"Opportunity Scholarship Act"; establishes pilot program in Department of Treasury providing tax credits to taxpayers contributing to scholarships for low-income children.

A1578

ASSEMBLY, No. 1578

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblyman SEAN T. KEAN

District 30 (Monmouth and Ocean)

Co-Sponsored by:

Assemblymen Webber and Inganamort

SYNOPSIS

���� "Opportunity Scholarship Act"; establishes
pilot program in Department of Treasury providing tax credits to taxpayers
contributing to scholarships for low-income children.

CURRENT VERSION OF TEXT

���� Introduced Pending Technical Review by Legislative
Counsel.

��

An Act

concerning educational opportunity scholarships
for certain students, and supplementing P.L.1945, c.162 (C.54:10A-1 et seq.),
chapter 4 of Title 54A of the New Jersey Statutes, and Title 18A of the New
Jersey Statutes.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� This act shall be known
and may be cited as the �Opportunity Scholarship Act.�

���� 2.��� The Legislature finds
and declares that:

���� a.����
Parents of limited financial resources are often less
able to provide access to quality educational options for their children and
are therefore unable to select the learning environment that might best meet
the needs of their children, even in those instances in which the public
schools are failing to educate their children
;

���� b.��� Consequently, it is
critical to provide a mechanism that will provide children of families that
have limited financial resources enrolled in chronically failing schools the
opportunity to enroll in different schools chosen by their parents so as to
expand the educational opportunities available to these children;

���� c.���� The United States
Supreme Court in its 2002 decision, Zelman v. Simmons-Harris, found that a
program providing tuition aid in the form of scholarships for some students to
attend public or nonpublic schools of a parent�s choosing did not violate the
Establishment Clause of the United States Constitution; and

���� d.��� Accordingly, it

is appropriate
that the State initiate a tax credit scholarship program on a pilot basis to
encourage taxpayers to make voluntary contributions to a nonprofit scholarship
organization, as well as to assess the impact of such a program on the
educational opportunity and achievement of children whose current education
options are limited to a chronically failing school.

���� 3.��� As used in sections 1
through 11 of P.L.��� , c. ���(C.� ������) (pending before the Legislature as
this bill):

���� �Chronically failing school�
means any public school, other than a charter school, that is located in a
targeted district and meets the criteria of paragraph (1) or paragraph (2):

���� (1)�� among all students in
that school to whom a State assessment was administered, the percent of
students scoring in the partially proficient range in both the language arts
and mathematics subject areas of the State assessments was equal to or greater
than 40% in each of the prior two school years; or

���� (2)�� among all students in
that school to whom a State assessment was administered, the percent of
students scoring in the partially proficient range in either the language arts
or mathematics subject area of the State assessment was equal to or greater
than 60% in each of the prior two school years.

����
(3)�� A school shall continue to be designated a
chronically
failing
school until such time that
the percent of students scoring in the partially proficient range in both the
language arts and mathematics subject areas of the State assessments is less
than or equal to the Statewide percent of students scoring in the partially
proficient range on the corresponding Statewide assessments.

���� "Eligible school"
means
an
out-of-district
public school or an in-district or out-of-district nonpublic school located in
this State offering a program of instruction for kindergarten through 12th
grade, or any combination of those grades that:

���� (1)�� is open to enroll
students who are eligible to participate in the pilot program established
pursuant to section 4 of P.L.��� , c.��� (C. �������) (pending before the
Legislature as this bill) on a space-available basis as determined by the
eligible school and does not discriminate in its admission policies or
practices for scholarship students enrolled in a public school on the date of
the scholarship application on the basis of intellectual or athletic ability,
measures of achievement or aptitude, status as a person with disabilities,
proficiency in the English language, or any other basis that would be illegal
if used by a school district; however, nothing shall prohibit a school from
qualifying as an eligible school solely because the school limits admission to
a particular grade level, single gender, or to areas of concentration at the
school, such as mathematics, science, or the arts.� Nothing in this paragraph
shall be construed to require a school to implement new academic or other
programs that the school does not offer at the time that, in the case of a
public school, the board of education designates it as a school that will
accept scholarship students, or, in the case of a nonpublic school, the school
obtains approval from the commissioner to be deemed an eligible school;

���� (2)�� provides instruction in
all subjects and grade levels that is consistent with the core curriculum
content standards or comparable standards, as determined by the commissioner;

���� (3)�� in the case of a public
school, has been designated by the board of education as a school that will
accept students who participate in the pilot program established pursuant to section
4 of P.L.��� , c.��� (C. �������) (pending before the Legislature as this
bill);

����
(4)�� in the case of a nonpublic school:

���� (a)�� provides first priority for enrollment in any
space made available by the school for scholarship students at that school to
students who participate in the pilot program established pursuant to section 4
of P.L.��� , c. ���(C. �������) (pending before the Legislature as this bill);

���� (b)�� has obtained approval
from the Commissioner of Education pursuant to section 16 of P.L.��� , c. ���(C.�
������) (pending before the Legislature as this bill) to enroll students who
participate in the pilot program established pursuant to that act; and

���� (c)�� obtains written
acknowledgment from the parent or guardian that notification has been received
that a nonpublic school may not provide the same level of special education
instructional programs and support services that may be available in a public
school; and

���� (5)�� is in full compliance
with all federal, State, and local laws.

���� "Low-income child"
means a child from a household with an income that does not exceed 2.50 times
the official federal poverty threshold for the calendar year preceding the
school year for which an educational scholarship is to be distributed.

���� �Per pupil expenditure� means
the sum of the budget year equalization aid per pupil, budget year adjustment
aid per pupil, and the prebudget year general fund tax levy per pupil inflated
by the CPI rate most recent to the calculation.

���� "Scholarship
organization" means an organization that has been determined by the
federal Internal Revenue Service to be qualified as a tax-exempt organization
pursuant to paragraph (3) of subsection (c) of section 501 of the federal
Internal Revenue Code of 1986 (26 U.S.C. s.501) and that:

���� (1)�� requires that any
tax-creditable contributions accepted by it be designated by the contributor at
the time of contribution as a contribution pursuant to P.L.��� , c. ���(C.� ������)
(pending before the Legislature as this bill);

���� (2)�� distributes individual
scholarships to the parents or guardians of scholarship students that:

���� (a)�� in the case of a
scholarship student enrolled in grades kindergarten through 8, are equal to the
lesser of:

���� (i)��� the actual cost per
pupil of the eligible school enrolling a scholarship student, as determined by
the Commissioner of Education, or

���� (ii) the greater of $6,000 or
40% of the average per pupil expenditure among all targeted districts, and

���� (b)�� in the case of a
scholarship student enrolled in grades 9 through 12, are equal to the lesser
of:

���� (i)��� the actual cost per
pupil of the eligible school enrolling a scholarship student, as determined by
the Commissioner of Education, or

���� (ii) the greater of $9,000 or
59% of the average per pupil expenditure among all targeted districts;

���� (3)�� ensures that a child
receives in any school year no more than one scholarship pursuant to the
provisions of P.L.��� , c.�� (C.� ������) (pending before the Legislature as
this bill); and

���� (4)�� has complied with such
other requirements as the Director of the Division of Taxation in the
Department of the Treasury may require.

���� �Targeted district� means Asbury
Park City School District, Camden City School District, Elizabeth City
School District, Lakewood City School District, Newark City School
District, City of Orange School District, Passaic City School District, and
City of Perth Amboy School District.

���� 4.��� Beginning in the first State fiscal year following
the effective date of P.L.��� , c.�� �(C.� ������) (pending before the
Legislature as this bill), the Director of the Division of Taxation in the
Department of the Treasury shall establish a five-year pilot program, including
an evaluation year in the last year of the pilot program, to provide tax
credits to taxpayers that contribute funding to the scholarship organization selected
pursuant to subsection b. of section 7 of P.L.��� , c. ���(C.� ������) (pending
before the Legislature as this bill) to provide educational scholarships to provide
a parent or guardian of a low-income child the ability to pay the costs at an
eligible school
that has been selected by the parent or guardian of the
scholarship student
.� Under the
pilot program, a low-income child shall be eligible to receive a scholarship
if:

���� (1)�� the child is enrolled in a chronically failing
school;

���� (2)�� the child received a scholarship pursuant to
P.L.��� , c. ���(C. ) (pending
before the Legislature as this bill) in the prior school year and continues to
reside in a targeted district;

���� (3)�� in the subsequent school year, the child would be
eligible to enroll in a chronically failing school in the lowest grade level,
other than preschool, operated by the chronically failing school.� A low-income
child currently enrolled in a nonpublic school shall be eligible to receive a
scholarship pursuant to this paragraph; or

���� (4)�� the child attends a public school, other than a
chronically failing school, located in a targeted district.

���� 5.��� a. Subject to the restrictions established
pursuant to subsection c. of this section, a taxpayer, upon application to the
scholarship organization selected pursuant to subsection b. of section 7 of
P.L.��� , c.� ��(C.� ������) (pending before the Legislature as this bill), and
approval of the Director of the Division of Taxation in the Department of the
Treasury, shall be allowed a credit against the tax imposed pursuant to section
5 of P.L.1945, c.162 (C.54:10A-5) for a privilege period, in an amount equal to
100% of the contribution made by the taxpayer to the scholarship organization
selected pursuant to subsection b. of section 7 of P.L. , c.���
(C. �������) (pending before the Legislature as this bill) during the privilege
period; provided that the taxpayer shall designate at the time the contribution
is made that the contribution is made pursuant to P.L.��� , c.��� (C.����� ��) (pending
before the Legislature as this bill).

���� b.��� The order of priority of
the credit allowed under this section of P.L.��� , c.��� (C.���� ���) (pending
before the Legislature as this bill) and any other credits allowed by law shall
be as prescribed by the director.� The amount of the credit applied under P.L.���
, c.������� (C. ) (pending before the Legislature as this
bill) against the tax imposed pursuant to section 5 of P.L.1945, c.162
(C.54:10A-5) for a privilege period shall not reduce the tax liability to an
amount less than the statutory minimum provided in subsection (e) of section 5
of P.L.1945, c.162 (C.54:10A-5).� The amount of the credit otherwise allowable
under this section which cannot be applied for the privilege period due to
limitations of this subsection or under other provisions of P.L.1945, c.162 may
be carried over, if necessary, to the seven privilege periods following the
privilege period for which the credit was allowed.

���� c.���� The value of credits
approved by the director pursuant to this section and section 6 of P.L.��� , c.
���(C.������ �) (pending before the Legislature as this bill) to apply to the
tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), and the tax
imposed pursuant to the �New Jersey Gross Income Tax Act,� N.J.S.54A:1-1 et
seq., shall not exceed 120% of the total value of scholarships awarded and
administrative fees collected in any State fiscal year, less any funds that
were carried forward from the prior fiscal year.� If the sum of the amount of
tax credits authorized pursuant to this section and section 6 of P.L.��� , c.� ��(C.
�������) (pending before the Legislature as this bill) in a State fiscal year
exceeds the aggregate annual limits established pursuant to this subsection,
tax credits shall be allowed in the order in which contributions are made until
the limit is reached.

���� 6.��� a. Subject to the restrictions established
pursuant to subsection c. of section 5 of P.L.��� , c.�� (C. ) (pending before
the Legislature as this bill), a taxpayer, upon application to the scholarship
organization selected pursuant to subsection b. of section 7 of P.L.��� , c. ���(C.
�������) (pending before the Legislature as this bill), and the approval of the
Director of the Division of Taxation in the Department of the Treasury, shall
be allowed a credit against the tax otherwise due for the taxable year under
the �New Jersey Gross Income Tax Act,� N.J.S.54A:1-1 et seq., in an amount
equal to 100% of the contribution made by the taxpayer to the scholarship
organization selected pursuant to subsection b. of section 7 of P.L.��� , c.���
(C.������ ) (pending before the Legislature as this bill) during the taxable
year; provided that the taxpayer shall designate at the time the contribution
is made that the contribution is made pursuant to P.L.��� , c. ���(C.������ �)
(pending before the Legislature as this bill) and provided that the
contribution is equal to or greater than $100.

���� b.��� The order of priority of
the credit allowed under this section of� P.L.��� , c.��� (C.���� ���) (pending
before the Legislature as this bill) and any other credits allowed by law shall
be as prescribed by the director.� The amount of the credit allowed pursuant to
this section shall be applied against the tax otherwise due under N.J.S.54A:1-1
et seq.� If the credit exceeds the amount of tax otherwise due, that amount of
excess shall be an overpayment for the purposes of N.J.S.54A:9-7.

���� 7.��� a.� There is hereby
established the Opportunity Scholarship Board.� The board shall consist of five
public members appointed in the following manner:

���� (1)�� three members shall be
appointed by the Governor, including one member who shall be a representative
of an entity subject to the tax imposed pursuant to section 5 of P.L.1945,
c.162 (C.54:10A-5) or an employee of such an entity, one member who shall have
experience in the education of low-income children, and one member who shall
have experience in the oversight or management of nonprofit entities; and

���� (2)�� one member shall be
appointed by the President of the Senate, and one member shall be appointed by
the Speaker of the General Assembly. Each member shall have demonstrated
experience in matters related to the responsibilities of the board.

���� The members of the board shall
serve without compensation for a term equal in length to the duration of the
pilot program established pursuant to section 4 of P.L.��� , c. ���(C. �������)
(pending before the Legislature as this bill).

���� b.��� The board shall select
one scholarship organization to administer the pilot program established
pursuant to section 4 of P.L.��� , c. ���(C.� ������) (pending before the
Legislature as this bill).

���� c.���� The board shall
establish a procedure for reallocating any scholarships that have not been
awarded in a targeted district by July 1 to another targeted district.

���� d.��� The board may evaluate
and approve a request from the scholarship organization selected pursuant to
subsection b. of this section to amend programmatic procedures as necessary to
ensure the effective and efficient administration of the pilot program.� Amendments
that may be considered may include, but need not be limited to, the
administration of the tax credits, the necessity to conduct a lottery, and the
requirements for reporting information to the entity selected pursuant to
subsection j. of section 10 of P.L.��� , c.��� (C.������� ) (pending before the
Legislature as this bill) to conduct the independent evaluation of the pilot
program.� The board shall not approve any amendments that would materially
alter the goals and objectives of the pilot program.

���� e.���� On or before January 1
of the fifth school year of the pilot program, the board shall submit a report
to the Governor, and to the Legislature pursuant to section 2 of P.L.1991,
c.164 (C.52:14-19.1), on the implementation and results of the pilot program.�
The report shall be based on the annual reports submitted by the scholarship
organization pursuant to subsection h. of section 10 of P.L.��� , c.��� (C.� ������)
(pending before the Legislature as this bill), the annual audits conducted
pursuant to subsection i. of that section, and the independent study conducted
pursuant to subsection j. of that section.� The report shall include a
recommendation on whether the program should be reauthorized on a permanent
basis and whether it should be expanded to include other school districts.

���� 8.��� a. The scholarship
organization selected pursuant to subsection b. of section 7 of P.L.��� , c.� ��(C.
������) (pending before the Legislature as this bill) shall award no more than
2,500 scholarships in the first year, 5,000 scholarships in the second year,
7,500 scholarships in the third year, 10,000 scholarships in the fourth year,
and 10,000 scholarships in the fifth year.

���� b.��� The total number of
scholarships available in each school year shall be allocated to each targeted
district by multiplying the number of scholarships available in the school year
by the percent obtained when dividing the total enrollment, excluding preschool
students, in the chronically failing schools in the targeted district by the
total enrollment, excluding preschool students, in chronically failing schools
located in the targeted districts.� For the purposes of this subsection, the
total number of scholarships available in each school year shall not include
any scholarships that will be awarded to a student who received a scholarship
in the prior school year.

���� c.���� The scholarship
organization shall award scholarships, other than a scholarship awarded to a
student who received a scholarship in the prior school year, using the
following order of priority:

���� (1)�� low-income children who
are either enrolled in a chronically failing school or,
in the subsequent school year, would be eligible to enroll
in a chronically failing school in the lowest grade level, other than
preschool, operated by the chronically failing school; and

���� (2)�� low-income children who
are enrolled in a public school in a targeted district that is not a
chronically failing school.

���� d.��� If by July 1 of any
school year, scholarships available in a targeted district have not been
awarded, then the remaining scholarships shall be used to provide scholarships
to low-income children
residing in another
targeted district in accordance with standards established by the Opportunity
Scholarship Board.� Any scholarship awarded after July 1 shall be awarded using
the same order of priority established pursuant to subsection c. of this
section.

���� 9.���
The scholarship organization selected by
the Opportunity Scholarship Board pursuant to subsection b. of section 7 of
P.L.��� , c.��� (C.������� ) (pending before the Legislature as this bill)
shall require that an eligible school which admits a child receiving an
educational scholarship under the pilot program:

���� a.���� shall not require any
payment in addition to the scholarship from the parent or guardian of the
scholarship student for attendance at the school;

���� b.��� ensures that a child
enrolled in an eligible school who received a scholarship under the program in
the prior school year receives a scholarship in each school year of enrollment
under the program provided that the child remains a resident of the targeted
district.� A
ny child who received a
scholarship under the program in the prior school year who is no longer
considered a low-income child shall continue to remain eligible to receive a
scholarship under the program.� A scholarship student shall continue to remain
eligible to receive a scholarship in subsequent school years if, as a result of
grade progression, the public school in which the child is eligible to enroll
is not a chronically failing school.

���� c.���� in the event that more
children apply for admission under the pilot program than there are openings at
the eligible school, determines through a lottery which children are selected
for admission, except that preference for enrollment may be given to siblings
of students who are enrolled in the eligible school;

���� d.��� if the eligible school
is a nonpublic school:

���� (1)�� upon admitting a
scholarship student, agrees to continue enrolling that student for at least two
full school years unless the student commits an act that threatens the health
or safety of other students, faculty, or staff at the school.� Thereafter, the scholarship
student shall be subject to the disciplinary and expulsion policy that is
applicable to all students; and

���� (2)�� if the nonpublic school
is a sectarian school, allows a scholarship student to opt out of any classes
that provide religious instruction or any religious activities; and

���� e.���� shall not use revenue
received through the enrollment of scholarship students for construction or
capital improvement projects.

���� 10.�
The scholarship organization selected by the
Opportunity Scholarship Board pursuant to subsection b. of section 7 of P.L.���
, c.��� (C.������� ) (pending before the Legislature as this bill) shall:

���� a.���� publicize the pilot
program to the parents and guardians of children who are eligible to receive a
scholarship pursuant to the provisions of section 4 of P.L.��� , c.� ��(C. ��������)
(pending before the Legislature as this bill);

���� b.���
manage the scholarship application process for each targeted
district;

���� c.���� review and verify the
income and residence of a scholarship applicant;

���� d.��� compile an inventory of
vacancies in eligible schools available for potential scholarship recipients
based on information provided by the eligible schools;

����
e.���� in the event that the number of eligible students
in
a targeted district
applying for a
scholarship exceeds the number of available scholarships
in the targeted
district
, conduct a lottery in the targeted
district to determine which students will receive a scholarship;

���� f.���� monitor the enrollment
of scholarship students in eligible schools;

���� g.��� manage the acceptance of
contributions made to the scholarship program, including:

���� (1)�� advising a potential
contributor of the inability to receive a tax credit due to the limits
established pursuant to subsection c. of section 5 of P.L.��� , c.� ��(C. �������)
(pending before the Legislature as this bill); and

���� (2)�� verifying contributions
to the Director of the Division of Taxation;

���� h.��� prepare a report to be
submitted to the scholarship board, the State Treasurer and the Commissioner of
Education by December 1 of each year that includes, but is not limited to, the
following information for the prior school year:� the amount of scholarship
funds received by the scholarship organization; the total number of
scholarships awarded, by grade level; the total number of scholarship
recipients, by school district; the amount of scholarship funds used by
scholarship recipients to attend eligible schools that are public schools, and
a listing of those eligible schools; the amount of scholarship funds used by
scholarship recipients to attend eligible schools that are nonpublic schools,
and a listing of those eligible schools; and the number of scholarship
applications for which no scholarships were available;

���� i.���� annually enter into a
contract with an independent entity to audit the implementation of the pilot
program.� The scholarship organization shall transmit a copy of the audit to
the scholarship board, the State Treasurer, and the Commissioner of Education
no later than December 1 of each year; and

���� j.���� commission an
independent study of the pilot program.� The study shall be conducted by an
individual or entity primarily identified with expertise in the field of urban
education.� The individual or entity shall design a comprehensive study of the
pilot program which shall include, but not be limited to, consideration of the
following:

���� (1)�� the academic achievement
of scholarship recipients based on test results on the State assessments, other
assessments, and other educational indicators comparing scholarship students to
students in the eligible school who are not scholarship students, students in
the public school previously attended by the scholarship student, students
enrolled in other schools in the district in which the scholarship student is a
resident, and disaggregated by the subgroups used in reporting the results of
the State assessments pursuant to the �No Child Left Behind Act of 2001;�

���� (2)�� the financial impact of
the pilot program on revenues and expenditures for the State, targeted
districts, and the eligible schools in which the scholarship students enroll;

���� (3)�� the impact of the
program on student enrollment patterns; and

���� (4)�� parental satisfaction
with the pilot program.

���� The scholarship organization may carry forward funds in
an amount not to exceed 20% of the total value of scholarships awarded and
administrative fees collected in the school year.� Any contributions not used
to award scholarships, administer the program, or carried forward to the
subsequent fiscal year shall be returned to the Department of the Treasury.

���� 11.� The Director of the
Division of Taxation shall adopt rules and regulations in accordance with the
"Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.),
to implement the provisions of sections 1 through 10 of P.L.��� , c.�� �(C.� ������)
(pending before the Legislature as this bill).

���� 12.� As used in sections 13
through 18 of P.L.��� , c. ���(C.������ �) (pending before the Legislature as
this bill):

���� �Chronically failing school�
means any public school, other than a charter school, that is located in a
targeted district and meets the criteria of paragraph (1) or paragraph (2):

���� (1)�� among all students in
that school to whom a State assessment was administered, the percent of
students scoring in the partially proficient range in both the language arts
and mathematics subject areas of the State assessments was equal to or greater
than 40% in each of the prior two school years; or

���� (2)�� among all students in
that school to whom a State assessment was administered, the percent of
students scoring in the partially proficient range in either the language arts
or mathematics subject area of the State assessment was equal to or greater
than 60% in each of the prior two school years.

����
(3)�� A school shall continue to be designated a
chronically
failing
school until such time that
the percent of students scoring in the partially proficient range in both the
language arts and mathematics subject areas of the State assessments is less
than or equal to the Statewide percent of students scoring in the partially
proficient range on the corresponding Statewide assessments.

���� �Targeted district� means Asbury
Park City School District, Camden City School District, Elizabeth City
School District, Lakewood City School District, Newark City School
District, City of Orange School District, Passaic City School District, and
City of Perth Amboy School District.

���� 13.� The Department of
Education shall annually provide a list of all
chronically failing schools
to the scholarship
organization selected pursuant to subsection b. of section 7 of P.L.��� , c.���
(C. ) (pending before the
Legislature as this bill).� The department shall coordinate with the
scholarship organization to determine the earliest feasible time that the list
can be developed after the administration of the State assessments.

���� 14.�
Notwithstanding any provision of
section 5 or
subsection a. of section 16 of P.L.2007,
c.260 (
C.18A:7F-47 and

C:18A:7F-58) or any other section of law to the contrary, for each scholarship
student who resides in the targeted district
,
the amount of State school aid paid to the district pursuant
to the provisions of P.L.2007, c.260 (C.18A:7F-43 et al.) shall be reduced by
an amount equal to sum of the amount of the scholarship awarded to the
scholarship student and the scholarship organization administrative fee.

���� The scholarship organization administrative fee shall
equal: in the first State fiscal year $750 per scholarship, in the second State
fiscal year, $400 per scholarship, in the third State fiscal year, $250 per
scholarship, in the fourth State fiscal year, $200 per scholarship, and in the
fifth State fiscal year, $210 per scholarship.

���� 15.� A targeted district shall
provide transportation services to a student who receives a scholarship pursuant
to P.L.��� , c.� ��(C. )
(pending before the Legislature as this bill) and attends a nonpublic school or
a public school outside the school district of residence pursuant to the
provisions of N.J.S.18A:39-1 applicable to nonpublic school pupil
transportation.

���� 16.� a. The Commissioner of
Education shall develop a process for approving a nonpublic school that wants
to be classified as an eligible school to enroll a scholarship student pursuant
to the provisions of P.L.��� , c.� ��(C.� ������) (pending before the
Legislature as this bill).� The commissioner shall grant approval to a
nonpublic school that meets any one of the following criteria:

���� (1)�� the school has been in
operation for at least five years, has an end-of-year financial statement for
each of the previous five years, and, in the two years prior to the school year
for which approval is sought, has undergone an independent financial audit
conducted by a certified public accountant that concluded that the school is
financially viable;

���� (2)�� the school was founded
within the prior 12 months by an operator of an existing school that meets the
criteria of paragraph (1) of this subsection; or

���� (3)�� the school is a current
member of the New Jersey Association of Independent Schools.

���� b.��� The commissioner may
grant approval to a school that does not meet the requirements of subsection a.
of this section if the nonpublic school submits an application containing the
following information:

���� (1)�� a statement of the
school�s objectives and a written strategy for meeting those objectives;

���� (2)�� information that
demonstrates the school�s financial viability;

���� (3)�� a list of the school�s
faculty, including information regarding each individual�s educational
attainment and relevant work experience;

���� (4)�� a statement regarding
the adequacy of the school�s equipment and facilities;

���� (5)�� documentation that the
school has been determined by the federal Internal Revenue Service to be
qualified as a tax-exempt organization pursuant to paragraph (3) of subsection
(c) of section 501 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.501);
and

���� (6)�� a list of current board
members, their affiliations, and terms of service.

���� c.���� As a condition of
receiving approval to enroll a scholarship student, a nonpublic school shall:

���� (1)�� require a criminal
history record check of final candidates for employment in accordance with the
procedures established pursuant to P.L.1989, c.229 (C.18A:6-4.13 et seq.)

���� (2)�� demonstrate that the
school administers an annual assessment to students enrolled in the school; and

���� (3)�� provide evidence that
the school has received accreditation from a recognized accrediting agency.

���� 17.� a. A nonpublic school
that enrolls a scholarship student pursuant to the provisions of P.L.��� , c. ���(C.
�������) (pending before the Legislature as this bill) shall administer an
appropriate grade level assessment to all scholarship students enrolled in the
school. If a nonpublic school administers a State assessment, the Department of
Education shall provide the necessary testing materials to the nonpublic school
at no cost.

���� b.��� In addition to any
assessment administered pursuant to subsection a. of this section, an eligible
school that enrolls a scholarship student shall administer a grade-level
appropriate assessment to all students receiving a scholarship pursuant to the
provisions of P.L.��� , c.�� �(C.�� �����) (pending before the Legislature as
this bill) within the first 30 days of the scholarship student�s enrollment in
the first school year in which a scholarship is received, and once in each subsequent
school year in which a scholarship is received.

���� c.���� Any assessment
administered pursuant to subsections a. and b. of this section shall be capable
of providing technically accurate measures of a student�s academic growth over
time.� An eligible school that administers an assessment pursuant to
subsections a. and b. of this section shall make the results available to the
entity selected pursuant to subsection j. of section 10 of P.L.��� , c.�� �(C. )
(pending before the Legislature as this bill) to conduct the independent
evaluation of the program, and to the commissioner.� The commissioner shall
make the results of the assessments publicly available provided that results
are available for at least 10 students in any given grade level and that such a
release does not risk disclosing the results of an individual student.

���� 18.� The State Board of
Education shall adopt regulations pursuant to the "Administrative
Procedures Act," P.L.1968, c.410 (C.52:14B-1 et seq.), to effectuate the
provisions of sections 12 through 18 of P.L.��� , c.� ��(C.���� ���) (pending
before the Legislature as this bill).

���� 19.� This act shall take
effect immediately.

STATEMENT

���� This bill directs the Director
of the Division of Taxation to establish a five-year pilot program to provide
tax credits to taxpayers that make contributions to a selected scholarship
organization that provides scholarships to certain low-income children to
attend a nonpublic school or an out-of-district public school.� The program
would allow a taxpayer to claim a tax credit against the corporate business tax
or gross income tax equal to 100% of any contribution made to the scholarship
organization; in the case of the gross income tax credit, a taxpayer must
contribute a minimum of $100 to the scholarship organization in order to be
eligible to receive the tax credit.� The maximum amount of tax credits
allowable in each State fiscal year would equal 120% of the total value of
scholarships awarded and administrative fees collected from school districts.�
Tax credits would be allowed in the order in which the contributions are
received.

���� The bill creates the
Opportunity Scholarship Board and directs it to select one scholarship
organization to administer the program.� The scholarship organization would
receive contributions made to the program and award scholarships to the parents
or guardians of eligible students.� The maximum number of scholarships that may
be awarded each year is: 2,500 in the first year, 5,000 in the second year,
7,500 in the third year, and 10,000 in the fourth and fifth years.� The number
of available scholarships would be allocated to each targeted district based on
the number of students enrolled in the district�s chronically failing school
relative to the enrollment in chronically failing schools located in targeted
districts.� If the number of eligible students applying for a scholarship
exceeds the number of available scholarships in a targeted district, then the
scholarship organization would be responsible for conducting a lottery to
determine scholarship awards in that district.

���� To be eligible to receive a
scholarship, a low-income child must either: 1) attend a chronically failing
school, 2) received a scholarship in the previous school year and continue to
reside in the targeted district, 3) reside in a targeted district and attend
one of the district�s public schools that is not a chronically failing school,
or 4) in the subsequent school year, would be eligible to enroll in a
chronically failing school in the lowest grade, other than preschool, operated
by the school.� The last category of students would include those currently
enrolled in a nonpublic school.

���� The bill defines a chronically
failing school as one in which, for the past two school years: at least 40% of
the school�s students did not pass both the language arts and mathematics
subject areas of the State assessments, or at least 60% of the students did not
pass either the language arts or mathematics subject areas.� Additionally, the
school must be located in one of eight targeted districts: Asbury Park, Camden,
Elizabeth, Lakewood, Newark, Orange, Passaic, or Perth Amboy.� A child is
considered low-income if the child lives in a household in which the income
does not exceed 250% of the federal poverty threshold.� Scholarships would be
awarded to eligible students in the following order or priority: 1)
low-children either attending a chronically failing school or eligible to
enroll in a chronically failing school in the next school year, and 2) children
who attend a public school, other than a chronically failing school, in a
targeted district.

���� The scholarship organization
selected under the bill must require that an eligible school which admits a
child receiving a scholarship under the pilot program:

���� (1) does not require a parent
or guardian to make a payment in addition to the scholarship for a child�s
attendance at the school;

���� (2) ensures that a child
enrolled in an eligible school who received a scholarship under the program in
the prior school year receives a scholarship in each school year of enrollment
under the program provided that the child continues to reside in the targeted
district;

���� (3) in the event that more
children apply for admission to that school under the pilot program than there
are openings, selects scholarship students through a lottery; and

���� (4) within the first 30 days
of a scholarship�s student�s enrollment in the school, and once each year
thereafter, administer a grade-level appropriate assessment to all scholarship
students.

���� Further, if the eligible
school is a nonpublic school, the scholarship organization must also require
that the school:

���� (1) administer the appropriate
grade level State assessment to scholarship students, and make the results
publicly available;

���� (2) agree to continue
enrolling a scholarship student for two school years, unless the student
commits an act that threatens the health or safety of other students, faculty,
or staff; and

���� (3) obtains written
acknowledgment from the parent or guardian that notification has been received
that a nonpublic school may not provide the same level of special education
instructional programs and support services that may be available in a public school.

Additionally, if the nonpublic
school is a sectarian school, it must provide a scholarship student the
opportunity to opt out of any religious instruction or activity.

���� In the case of public schools,
eligible schools will be those schools designated by the board of education to
accept students who participate in the program.� In the case of nonpublic
schools, eligible schools will include those approved by the Commissioner of
Education to accept students who participate in the program.� The commissioner
will develop a process for providing such approval.� The commissioner is
required to grant approval to a nonpublic school if it: 1) has been in
operation for at least five years and has an end of year financial statement
for each of the previous five years; 2) was founded within the prior 12 months
by an operator of an existing school that meets the first criteria; or 3) is a
current member of the New Jersey Association of Independent Schools.� The
commissioner may approve a school that does not meet the previous requirements
if the school submits an application that includes information regarding: 1)
the school�s objectives and strategy for meeting those objectives, 2) a demonstration
of the school�s financial viability, 3) a list of faculty, including the
individual�s educational attainment and relevant work experience, 4) a
statement regarding the adequacy of the school�s facilities and equipment, 5)
documentation that the school is a qualified nonprofit entity; and 6) a list of
board members.

���� The scholarship organization
would have a number of program responsibilities, including: managing the
application process in each district, verifying applicants� eligibility to
receive a scholarship, maintaining an inventory of vacancies in eligible schools,
conducting any necessary lotteries to determine scholarship awards, monitoring
the enrollment of scholarship students, and managing the acceptance of
contributions made to the program.� Additionally, the scholarship organization
must prepare an annual report, to be submitted to the State Treasurer,
Commissioner of Education, and the scholarship board, enter into a contract
with an independent entity to conduct an annual audit, and commission an
independent study of the pilot program.

���� The scholarship organization
may apply to the Opportunity Scholarship Board to amend programmatic procedures
as necessary to ensure the effective and efficient administration of the
programs.� Amendments that may be considered may include, but need not be
limited to, the administration of the tax credits, the need to conduct
lotteries, and reporting requirements related to the independent evaluation of
the pilot program.� The board shall not approve any amendments that would
materially alter the goals and objectives of the pilot program.

���� For each resident student who
receives a scholarship, a targeted district�s State aid will be reduced by an
amount equal to the scholarship awarded to the student plus the scholarship
organization�s administrative fee.� The administrative fee will equal $750 per
scholarship in the first year, $400 per scholarship in the second year, $250
per scholarship in the third year, $200 per scholarship in the fourth year, and
$210 per scholarship in the final year.� The targeted district would also be
responsible for providing transportation services to a scholarship student who
attends a school outside of the district on the same basis that the district
provides transportation services to nonpublic school students pursuant to
N.J.S.18A:39-1.