEC. 45U. CONTRIBUTIONS TO ELIGIBLE SCHOLARSHIP9 GRANTING ORGANIZATIONS. 

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

11 202(c) of the School Choice Now Act, for purposes of sec12 tion 38, there shall be allowed as a credit against the tax 

13 imposed by this chapter for the taxable year an amount 

14 equal to the sum of any qualified contributions (as defined 

15 in section 25E(c)(2)) made by such corporation taxpayer 

16 during the taxable year. 

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

18 subsection (a) for any taxable year shall not exceed 5 per19 cent of the taxable income (as defined in section 

20 170(b)(2)(D)) of the domestic corporation for such taxable 

21 year. 

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

23 section, any qualified contributions made by a domestic 

24 corporation shall be subject to the provisions of section 


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1 25E (including subsection (d) of such section), to the ex2 tent applicable. 

3 ‘‘(d) ELECTION.—This section shall apply to a tax4 payer for a taxable year only if the taxpayer elects to have 

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

6 (d) CREDIT PART OF GENERAL BUSINESS CRED7 IT.—Section 38(b) is amended— 

8 (1) by striking ‘‘plus’’ at the end of paragraph 

9 (32); 

10 (2) by striking the period at the end of para11 graph (33) and inserting ‘‘, plus’’; and 

12 (3) by adding at the end the following new 

13 paragraph: 

14 ‘‘(34) the credit for qualified contributions de15 termined under section 45U(a).’’. 

16 (e) CLERICAL AMENDMENT.—The table of sections 

17 for subpart D of part IV of subchapter A of chapter 1 

18 is amended by adding at the end the following new item: 

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

19 (f) EFFECTIVE DATE.—The amendments made by 

20 this section shall apply to taxable years beginning after 

21 December 31, 2020. 


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1 SEC. 202. EDUCATION FREEDOM SCHOLARSHIPS WEB POR2 TAL AND ADMINISTRATION. 

3 (a) IN GENERAL.—The Secretary of Treasury shall, 

4 in coordination with the Secretary of Education, establish, 

5 host, and maintain a web portal that— 

6 (1) lists all eligible scholarship-granting organi7 zations; 

8 (2) enables a taxpayer to make a qualifying 

9 contribution to one or more eligible scholarship10 granting organizations and to immediately obtain 

11 both a pre-approval of a tax credit for that contribu12 tion and a receipt for tax filings; 

13 (3) provides information about the tax benefits 

14 under sections 25E and 45U of the Internal Rev15 enue Code of 1986; and 

16 (4) enables a State to submit and update infor17 mation about its programs and its eligible scholar18 ship-granting organizations for informational pur19 poses only, including information on— 

20 (A) student eligibility; 

21 (B) allowable educational expenses; 

22 (C) the types of allowable education pro23 viders; 

24 (D) the percentage of funds an organiza25 tion may use for program administration; and 


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1 (E) the percentage of total contributions 

2 the organization awards in a calendar year. 

3 (b) NONPORTAL CONTRIBUTIONS.—A taxpayer may 

4 opt to make a contribution directly to an eligible scholar5 ship-granting organization, instead of through the web 

6 portal described in subsection (a), provided that the tax7 payer, or the eligible scholarship-granting organization on 

8 behalf of the taxpayer, applies for, and receives pre-ap9 proval for a tax credit from the Secretary of Treasury in 

10 coordination with the Secretary of the Education. 

11 (c) NATIONAL AND STATE LIMITATIONS ON CRED12 ITS.— 

13 (1) NATIONAL LIMITATION.—For each fiscal 

14 year, the total amount of qualifying contributions for 

15 which a credit is allowed under sections 25E and 

16 45U of the Internal Revenue Code of 1986 shall not 

17 exceed $5,000,000,000. 

18 (2) ALLOCATION OF LIMITATION.— 

19 (A) INITIAL ALLOCATIONS.—For each cal20 endar year, with respect to the limitation under 

21 paragraph (1), the Secretary of the Treasury, 

22 in consultation with the Secretary of Education, 

23 shall— 

24 (i) allocate to each State an amount 

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1 tributions made in the State in the pre2 vious year; and 

3 (ii) from any amounts remaining fol4 lowing allocations made under clause (i), 

5 allocate to each participating State an 

6 amount that bears the same relation to 

7 such remaining amount as the number of 

8 individuals aged 5 through 19 in the State, 

9 as determined by the Secretary of Edu10 cation on the basis of the most recent sat11 isfactory data, bears to the number of 

12 those individuals, as so determined, in all 

13 such States, as so determined. 

14 (B) MINIMUM ALLOCATION.—Notwith15 standing subparagraph (A), no State receiving 

16 an allocation under this section may receive less 

17 than one-half of 1 percent of the amount allo18 cated for a fiscal year. 

19 (C) ALTERNATIVE ALLOCATION.— 

20 (i) IN GENERAL.—Not later than the 

21 end of the fifth year of the program or 1 

22 year after the end of the first fiscal year 

23 for which the total amount of credits 

24 claimed under section 25E and section 

25 45U of the Internal Revenue Code of 1986 


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1 is $2,500,000,000 or more, whichever 

2 comes first, the Secretary of the Treasury, 

3 in consultation with the Secretary of Edu4 cation, shall, by regulation, provide for an 

5 alternative allocation method that shall 

6 take effect beginning with the first fiscal 

7 year after such regulation takes effect. 

8 (ii) ALTERNATIVE ALLOCATION METH9 OD.—The alternative allocation method 

10 shall be expressed as a formula based on 

11 a combination of the following data for 

12 each State, as reported by the State to the 

13 Secretary of Treasury: 

14 (I) The relative percentage of 

15 students in the State who receive an 

16 elementary or secondary scholarship 

17 through a State program that is fi18 nanced through State tax-credited do19 nations or appropriations and that 

20 permits the elementary or secondary 

21 scholarship to be used to attend a pri22 vate school. 

23 (II) The total amount of all ele24 mentary and secondary scholarships 

25 awarded through a State program 


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1 that is financed through State tax2 credited donations or appropriations 

3 compared to the total amount of cur4 rent State and local expenditures for 

5 free public education in the State. 

6 (iii) ALLOCATION FORMULA.—For any 

7 fiscal year to which clause (i) applies, the 

8 Secretary of Treasury, in consultation with 

9 the Secretary of Education, shall— 

10 (I) for each State, allocate an 

11 amount equal to the sum of the quali12 fying contributions made in the State 

13 in the previous year; 

(II) allocate 2 14 ⁄3 of the remaining 

15 amount (after application of subclause 

16 (I)) of the national limitation for that 

17 year using the alternative allocation 

18 method under clause (ii); and 

(III) allocate 1 19 ⁄3 of the remaining 

20 amount (after application of subclause 

21 (I) and (II)) in accordance with sub22 paragraph (A)(ii). 

23 (iv) INELIGIBILITY.—For any fiscal 

24 year to which clause (i) applies, a State 

25 that does not provide the Secretary of the 


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1 Treasury with information described in 

2 clause (ii) is not eligible to receive an allo3 cation through the alternative allocation 

4 method under such clause. 

5 (3) ALLOWABLE PARTNERSHIPS.—A State may 

6 choose to administer the allocation it receives under 

7 paragraph (2) in partnership with one or more 

8 States, provided that the eligible scholarship-grant9 ing organizations in each partner State serve stu10 dents who reside in all States in the partnership. 

11 (4) ALLOCATION AND ADJUSTMENTS.— 

12 (A) INITIAL ALLOCATION TO STATES.—Not 

13 later than November 1 of the year preceding a 

14 year for which there is a national limitation on 

15 credits under paragraph (1) (referred to in this 

16 section as the ‘‘applicable year’’), or as early as 

17 practicable with respect to the first year, the 

18 Secretary of the Treasury shall announce the 

19 State allocations under paragraph (2) for the 

20 applicable year. 

21 (B) LIST OF ELIGIBLE SCHOLARSHIP22 GRANTING ORGANIZATIONS.— 

23 (i) IN GENERAL.—Not later than Jan24 uary 1 of each applicable year, or as early 

25 as practicable with respect to the first 


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1 year, each State shall provide the Sec2 retary of the Treasury a list of eligible 

3 scholarship-granting organizations, includ4 ing a certification that the entity submit5 ting the list on behalf of the State has the 

6 authority to perform this function. 

7 (ii) RULE OF CONSTRUCTION.—Nei8 ther this section nor any other Federal law 

9 shall be construed as limiting the entities 

10 that may submit the list on behalf of a 

11 State. 

12 (C) REALLOCATION OF UNCLAIMED CRED13 ITS.—The Secretary of the Treasury shall re14 allocate a State’s allocation to other States, in 

15 accordance with paragraph (2), if the State— 

16 (i) chooses not to identify scholarship17 granting organizations under subparagraph 

18 (B) in any applicable year; or 

19 (ii) does not have an existing eligible 

20 scholarship-granting organization. 

21 (D) REALLOCATION.—On or after April 1 

22 of any applicable year, the Secretary of the 

23 Treasury may reallocate, to one or more other 

24 States that have eligible scholarship-granting 

25 organizations in the States, without regard to 


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1 paragraph (2), the allocation of a State for 

2 which the State’s allocation has not been 

3 claimed. 

4 (d) DEFINITIONS.—Any term used in this section 

5 which is also used in section 25E of the Internal Revenue 

6 Code of 1986 shall have the same meaning as when used 

7 in such section. 

8 (e) AUTHORIZATION OF APPROPRIATIONS.—There 

9 are authorized to be appropriated $50,000,000 to carry 

10 out section 202(a) of this Act. 

Æ 


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