ASSEMBLY, No. 2830

STATE OF NEW JERSEY

215th LEGISLATURE

 

INTRODUCED MAY 10, 2012

 


 

Sponsored by:

Assemblyman  ANGEL FUENTES

District 5 (Camden and Gloucester)

Assemblyman  LOUIS D. GREENWALD

District 6 (Burlington and Camden)

Assemblyman  JON M. BRAMNICK

District 21 (Morris, Somerset and Union)

Assemblyman  GARY S. SCHAER

District 36 (Bergen and Passaic)

Assemblyman  TROY SINGLETON

District 7 (Burlington)

Assemblyman  GILBERT "WHIP" L. WILSON

District 5 (Camden and Gloucester)

 

Co-Sponsored by:

Assemblymen Rible, S.Kean, Assemblywoman Schepisi, Assemblyman Chiusano, Assemblywomen N.Munoz, Mosquera, Assemblymen Webber, Peterson and Assemblywoman Simon

 

 

 

 

SYNOPSIS

     “Opportunity Scholarship Act”; establishes pilot program in Department of Treasury providing tax credits to entities contributing to scholarships for low-income children; appropriates $1,500,000 to Treasury.

 

CURRENT VERSION OF TEXT

     As introduced.

  


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

 

     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 corporations to make voluntary contributions to nonprofit scholarship organizations, 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 9 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 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 assessments was equal to or greater than 65% 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 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;

     (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); and

     (b)   has obtained approval from the Commissioner of Education pursuant to section 12 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

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

     "Household income" means income as defined for the purposes of determining eligibility for a free or reduced price lunch pursuant to the State School Lunch Program.

     "Low-income child" means a child from a household with an income that does not exceed 1.85 times the official federal poverty level based on family size, established and adjusted under Section 673(2) of Subtitle B, the "Community Services Block Grant Act," Pub. L.97-35 (42 U.S.C. s.9902(2)), for the school year preceding the school year for which an educational scholarship is to be distributed.

     "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 100% of the tax-creditable contributions that it accepts pursuant to P.L.    , c.   (C.   ) (pending before the Legislature as this bill) as educational scholarships to low-income students;

     (3)   distributes individual scholarships to the parents or guardians of scholarship students that are equal to the lesser of the actual cost per pupil of the eligible school enrolling a scholarship student, as determined by the Commissioner of Education, or, in the case of a scholarship student enrolled in grades kindergarten through 8, $6,000, or, in the case of a scholarship student enrolled in grades 9 through 12, $9,000;

     (4)   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

     (5)   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, and Passaic City School District. 

 

     4.    a.  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 four-year pilot program to provide tax credits to corporations which contribute funding to the scholarship organization selected pursuant to subsection b. of section 5 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 pay tuition 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, except as otherwise provided pursuant to paragraph (2) of subsection a. of section 6 of P.L.    , c.   (C.   ) (pending before the Legislature as this bill), the child is enrolled in a chronically failing school located in a targeted district, or, in the subsequent school year, the child would be eligible to enroll in a chronically failing school located in a targeted district in the lowest grade, other than preschool, operated by the chronically failing school.

     b.    Subject to the restrictions established pursuant to subsection d. of this section, a taxpayer, upon application to 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 contributions made by the taxpayer to the scholarship organization selected pursuant to subsection b. of section 5 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).

     c.    The order of priority of the credit allowed under 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 three privilege periods following the privilege period for which the credit was allowed.

     d.    In aggregate, the total tax contribution of all participating corporations shall not exceed $13,800,000 in the first State fiscal year, $27,600,000 in the second State fiscal year, $41,400,000 in the third State fiscal year, and $55,200,000 in the fourth State fiscal year.  If the sum of the amount of tax credits authorized pursuant to this section 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.

 

     5.    a.  There is hereby established the Opportunity Scholarship Board.  The board shall consist of three public members appointed by the Governor, with the advice and consent of the Senate.  One member 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 shall have experience in the education of low-income children, and one shall have experience in the oversight or management of nonprofit entities.

     b.    The board shall select one scholarship organization to administer the scholarship funds made available through contributions received pursuant to section 4 of P.L.    , c.   (C.   ) (pending before the Legislature as this bill).

     c.    The board shall 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.

     d.    The board shall annually enter into a contract with an independent entity to audit the implementation of the pilot program.  The audit for the prior school year shall be submitted to the board no later than December 1 of each year.  The board shall transmit a copy of the audit to the State Treasurer and Commissioner of Education.

     e.    On or before January 1 of the fourth 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 c. of section 6 of P.L.    , c.   (C.   ) (pending before the Legislature as this bill), the independent study conducted pursuant to subsection c. of this section, and the annual audits conducted pursuant to subsection d. of this 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.

     f.     The board shall ensure that the scholarship organization publicize the pilot program to the parents and guardians of children who are enrolled in a chronically failing school located in a targeted district or who, in the subsequent school year, would be eligible to enroll in a chronically failing school located in a targeted district in the lowest grade, other than preschool, operated by the chronically failing school.

 

     6.    a.  (1) The total funds available for scholarships for each school year shall be allocated to each targeted district by multiplying the total funds available for scholarships 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 a targeted district Statewide, except that scholarship funds shall be allocated in the manner necessary to ensure that a student who received a scholarship in the prior school year receives a scholarship in the subsequent year pursuant to the provisions of paragraph (2) of subsection b. of this section.

     (2)   If by August 1 of any school year, scholarship funds available in a targeted district remain unallocated, then the unallocated funds shall be used to provide scholarships to low-income children residing in another targeted district. Priority shall be given to students in the following order:

     (a)   low-income children attending a chronically failing school located in a targeted district; and

     (b)   low-income children attending a public school located in a targeted district.

     The Opportunity Scholarship Board established pursuant to subsection a. of section 5 of P.L.    , c.   (C.   ) (pending before the Legislature as this bill) shall determine the apportionment of unallocated funds to  another targeted district.

     b.    The scholarship organization selected by the board pursuant to subsection b. of section 5 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:

     (1)   accepts the scholarship as payment in full for a child's tuition and any other costs of attendance payable to 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 remains eligible; except that any 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 until the child completes the eighth grade or the twelfth grade, whichever occurs first, provided that the child continues to meet all other eligibility requirements;

     (3)   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;

     (4)   if the eligible school is a nonpublic school:

     (a)   administers the appropriate grade level State assessment to scholarship students and makes the results publicly available, except that the school shall not make any results publicly available that may lead to the disclosure of results for an individual student. The Department of Education shall provide the necessary material to the nonpublic school at no cost;

     (b)   obtains written acknowledgement from the parent or guardian that the parent or guardian has been notified that a nonpublic school may not provide the same level of special education services that are provided in a public school;

     (c)   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;

     (d)   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

     (5)   shall not use revenue received through the enrollment of scholarship students for construction or capital improvement projects.

     c.    The selected scholarship organization shall:

     (1)   manage the scholarship application process for the school district in which students who are eligible to participate in the scholarship program reside;

     (2)   review and verify the income and residence of a scholarship applicant;

     (3)   distribute scholarship funds to the parents or guardians of scholarship students in such a manner that the number of scholarships awarded does not exceed 2,000 in the first year, 4,000 in the second year, 6,000 in the third year, and 8,000 in the fourth year, and 70% of the scholarships shall be awarded to students enrolled in grades kindergarten through 8 and 30% of the scholarships shall be awarded to students enrolled in grades 9 through 12, except that the scholarship organization may allocate the scholarships in a different proportion if this proportion cannot be achieved with the number of scholarship applications received;

     (4)   compile an inventory of vacancies in eligible schools available for potential scholarship recipients based on information provided by the eligible schools;

     (5)   conduct necessary student selection lotteries in accordance with the requirements of paragraph (3) of subsection b. of this section;

     (6)   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;

     (7)   monitor the enrollment of scholarship students in eligible schools; and

     (8)   prepare a report to be submitted to 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 scholarship funds were available.

     The board shall make the annual report available to the parents or guardians of scholarship recipients and to members of the public. 

 

     7.    The Department of Education shall annually provide a list of all chronically failing schools located in a targeted district to the Opportunity Scholarship Board established pursuant to subsection a. of section 5 of P.L.    , c.   (C.   ) (pending before the Legislature as this bill).  The department shall coordinate with the board to determine the earliest feasible time that the list can be developed after the administration of the State assessments.

 

     8.    There is appropriated from the General Fund to the Department of the Treasury the sum of $1,500,000 to be used to support the costs incurred by the Opportunity Scholarship Board and the selected scholarship organization in administering and publicizing the pilot program and commissioning the independent study and annual audit.

 

     9.    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 8 of P.L.    , c.   (C.   ) (pending before the Legislature as this bill).

 

     10.  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 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 the amount of the scholarship awarded to the scholarship student.

 

     11.  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 who 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.

     As used in this section, “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, and Passaic City School District.

 

     12.  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.    As a condition of receiving approval to enroll a scholarship student, a nonpublic school shall 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.).

     c.    A nonpublic school shall submit the results of the most recent assessment administered by the nonpublic school to its students to the Commissioner of Education.  The commissioner shall establish performance criteria that must be met by the nonpublic school students in order for the school to be approved to enroll a scholarship student.  The commissioner shall not approve a nonpublic school to receive a scholarship student if the nonpublic school does not administer an assessment to its students.

     13.  The commissioner shall select grade-level appropriate assessments to be administered to all students receiving a scholarship pursuant to the provisions of P.L.    , c.   (C.   ) (pending before the Legislature as this bill) in the first school year in which the student receives a scholarship.  The assessments that are selected shall be capable of providing technically accurate measures of a student’s academic growth over time.  The assessments shall be administered to students twice during the school year.  The first administration shall occur within the first 30 school days of the school year, and the second administration shall occur within the last 30 school days of the school year.  These requirements shall be in addition to the requirement for the administration of the appropriate grade level State assessment.

 

     14.  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 10 through 13 of P.L.    , c.   (C.   ) (pending before the Legislature as this bill).

 

     15.  This act shall take effect immediately.

 

 

STATEMENT

 

     This bill directs the Director of the Division of Taxation to establish a four-year pilot program to provide tax credits to corporations which contribute funding to a nonprofit organization which provide scholarships to certain low-income children to attend a nonpublic school or an out-of-district public school.  To be eligible to receive a scholarship, the low-income child must attend a chronically failing school or, in the subsequent school year, would be eligible to enroll in a chronically failing school in the lowest grade operated by the 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 65% of the students did not pass either the language arts or mathematics subject areas.  The school must also be located in one of seven targeted districts: Asbury Park, Camden, Elizabeth, Lakewood, Newark, Orange, or Passaic.  A low-income child who is enrolled in a public school that is not classified as a chronically failing school in one of these districts may be awarded a scholarship if funding remains available after August 1.  A child is considered low-income if the child lives in a household in which the income does not exceed 185% of the federal poverty level.  Scholarships awarded under the program will equal the lesser the actual cost per pupil of the school enrolling a scholarship student, as determined by the commissioner, or in the case of a student enrolled in grades kindergarten through 8, $6,000, and, in the case of a student enrolled in grades 9-12, $9,000.

     Under the pilot program, a tax credit will be equal to 100% of the contribution a corporation makes to the qualified scholarship organization.  While there is no limit on the amount that can be contributed for credit, a corporation may not apply the credits to reduce its tax liability to an amount less than the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162.  The total tax credit of all participating corporations would be capped at an amount equal to $13.8 million in the first year, $27.6 million in the second year, $41.4 million in the third year, and $55.2 million in the fourth year.  If the sum of the amount of tax credits authorized in a State fiscal year exceeds the aggregate annual limits, tax credits will be allowed in the order in which contributions are made until the limit is reached.  The number of scholarships awarded cannot exceed 2,000 in the first year, 4,000 in the second year, 6,000 in the third year, and 8,000 in the fourth year; 70% of the scholarships will be awarded to elementary school students, while the remaining 30% will be awarded to high school students, unless this allocation cannot be achieved with the number of eligible applicants.

     The bill creates the Opportunity Scholarship Board and directs it to select one scholarship organization to administer the scholarship funds. The scholarship organization will receive the contributions made pursuant to this bill and award scholarships to parents and guardians of eligible students.  The available funds would be allocated to each targeted district based on the number of students in the targeted district who are enrolled in a chronically failing school, other than preschool students, divided by the number of students in a targeted district who are enrolled in a chronically failing school Statewide.  The scholarship organization may deviate from this methodology to the extent that it is necessary to ensure that a student who received a scholarship in the prior year is awarded a scholarship in the next year, assuming that the student remains eligible.

     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)   accepts the scholarship as payment in full for the child’s tuition and other costs of attendance;

     (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 remains eligible; and

     (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.

     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)   obtains written acknowledgement from a parent or guardian of a scholarship student that the parent or guardian has been notified that a nonpublic may not provide the same level of special education services as a public school; and

     (3)   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.

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.

     In the event that the number of eligible students applying for a scholarship exceeds the number of available scholarships, the scholarship organization will conduct lotteries to determine which students will receive a scholarship.

     The scholarship organization selected will manage the scholarship application process; review and verify the income of scholarship applicants; compile an inventory of vacancies in eligible schools; conduct necessary student selection lotteries; provide scholarships to parents or guardians; monitor the enrollment of scholarship students in eligible schools; and prepare an annual report to be submitted to the State Treasurer and Commissioner of Education that provides information on the program for the prior school year.

     The bill directs the board to commission an independent study on the implementation of the pilot program by an individual or entity with expertise in the field of urban education.  The study will consider issues such as the academic achievement of scholarship recipients, the impact of the pilot program on achieving savings for State taxpayers, the impact of the pilot program on student enrollment patterns, and parental satisfaction with the program.  The board would also be required to contract with an entity that will perform an annual audit of the program’s implementation.

     For each district student who obtains a scholarship, the district’s State school aid will be reduced by an amount equal to the scholarship awarded to each scholarship student who resides in the school district.  The district would also be responsible for providing transportation services for a scholarship student on the same basis as it would for a nonpublic school student.

     On or before January 1 of the fourth school year of the pilot program, the board is directed to submit a report to the Governor and the Legislature on the implementation and results of the pilot program.  The report will include a recommendation on whether the program should be reauthorized on a permanent basis.

     Finally, the bill appropriates $1.5 million to the Department of the Treasury to support costs incurred by the scholarship board in publicizing the scholarship program and contracting with an entity to perform the annual audit and the evaluation.