Children Have Opportunities in Classrooms Everywhere Act

Subjects: Education, Academic performance and assessments, Bank accounts, deposits, capital, Education of the disadvantaged, Education programs funding, Elementary and secondary education, Higher education, Income tax exclusion, Special education, Student aid and college costs, Teaching, teachers, curricula

Summary:  <p><b>Children Have Opportunities in Classrooms Everywhere Act</b></p> <p>This bill allows tax-exempt distributions from qualified tuition programs (known as 529 plans) to be used for additional educational expenses in connection with elementary or secondary school. The bill also allows certain federal funds for elementary and secondary education to follow a student from a low-income household to the public school that the student attends or for tax-exempt educational expenses.</p> <p>Under current law, tax-exempt distributions in connection with elementary or secondary school are limited to tuition for a public, private, or religious school. The bill allows these distributions to be used additionally for</p> <ul> <li>curriculum and curricular materials, </li> <li>books or other instructional materials, </li> <li>online educational materials, </li> <li>tutoring or educational classes outside the home, </li> <li>testing fees, </li> <li>fees for dual enrollment in an institution of higher education, and </li> <li>educational therapies for students with disabilities.</li> </ul> <p>Distributions may also be used for tuition and the purposes above in connection with a home school (whether treated as a home school or a private school under state law).</p> <p>In addition, the bill directs state educational agencies to allocate grant funds to ensure the funding follows students to their public school or for other tax-exempt educational expenses outlined by the bill. Each state that carries out these allocations must establish a plan that allows the parent or guardian of an eligible child to apply for grant funds.</p>

<html><body><pre>[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 105 Introduced in Senate (IS)]

&lt;DOC&gt;






118th CONGRESS
  1st Session
                                 S. 105

              To have education funds follow the student.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 26, 2023

 Mr. Lee (for himself, Mr. Tuberville, Mr. Budd, Mr. Scott of Florida, 
and Mr. Wicker) introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
              To have education funds follow the student.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Children Have Opportunities in 
Classrooms Everywhere Act''.

SEC. 2. FEDERAL FUNDING UNDER THE ELEMENTARY AND SECONDARY EDUCATION 
              ACT OF 1965 TO FOLLOW THE STUDENT.

    Title VIII of the Elementary and Secondary Education Act of 1965 
(20 U.S.C. 7801 et seq.) is amended by adding at the end the following:

                 ``PART H--FUNDS TO FOLLOW THE STUDENT

``SEC. 8701. FUNDS TO FOLLOW THE STUDENT.

    ``(a) Definitions.--In this section:
            ``(1) 529 education savings plan account.--The term `529 
        education savings plan account' means a qualified tuition 
        program (as defined in section 529(b)(1)(A) of the Internal 
        Revenue Code of 1986).
            ``(2) Eligible child.--The term `eligible child' means a 
        child who is from a household, the taxable income of which for 
        the most recently completed taxable year is not more than 130 
        percent of an amount equal to the poverty level, as determined 
        by using criteria of poverty established by the Bureau of the 
        Census.
            ``(3) Home school.--The term `home school' means a home 
        school as defined by the laws of the State in which the 
        eligible child resides.
    ``(b) Funds To Follow the Student.--
            ``(1) In general.--Notwithstanding any other provision of 
        law and to the extent permitted under State law, a State 
        educational agency shall allocate grant funds provided under 
        title I, subparts 2 and 3 of part B of title II, and titles 
        III, IV, V, and VI, for the purposes of ensuring that funding 
        under such titles follows children, to the public school the 
        children attend or for the expenses described in section 
        529(c)(7) of the Internal Revenue Code of 1986.
            ``(2) Plan.--
                    ``(A) In general.--Each State that carries out 
                allocations described in paragraph (1) shall establish 
                a plan that complies with the following:
                            ``(i) The parent or guardian of each 
                        eligible child in the State who desires access 
                        to the funds described in paragraph (1) shall 
                        annually submit to the State educational agency 
                        by not later than April 30, a paper or 
                        electronic application form that includes the 
                        following:
                                    ``(I) The parent or guardian's 
                                taxable income based on the Federal tax 
                                return of the parent or guardian for 
                                the prior tax year.
                                    ``(II) The eligible child's date of 
                                birth, place of residence, school 
                                district, and school in which the 
                                eligible child will be enrolled for the 
                                subsequent school year.
                                    ``(III) If the eligible child will 
                                be enrolled in a private school or home 
                                school for the subsequent school year, 
                                confirmation that the eligible child 
                                has a 529 education savings plan 
                                account, including the necessary 
                                details of such account to enable the 
                                State to deposit funds available under 
                                this section into such account.
                            ``(ii) Not later than May 14 of each year, 
                        the State educational agency shall submit to 
                        the Secretary the application forms for all 
                        applicants under clause (i).
                            ``(iii) Not later than July 1 of each year 
                        and based on the information submitted under 
                        clause (i), the State educational agency 
                        shall--
                                    ``(I) if the eligible child will be 
                                enrolled in a private school or home 
                                school for the subsequent school year, 
                                deposit the amount equal to the 
                                concentration distribution and basic 
                                distribution applicable for the 
                                eligible child under subparagraphs (B) 
                                and (C) of subsection (c)(2), into the 
                                529 education savings plan account of 
                                the eligible child; and
                                    ``(II) if the eligible child will 
                                be enrolled in a public school for the 
                                subsequent school year, distribute the 
                                amount equal to the concentration 
                                distribution and basic distribution 
                                applicable for the eligible child under 
                                subparagraphs (B) and (C) of subsection 
                                (c)(2), to such public school.
                    ``(B) Data collection.--Information collected under 
                this section by the State shall be used for the sole 
                purposes of calculating the allocation of funds and 
                distribution of funds under this section.
                    ``(C) Data privacy protection.--Information 
                collected under this section shall be subject to the 
                privacy protections outlined in section 444 of the 
                General Education Provisions Act (20 U.S.C. 1232g; 
                commonly referred to as the `Family Educational Rights 
                and Privacy Act of 1974').
    ``(c) Calculation of Amounts To Be Distributed.--
            ``(1) In general.--From the amounts provided to carry out 
        title I, subparts 2 and 3 of part B of title II, and titles 
        III, IV, V, and VI, and based on the information submitted by 
        State educational agencies under subsection (b)(2)(A)(ii), the 
        Secretary shall--
                    ``(A) determine the eligibility based on the 
                information provided under subsection (b)(2)(A)(i) and 
                verify that the child for whom the information is 
                submitted is an eligible child;
                    ``(B) determine the income bracket for such 
                eligible child; and
                    ``(C) make grants to State educational agencies in 
                the amount determined under paragraph (2) by not later 
                than 30 days after the date the Secretary receives the 
                information under subsection (b)(2)(A)(ii).
            ``(2) Amount of grants.--
                    ``(A) In general.--The grant amount provided to a 
                State educational agency shall be equal to the total 
                distribution amount determined under subparagraphs (B) 
                and (C) for all eligible children in the State.
                    ``(B) Concentration distribution.--An eligible 
                child who is from a household, the taxable income of 
                which for the most recently completed taxable year is 
                not more than 100 percent of an amount equal to the 
                poverty level, as measured by the most recent Small 
                Area Income and Poverty Estimates of the Bureau of the 
                Census, shall receive a concentration distribution 
                according to the following:
                            ``(i) If the eligible child resides in an 
                        area served by a school district in which not 
                        less than 1 percent and not more than 9 percent 
                        of the elementary school and secondary school 
                        students are from a household, the taxable 
                        income of which for the most recently completed 
                        taxable year is not more than 100 percent of an 
                        amount equal to the poverty level, as measured 
                        by the most recent Small Area Income and 
                        Poverty Estimates of the Bureau of the Census, 
                        the eligible child shall receive $50.
                            ``(ii) If the eligible child resides in an 
                        area served by a school district in which not 
                        less than 10 percent and not more than 19 
                        percent of the elementary school and secondary 
                        school students are from a household, the 
                        taxable income of which for the most recently 
                        completed taxable year is not more than 100 
                        percent of an amount equal to the poverty 
                        level, as measured by the most recent Small 
                        Area Income and Poverty Estimates of the Bureau 
                        of the Census, the eligible child shall receive 
                        $100.
                            ``(iii) If the eligible child resides in an 
                        area served by a school district in which not 
                        less than 20 percent and not more than 29 
                        percent of the elementary school and secondary 
                        school students are from a household, the 
                        taxable income of which for the most recently 
                        completed taxable year is not more than 100 
                        percent of an amount equal to the poverty 
                        level, as measured by the most recent Small 
                        Area Income and Poverty Estimates of the Bureau 
                        of the Census, the eligible child shall receive 
                        $150.
                            ``(iv) If the eligible child resides in an 
                        area served by a school district in which not 
                        less than 30 percent and not more than 39 
                        percent of the elementary school and secondary 
                        school students are from a household, the 
                        taxable income of which for the most recently 
                        completed taxable year is not more than 100 
                        percent of an amount equal to the poverty 
                        level, as measured by the most recent Small 
                        Area Income and Poverty Estimates of the Bureau 
                        of the Census, the eligible child shall receive 
                        $200.
                            ``(v) If the eligible child resides in an 
                        area served by a school district in which not 
                        less than 40 percent and not more than 49 
                        percent of the elementary school and secondary 
                        school students are from a household, the 
                        taxable income of which for the most recently 
                        completed taxable year is not more than 100 
                        percent of an amount equal to the poverty 
                        level, as measured by the most recent Small 
                        Area Income and Poverty Estimates of the Bureau 
                        of the Census, the eligible child shall receive 
                        $250.
                            ``(vi) If the eligible child resides in an 
                        area served by a school district in which 50 
                        percent or more of the elementary school and 
                        secondary school students are from a household, 
                        the taxable income of which for the most 
                        recently completed taxable year is not more 
                        than 100 percent of an amount equal to the 
                        poverty level, as measured by the most recent 
                        Small Area Income and Poverty Estimates of the 
                        Bureau of the Census, the eligible child shall 
                        receive $300.
                    ``(C) Basic distribution.--In addition to a 
                concentration distribution under subparagraph (B), an 
                eligible child shall receive a basic distribution based 
                on the income bracket applicable for such eligible 
                child and according to a formula established by the 
                Secretary in which benefits are flat for everyone at or 
                below 100 percent of the Federal poverty level and 
                decrease at an even rate from 100 percent to 130 
                percent of the Federal poverty level.
    ``(d) Notification of Availability of Funds.--Not later than 100 
days after the date of enactment of the Children Have Opportunities in 
Classrooms Everywhere Act, and annually for each of the 5 years 
thereafter, each State that carries out allocations described in 
subsection (b)(1) shall inform each parent or guardian of a child 
eligible for assistance under the supplemental nutrition assistance 
program under the Food and Nutrition Act of 2008 (7 U.S.C. 2011 et 
seq.) or the program of block grants for States for temporary 
assistance for needy families established under part A of title IV of 
the Social Security Act (42 U.S.C. 601 et seq.) of the availability of 
assistance under this section.
    ``(e) Application of Participation of Children Enrolled in Private 
Schools.--The provisions of section 1117 shall apply to this section.
    ``(f) Rule of Construction.--
            ``(1) Federally funded school food programs.--Nothing in 
        this section shall be construed to preclude a child eligible 
        for assistance under the free and reduced price school lunch 
        program established under the Richard B. Russell National 
        School Lunch Act (42 U.S.C. 1751 et seq.) from receiving 
        assistance under such program.
            ``(2) Prohibition of control over non-public education 
        providers.--Nothing in this section shall permit, allow, 
        encourage, or authorize Federal or State control over non-
        public education providers.''.

SEC. 3. 529 ACCOUNT FUNDING FOR HOMESCHOOL AND ADDITIONAL ELEMENTARY 
              AND SECONDARY EXPENSES.

    (a) In General.--Section 529(c)(7) of the Internal Revenue Code of 
1986 is amended to read as follows:
            ``(7) Treatment of elementary and secondary tuition and 
        resources.--Any reference in this section to the term 
        `qualified higher education expense' shall include a reference 
        to the following expenses in connection with enrollment or 
        attendance at, or for students enrolled at or attending, an 
        elementary or secondary public, private, or religious school:
                    ``(A) Tuition.
                    ``(B) Curriculum and curricular materials.
                    ``(C) Books or other instructional materials.
                    ``(D) Online educational materials.
                    ``(E) Tuition for tutoring or educational classes 
                outside of the home, including at a tutoring facility, 
                but only if the tutor or instructor is not related to 
                the student.
                    ``(F) Fees for a nationally standardized norm-
                referenced achievement test, an advanced placement 
                examination, or any examinations related to college or 
                university admission.
                    ``(G) Fees for dual enrollment in an institution of 
                higher education.
                    ``(H) Educational therapies for students with 
                disabilities provided by a licensed or accredited 
                practitioner or provider, including occupational, 
                behavioral, physical, and speech-language therapies.
        Such term shall include expenses for the purposes described in 
        subparagraphs (A) through (H) in connection with a homeschool 
        (whether treated as a homeschool or a private school for 
        purposes of applicable State law).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to distributions made after the date of the enactment of this Act.

SEC. 4. INCREASED ADDITIONAL TAX ON GRANTS NOT USED FOR EDUCATIONAL 
              PURPOSES.

    Section 529(c)(6) of the Internal Revenue Code of 1986 is amended--
            (1) by striking ``The tax'' and inserting the following:
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the tax'', and
            (2) by adding at the end the following new subparagraph:
                    ``(B) Increased tax on amounts attributable to 
                certain grants.--
                            ``(i) In general.--In the case of any 
                        distribution from a qualified contribution 
                        program that includes amounts attributable to a 
                        qualified grant--
                                    ``(I) section 530(d)(4) shall be 
                                applied separately to amounts 
                                attributable to qualified grants and to 
                                other amounts, and
                                    ``(II) in applying such section to 
                                amounts attributable to qualified 
                                grants, such section shall be applied 
                                by substituting `100 percent' for `10 
                                percent'.
                            ``(ii) Attribution rules.--For purposes of 
                        this subparagraph--
                                    ``(I) any earnings on contributions 
                                from a qualified grant shall not be 
                                treated as attributed to a qualified 
                                grant, and
                                    ``(II) distributions from a 
                                qualified tuition program described in 
                                clause (i) shall be treated as 
                                distributed first from amounts other 
                                than amounts attributable to a 
                                qualified grant and then from amounts 
                                attributable to a qualified grant.
                            ``(iii) Qualified grant.--For purposes of 
                        this subparagraph, the term `qualified grant' 
                        means any grant under section 8701 of the 
                        Elementary and Secondary Education Act of 
                        1965.''.
                                 &lt;all&gt;
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