201. Education Freedom Scholarships and Opportunity Act web portal and administration
In general— The Secretary of Education shall, in coordination with the Secretary of the Treasury and the Secretary of Labor, establish, host, and maintain a Web portal that—
lists all scholarship-granting organizations and workforce training organizations that are eligible under section 25E or 45T of the Internal Revenue Code of 1986;
enables a taxpayer to make a qualifying contribution to one or more eligible scholarship-granting organizations and eligible workforce training organizations and to immediately obtain both a pre-approval of a tax credit for that contribution and a receipt for tax filings;
provides information about the tax benefits of the provisions of the Education Freedom Scholarships and Opportunity Act under the Internal Revenue Code of 1986; and
enables a State to submit and update information about its programs and its eligible scholarship-granting organizations and eligible workforce training organizations for informational purposes only, including information on—
student eligibility;
allowable educational expenses;
the types of allowable education providers;
the percentage of funds an organization may use for program administration; and
the percentage of total contributions the organization awards in a calendar year.
Nonportal contributions— A taxpayer may opt to make a contribution directly to an eligible scholarship-granting organization or an eligible workforce training organization, instead of through the Web portal described in subsection (a), provided that the taxpayer, or the eligible scholarship-granting organization or eligible workforce training organization on behalf of the taxpayer, applies for, and receives pre-approval for a tax credit from the Secretary of Education in coordination with the Secretary of the Treasury.
National and State caps on credits—
National cap— There is a cap of $10,000,000,000 on the sum of the contributions that qualify for a credit under section 25E and section 45T of the Internal Revenue Code of 1986 for each calendar year, of which—
$5,000,000,000 shall be allotted for qualified contributions to eligible scholarship-granting organizations; and
$5,000,000,000 shall be allotted for qualified contributions to eligible workforce training organizations.
Allocation of cap—
Initial allocations— For each calendar year, the Secretary of Education, in coordination with the Secretary of Labor, shall—
from the amount allotted under paragraph (1)(A)—
first reserve, for each State, an amount equal to the sum of the qualifying contributions made in the State in the previous year; and
next, allocate the remaining amount among the participating States by allocating to each State the sum of—
an amount that bears the same relationship to 20 percent of such remaining amount as the number of individuals aged 5 through 17 in the State, as determined by the Secretary of Education on the basis of the most recent satisfactory data, bears to the number of those individuals in all such States, as so determined; and
an amount that bears the same relationship to 80 percent of such remaining amount as the number of individuals aged 5 through 17 from families with incomes below the poverty line in the State, as determined by the Secretary of Education, on the basis of the most recent satisfactory data, bears to the number of those individuals in all such States, as so determined; and
from the amount allotted under paragraph (1)(B)—
first reserve, for each State, an amount equal to the sum of the qualifying contributions made in the State in the previous year attributable to eligible workforce training organizations; and
next, allocate the remaining amount among the participating States by allocating to each State an amount determined through a system, as established and maintained by the Secretary of Labor, that accurately reflects demand and potential qualified participants for apprenticeships and workforce training within that State.
Minimum allocation— Notwithstanding subparagraph (A), no State receiving an allotment under this section may receive less than one-half of one percent of the amount allotted for a fiscal year.
Alternative allocation for qualified contributions to eligible scholarship-granting organizations—
In general— Not later than the end of the fifth year of the program or one year after the end of the first fiscal year for which the total amount of credits claimed under section 25E and section 45T of the Internal Revenue Code of 1986 for qualified contributions to eligible scholarship-granting organizations is $2,500,000,000 or more, whichever comes first, the Secretary of Education shall, by regulation, provide for an alternative allocation method for the amount described in paragraph (1)(A) that shall take effect beginning with the first fiscal year after the regulation takes effect.
Alternative allocation method— The alternative allocation method described in clause (i) shall be expressed as a formula based on a combination of the following data for each State, as reported by the State to the Secretary of Education:
The relative percentage of students in the State who receive a elementary or secondary scholarship through a State program that is financed through State tax-credited donations or appropriations and that permits the elementary or secondary scholarship to be used to attend a private school.
The total amount of all elementary and secondary scholarships awarded through a State program that is financed through State tax-credited donations or appropriations compared to the total amount of current State and local expenditures for free public education in the State.
Allocation formula— For any fiscal year to which clause (i) applies, the Secretary of Education shall—
first reserve, for each State, an amount equal to the sum of the qualifying contributions made in the State in the previous year;
next, allocate two-thirds of the remaining amount of the national cap for that year using the alternative allocation method in clause (ii); and
then, allocate one-third of the remaining amount in accordance with subparagraph (A)(ii).
Ineligibility— For any fiscal year to which clause (i) applies, a State that does not provide the Secretary of Education with information described in clause (ii) is not eligible to receive an allocation through the alternative allocation method under clause (ii).
Allowable partnerships— A State may choose to administer the allocation it receives under paragraph (2) in partnership with 1 or more States, provided that the eligible scholarship-granting organizations or eligible workforce training organizations in each partner State serve students who reside in all States in the partnership.
Total allocation— A State’s allocation, for any fiscal year, is the sum of the amount determined for it under subparagraphs (A) and (B) of paragraph (2), except as provided in paragraph (2)(C).
Allocation and adjustments—
Initial allocation to States— No later than November 1 of the year preceding a year for which there is a national cap on credits under paragraph (1) (hereafter in this section, the “applicable year”), or as early as practicable with respect to the first year, the Secretary of Education shall announce the State allocations under paragraph (2) for the applicable year.
List of eligible scholarship-granting organizations and eligible workforce training organizations— No later than January 1 of each applicable year, or as early as practicable with respect to the first year, each State shall provide the Secretary of Education a list of eligible scholarship-granting organizations and eligible workforce training organizations described in paragraphs (3)(A) and (4) of section 25E(c) of the Internal Revenue Code of 1986, including a certification that the entity submitting the list on behalf of the State has the authority to perform this function. Neither this Act nor any other Federal law shall be construed as limiting the entities that may submit the list on behalf of a state.
Reallocation—
In general— The Secretary of Education shall, in accordance with paragraph (2), reallocate to any other States the allocation of a State which, for any applicable year—
fails to provide the Secretary of Education a list of eligible scholarship-granting organizations and eligible workforce training organizations pursuant to subparagraph (B); and
does not have an eligible scholarship-granting organization (as described in section 25E(c)(3)(B) of the Internal Revenue Code of 1986) located in such State.
Unclaimed credits— On or after April 1 of any applicable year, the Secretary of Education may reallocate, to 1 or more other States that have eligible scholarship-granting organizations and eligible workforce training organizations in the States, without regard to paragraph (2), the allocation of a State for which the State's allocation has not been claimed.
Definitions— The definitions of terms in section 25E(c) of the Internal Revenue Code of 1986 apply to those terms as used in this title.
Authorization of appropriations— For the purpose of administering this section and sections 25E and 45T of the Internal Revenue Code of 1986, there are authorized to be appropriated, and there are appropriated, such sums as may be necessary for fiscal year 2019 and each succeeding fiscal year.