On July 11, 2024, Pennsylvania Governor Josh Shapiro approved Senate Bill No. 700, now Act No. 55 of 2024 (the “Act”). The Act amends several sections of the Pennsylvania Public School Code of 1949 (the “School Code”).
In Part Three of our School Administrators’ Guide to Act 55, KingSpry’s Education Law Chair Emeritus, John E. Freund, III, Esq., and Education Law Attorney, Sarah Modrick, Esq., LL.M., discuss the changes impacting economically disadvantaged schools and the tax credit program.
Definition
The Act defines an “economically disadvantaged school” as “any school within this Commonwealth at which at least 51% of the students attending the school in the immediately preceding school year received a scholarship in the following amounts:
1. For a pre-kindergarten, kindergarten or elementary school, at least $500; and
2. For a secondary school, at least $1,000.”
Economically Disadvantaged School Scholarships
The Act adds Section 2009.1-B to Article XX-B, governing economically disadvantaged school scholarships. This Section sets forth the application, reporting, and notification requirements for schools, scholarship organizations, and the Department of Community and Economic Development of the Commonwealth.
Scholarship Organizations Deadlines
The Act revises the deadlines for scholarship organizations for economically disadvantaged schools (the “scholarship organizations”) as follows:
1. Scholarship organizations must agree to distribute scholarships to applicants no later than December 15th of the applicable school year; and
2. Scholarship organizations must report the information required under Section 2003-B(D.3)(4) by January 15th of each year.
Tax Credit Provisions
The Act amends the tax credit provisions under Section 2005-B of Article XX-B to consider the financial needs of economically disadvantaged schools as follows:
When a contribution is made to a scholarship organization for economically disadvantaged schools, the tax credit shall not exceed 85% of the total amount contributed during the taxable year by the business firm. Alternatively, when a contribution is made to a scholarship organization for economically disadvantaged schools, the Department of Revenue shall grant a tax credit of up to 99% of the total amount contributed during the taxable year if the business firm provides a written commitment to provide the scholarship organization with the same amount of contribution for two (2) consecutive tax years.
For the 2024-2025 fiscal year and each fiscal year thereafter, the $750,000 annual tax credit limitation will not apply for contributions made to a scholarship organization for economically disadvantaged schools.
Business firms and economically disadvantaged schools interested in learning more about the tax credit program and its thresholds are encouraged to review Section 2005-B of Article XX-B.
