I 
109TH CONGRESS 
1ST SESSION H. R. 2426 
To establish the Supportive Communities Helping Offer Opportunities for 
Learning Program and to allow an income tax credit for contributions 
to qualified scholarship granting organizations. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 18, 2005 
Mr. GREEN of Wisconsin (for himself, Mr. PETRI, Ms. HART, Mr. JINDAL, 
Mr. MILLER of Florida, Mr. HOSTETTLER, Mr. FEENEY, and Mr. 
SOUDER) introduced the following bill; which was referred to the Com-
mittee on Ways and Means, and in addition to the Committee on Edu-
cation and the Workforce, for a period to be subsequently determined by 
the Speaker, in each case for consideration of such provisions as fall with-
in the jurisdiction of the committee concerned 
A BILL 
To establish the Supportive Communities Helping Offer Op-
portunities for Learning Program and to allow an income 
tax credit for contributions to qualified scholarship 
granting organizations. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Supportive Commu-
nities Helping Offer Opportunities for Learning Act of 
2005’’ or as the ‘‘SCHOOL Act of 2005’’.
SEC. 2. ESTABLISHMENT OF SUPPORTIVE COMMUNITIES 
HELPING 
OFFER 
OPPORTUNITIES 
FOR 
LEARNING PROGRAM. 
(a) IN GENERAL.—The Secretary of Education shall 
establish a program to be known as the ‘‘Supportive Com-
munities Helping Offer Opportunities for Learning Pro-
gram’’ or as the ‘‘SCHOOL Program’’. 
(b) CERTIFICATION OF SCHOLARSHIP GRANTING OR-
GANIZATIONS.— 
(1) IN GENERAL.—The Secretary of Education 
may certify an organization as a scholarship grant-
ing organization participating in the SCHOOL Pro-
gram if such organization meets all of the following 
requirements: 
(A) Notifies the Secretary of its intent to 
provide educational scholarships for eligible stu-
dents attending qualified schools. 
(B) Demonstrates to the Secretary that it 
is described in section 501(c)(3) of the Internal 
Revenue Code of 1986 and exempt from tax 
under section 501(a) of such Code. 
(C) Provides a receipt to taxpayers for 
contributions made to the organization. 
(D) Ensures that at least 90 percent of its 
annual receipts are spent on educational schol-
arships, and that all receipts from interest or
investments is spent on educational scholar-
ships. 
(E) Spends each year a portion of its ex-
penditures on scholarships for low-income eligi-
ble students equal to the percentage of low-in-
come eligible students in the county where the 
organization expends the majority of its schol-
arships. 
(F) Ensures that at least 30 percent of 
first time recipients of educational scholarships 
were not continuously enrolled in a private ele-
mentary or secondary school during the pre-
vious year. 
(G) Distributes periodic scholarship pay-
ments as checks made out to a student’s parent 
or guardian and mailed to the qualified school 
where the student is enrolled. 
(H) Cooperates with the Secretary in con-
ducting criminal background checks on all of its 
employees and board members and excluding 
from employment or governance any individual 
that might reasonably pose a risk to the appro-
priate use of contributed funds. 
(I) Ensures that scholarships are portable 
during the school year and can be used at any
qualified school that accepts the student accord-
ing to a parent’s wishes. 
(J) Ensures that if a student moves to a 
new qualified school during a school year, the 
scholarship amount may be prorated. 
(K) Demonstrates its financial account-
ability by— 
(i) submitting a financial information 
report for the organization that complies 
with uniform financial accounting stand-
ards established by the Secretary and that 
has been conducted by a certified public 
accountant; and 
(ii) having an auditor certify that the 
report is free of material misstatements. 
(L) Demonstrates its financial viability, if 
the organization is to receive donations of 
$50,000 or more during any school year (as de-
termined by the Secretary), by— 
(i) filing with the Secretary prior to 
the start of the school year a surety bond 
payable to the Federal Government in an 
amount equal to the aggregate amount of 
contributions expected to be received dur-
ing the school year; or
(ii) filing with the Secretary prior to 
the start of the school year financial infor-
mation that demonstrates the financial via-
bility of the organization. 
(M) Ensures that qualified schools that ac-
cept its scholarship students will— 
(i) comply with all health and safety 
laws or codes that apply to the school; 
(ii) hold a valid occupancy permit if 
required by their municipality; 
(iii) certify that they will not discrimi-
nate in admissions on the basis of race, 
color, national origin, religion or disability; 
and 
(iv) provide academic accountability to 
parents of the students in the program by 
regularly reporting to the parent on the 
student’s progress. 
(N) Does not provide educational scholar-
ships for students to attend any school with 
paid staff or board members, or relatives there-
of, in common with the organization. 
(O) Publicly reports to the Secretary by 
June 1 of each year the following information
prepared by a certified public accountant for 
the previous calendar year— 
(i) the name and address of the orga-
nization; 
(ii) the total number and total dollar 
amount of contributions received during 
the previous calendar year; 
(iii) the total number and total dollar 
amount of educational scholarships award-
ed during the previous calendar year; 
(iv) the total number and total dollar 
amount of educational scholarships award-
ed during the previous year to low-income 
eligible students; and 
(v) the percentage of first time recipi-
ents of educational scholarships who were 
continuously enrolled in a public elemen-
tary or secondary school during the pre-
vious year. 
(2) DEFINITIONS.—For purposes of this sub-
section— 
(A) EDUCATIONAL
SCHOLARSHIPS.—The 
term ‘‘educational scholarships’’ means grants 
for eligible students to cover all or part of—
(i) in the case of a private or religious 
school which charges tuition or fees, the 
tuition and fees of such school, 
(ii) in the case of a public school, the 
cost of transportation to such school, and 
(iii) in the case of any other school or 
program, such expenses as the Secretary of 
Education may provide. 
(B) 
QUALIFIED
SCHOOL.—The 
term 
‘‘qualified school’’ means any public, private, 
religious, or other school or program which pro-
vides elementary or secondary education (as de-
termined under State law). 
(C) ELIGIBLE STUDENT.—The term ‘‘eligi-
ble student’’ means any student who— 
(i) has not— 
(I) attained age 21, or 
(II) been graduated from high 
school, and 
(ii) as of the time that such student 
first 
receives 
assistance 
under 
the 
SCHOOL Program, is a member of a 
household whose total annual income dur-
ing the year before receipt of such assist-
ance does not exceed an amount equal to
2.5 times the highest amount of income 
which qualifies for a reduced price lunch 
under section 9(b)(1) of the Richard B. 
Russell National School Lunch Act. 
(D) LOW-INCOME
ELIGIBLE
STUDENT.— 
The term ‘‘low-income eligible student’’ means 
a student who meets the requirements of para-
graph (3)(A) and who qualifies for a free or re-
duced price lunch under section 9(b)(1) of the 
Richard B. Russell National School Lunch Act. 
(E) PARENT.—The term ‘‘parent’’ includes 
a guardian, custodian, or other person with au-
thority to act on behalf of the child. 
(c) DUTIES OF THE SECRETARY OF EDUCATION.— 
The Secretary of Education shall— 
(1) adopt such rules and procedures as are nec-
essary or appropriate to implement the SCHOOL 
Program; and 
(2) provide a standardized format for certified 
organizations to report the information described in 
subsection (b)(1)(O). 
SEC. 3. EDUCATIONAL IMPROVEMENT CONTRIBUTIONS 
CREDIT. 
(a) IN GENERAL.—Subpart B of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to other credits) is amended by adding at 
the end the following new section: 
‘‘SEC. 30B. EDUCATIONAL IMPROVEMENT CONTRIBUTIONS 
CREDIT. 
‘‘(a) IN GENERAL.—There shall be allowed as a cred-
it against the tax imposed by this chapter for the taxable 
year an amount equal to the aggregate amount of the 
qualified contributions made by the taxpayer to qualified 
scholarship granting organizations during the taxable 
year. 
‘‘(b) LIMITATION.— 
‘‘(1) INDIVIDUALS.—In the case of an indi-
vidual, the amount of the credit determined under 
this section for any taxable year shall not exceed 
$3,000 ($6,000 in the case of a joint return). 
‘‘(2) CORPORATIONS.—In the case of a corpora-
tion, the amount of the credit determined under this 
section for any taxable year shall not exceed the 
lesser of— 
‘‘(A) 5 percent of the taxpayer’s regular 
tax liability for the taxable year, or 
‘‘(B) $20,000. 
‘‘(c) QUALIFIED SCHOLARSHIP GRANTING ORGANI-
ZATION.—For purposes of this section, the term ‘qualified
scholarship granting organization’ means any organization 
which— 
‘‘(1) is described in section 501(c)(3) and ex-
empt from tax under section 501(a), and 
‘‘(2) has in effect a certification from the Sec-
retary of Education that such organization is a 
scholarship granting organization participating in 
the SCHOOL Program (within the meaning of sec-
tion 2 of the SCHOOL Act of 2005). 
‘‘(d) QUALIFIED CONTRIBUTIONS.—For purposes of 
this section, the term ‘qualified contribution’ means any 
cash contribution which the taxpayer elects (at such time 
and in such form and manner as the Secretary may pre-
scribe) to treat as a qualified contribution. 
‘‘(e) COORDINATION WITH OTHER CREDITS; CARRY-
OVER OF UNUSED CREDIT.— 
‘‘(1) IN
GENERAL.—If the credit allowable 
under subsection (a) for a taxable year exceeds the 
limitation imposed by paragraph (2) for such taxable 
year, such excess shall be carried over to the suc-
ceeding taxable year and added to the credit allow-
able under subsection (a) for such succeeding tax-
able year. No credit may be carried forward under 
this subsection to any taxable year following the 
third taxable year after the taxable year in which the
credit arose. For purposes of the preceding sentence, 
credits shall be treated as used on a first-in first-out 
basis. 
‘‘(2) APPLICATION
WITH
OTHER
CREDITS.— 
The credit allowed by subsection (a) for any taxable 
year shall not exceed the excess (if any) of— 
‘‘(A) the regular tax liability for the tax-
able year reduced by the sum of the credits al-
lowed by this part (other than this section), 
over 
‘‘(B) the tentative minimum tax for the 
taxable year. 
‘‘(f) SPECIAL RULES.— 
‘‘(1) SUBSTANTIATION.—No credit shall be al-
lowed under subsection (a) with respect to any con-
tribution to a qualified scholarship granting organi-
zation unless the taxpayer attaches to the taxpayer’s 
return for the taxable year a receipt from such orga-
nization which meets such requirements as the Sec-
retary may establish. 
‘‘(2) CONTROLLED GROUPS.—Rules similar to 
the rules of paragraphs (1) and (2) of section 41(f) 
shall apply for purposes of this section. 
‘‘(3) DENIAL OF DOUBLE BENEFIT.—No deduc-
tion or credit shall be allowed under this subtitle for
any contribution which is taken into account under 
this section. 
‘‘(g) REGULATIONS.—The Secretary may prescribe 
such regulations as may be necessary or appropriate to 
carry out the purposes of this section.’’. 
(b) COORDINATION WITH LIMITATIONS ON CHARI-
TABLE DEDUCTIONS.—Subsection (c) of section 170 of 
such Code is amended by adding at the end the following: 
‘‘Such term shall not include any contribution taken into 
account under section 30B.’’ 
(c) CLERICAL AMENDMENT.—The table of sections 
for subpart B of part IV of subchapter A of chapter 1 
of such Code is amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 30B. Educational improvement contributions credit.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contributions made during tax-
able years beginning after the date of the enactment of 
this Act. 
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