BILL ANALYSIS



C.S.H.B. 900
By: Grusendorf
April 11, 1995
Committee Report (Substituted)


BACKGROUND

Parents who do not have the financial resources to send their child
to the school of their choice have limited educational options. 
One alternative that is available to some families with limited
resources is privately funded scholarships.  These scholarships
allow parents the opportunity to select a school that better meets
the educational needs of their child.

PURPOSE

This bill establishes a tax incentive program that would encourage
corporations to fund scholarships for educationally disadvantaged
students to attend private schools.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Subchapter A, Chapter 171, Tax Code, by adding
Section 171.0025 (Tax Credit for Payment of Tuition).

(a) Entitles a corporation to receive a franchise tax credit if the
corporation pays money which is used to fund a scholarship to a
private school of an educationally disadvantaged child who:
     (1) is eligible to attend public free schools; and
     (2) did not attend an accredited or unaccredited private
school during the 1994-1995   school year.

(b) Establishes conditions under which a public school district
shall issue a tax credit voucher.

(c) Establishes deadlines by which corporations must submit
required paperwork to districts and by which districts must provide
information to the comptroller.

(d) Establishes that for each scholarship funded, the corporation
receives a tax refund for the amount actually paid to a private
school or to a nonprofit foundation that provides scholarships, but
not more than 50 percent of the total state funding the district
receives per student in statewide average daily attendance.

(e), (f), (g), and (h) Establish procedures and restrictions on tax
credit claims and transfer of tax credits.

(i) Defines:
     (1) "Accredited private school" - a nonpublic school
accredited by an accrediting  association recognized by the
commissioner of education.
     (2) "Educationally disadvantaged child" - a student enrolled
or eligible for enrollment in      the national school lunch
program for free or reduced-price lunch.

SECTION 2. Amends Chapter 31, Tax Code, by adding Section 31.051
(Tax Credit for Payment of Tuition).

(a) Allows a school district to authorize a corporation to fund a
private school scholarship in lieu of school property taxes.

(b) Requires the school district to provide that a corporation is
not eligible to receive a credit unless the corporation:
     (1) pays money which is used to fund a scholarship to a
private school of an educationally      disadvantaged child who:
           (A) is eligible to attend public free schools in the
district granting credit; and
           (B) did not attend an accredited or unaccredited private
school during the 1994-       1995 school year.
     (2) submits proof that the scholarship is being used to attend
school.

(c) Establishes additional informational requirements on the
corporation to be supplied to the district, and on the district to
be supplied to the comptroller.

(d) Establishes that for each scholarship funded, the corporation
receives a tax credit for the amount actually paid to a private
school or to a nonprofit foundation that provides scholarships but
not more than 50 percent of the state's tier one share per student
in statewide average daily attendance.

(e) Defines:
     (1) "Accredited private school" - a nonpublic school
accredited by an accrediting  association recognized by the
commissioner of education.
     (2) "Educationally disadvantaged child" - a student enrolled
or eligible for enrollment in      the national school lunch
program for free or reduced-price lunch.

SECTION 3. Amends Section 16.006, Education Code, by adding
subsection (e)

(e) Reduces the average daily attendance of the school district in
which a student receiving a scholarship for which a corporation
received a tax credit under Section 171.0025, Tax Code. 

SECTION 4. Section 171.0025 applies to reports originally due on or
after January 1, 1996.

SECTION 5. Emergency Clause.

COMPARISON OF ORIGINAL TO SUBSTITUTE

The original bill allowed a corporation to receive a tax credit for
providing a scholarship to an educationally disadvantaged child to
attend an accredited private school.  The committee substitute
would also allow a corporation to receive a tax credit for the
amount paid to a nonprofit foundation that provides scholarships
for students who attend accredited private schools.  

C.S.H.B. 900 would require the school district to issue a tax
credit voucher to an eligible corporation for franchise tax
purposes.  H.B. 900 contained permissive language.

SUMMARY OF COMMITTEE ACTION

On April 5, 1995, the bill was recommitted to committee.

Pursuant to an announcement on the House Floor, the committee met
in a formal meeting and considered H.B. 900.  The committee
considered a complete substitute by Representative Craddick. 
Without objection, C.S.H.B. 900 was adopted.  By a record vote of
6 ayes, 0 nays, 0 present not voting and 5 absent, the committee
voted to report H.B. 900 to the House as substituted with the
recommendation that it do pass.