HB 2632 — An Act amending the act of March 10, 1949 (P.L.30, No.14), known as the Public School Code of 1949, in educational tax credits, further providing for limitations and providing for termination of authority; providing for education options tax credits; establishing the Accountability for Diverted Tax Dollars Restricted Account; providing for scholarship granting organizations, for application by eligible contributors, for scholarships, for educational improvement programs, for low-achieving schools, for school participation in program and for original jurisdiction; and imposing duties on the Department of Community and Economic Development, the Department of Education, the Department of Revenue, the Auditor General, the Independent Fiscal Office and the State Treasurer.

PRIOR PRINTER'S NO.

3598 PRINTER'STHE NO.GENERAL ASSEMBLY OF PENNSYLVANIA HOUSE BILL Session of 2026 No.

3651INTRODUCED THEBY GENERALRIVERA, ASSEMBLYTIBURCIO, OFMADDEN, PENNSYLVANIASTEELE, HOUSEPIELLI, BILLMAZZOCCO, SessionWEBSTER, ofBRADFORD, SANCHEZ, CEPEDA-FREYTIZ, PROBST AND SCHWEYER, JUNE 12, 2026 No.REFERRED TO COMMITTEE ON EDUCATION, JUNE 12, 2026 AN ACT Amending the act of March 10, 1949 (P.L.30, No.14), entitled "An act relating to the public school system, including certain provisions applicable as well to private and parochial schools;

INTRODUCED BY RIVERA, TIBURCIO, MADDEN, STEELE, PIELLI, MAZZOCCO, WEBSTER, BRADFORD, SANCHEZ, CEPEDA-FREYTIZ, PROBST, SCHWEYER, SHUSTERMAN, D.

WILLIAMS, OTTEN AND CIRESI, JUNE 12, 2026 AS RE-REPORTED FROM COMMITTEE ON APPROPRIATIONS, HOUSE OF REPRESENTATIVES, AS AMENDED, JUNE 22, 2026 AN ACT Amending the act of March 10, 1949 (P.L.30, No.14), entitled "An act relating to the public school system, including certain provisions applicable as well to private and parochial schools;

establishing the Accountability for Diverted Tax Dollars organizations,Restricted forAccount; application by eligible contributors, for scholarships, for educational improvement programs, for low- achieving schools, for school participation in program and for original jurisdiction;

providing for scholarship granting organizations, for application by eligible contributors, for achieving schools, for school participation in program andw- for original jurisdiction;

Section 2006-B(a)(1) introductory paragraph, (i) <-- and (ii) and (2) of the act of March 10, 1949 (P.L.30, No.14), known as the Public School Code of 1949, amended November 12, 2025 (P.L.244, No.47), are amended and the subsection is amended by adding a paragraph to read:

(i) No less than [$375,000,000] $303,000,000 of the <-- total aggregate amount shall be used to provide tax credits for contributions from business firms to scholarship organizations.

20260HB2632PN3651 - 2 - (b) Approval.--The department may not approve a tax credit 20260HB2632PN3598 - 2 - under this article for the 2027-2028 fiscal year or a fiscal year thereafter.

"Assessment." The Pennsylvania System of School Assessment test, the Keystone Exam, an equivalent local assessment or another test established or approved by the State Board of Education or the General Assembly to meet the requirements of section 2603-B(d)(10)(i), or required under the Every Student 20260HB2632PN3651 - 3 - Succeeds Act (Public Law 114-95, 129 Stat.

1802) or its 20260HB2632PN3598 - 3 - successor statute or another test required to achieve other standards established by the Department of Education for the public school or school district under 22 Pa.

20260HB2632PN3651 - 4 - Code § 3290.4 (relating to definitions).

20260HB2632PN3598 - 4 - (4) A program of instruction for three-year-old, four- year-old, five-year-old or six-year-old students, other than kindergarten, that uses a curriculum aligned with the curriculum of the school with which it is affiliated and provides any of the following:

20260HB2632PN3651 - 5 - (1) Reside within the attendance boundary of a low- 20260HB2632PN3598 - 5 - achieving school.

20260HB2632PN3651 - 6 - (7) Uses specialized instructional materials, 20260HB2632PN3598 - 6 - instructors or instruction not provided by the school.

20260HB2632PN3651 - 7 - "Eligible nonprofit entity." An organization that is exempt 20260HB2632PN3598 - 7 - from Federal taxation under section 501(c)(3) of the Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C.

(3) Other unemancipated minor children who are related 20260HB2632PN3651 - 8 - by blood or marriage.

20260HB2632PN3598 - 8 - (4) Other adults or unemancipated minor children living in the household who are dependent upon the individual.

20260HB2632PN3651 - 9 - "Low-achieving school." A public school that ranked in the 20260HB2632PN3598 - 9 - lowest 15% of the school's designation as an elementary school or a secondary school based on combined mathematics and reading scores from the assessment administered in any of the previous five school years and for which the Department of Education has posted results on the Department of Education's publicly accessible Internet website.

(2) For each eligible student and,and eligible early <-- childhood studentstudent, AND DEPENDENT MEMBER OF THE HOUSEHOLD, the <-- amount under paragraph (1) plus 10% of the amount under paragraph (1).

20260HB2632PN3651 - 10 - "Parent." An individual who is a resident of this Commonwealth and meets any of the following:

20260HB2632PN3598 - 10 - (1) Has legal custody or guardianship of a student.

"Qualified Subchapter S trust." As defined in section 20260HB2632PN3651 - 11 - 1361(d) of the Internal Revenue Code of 1986.

20260HB2632PN3598 - 11 - "Scholarship." An award under a scholarship program, economically disadvantaged scholarship program or early childhood scholarship program to pay tuition and school-related fees to attend a participating public school, participating nonpublic school or early childhood program.

"School age." Children from the earliest admission age to a school's kindergarten program or, if no prekindergarten or kindergarten program is provided, the school's earliest admission age for beginners, until the end of the school year in 20260HB2632PN3651 - 12 - which the student attains 21 years of age or graduates from high school, whichever occurs first.

20260HB2632PN3598 - 12 - "School district of residence." The school district in which a student's primary domicile is located.

(4) Establish the process through which an eligible 20260HB2632PN3651 - 13 - contributor may apply for a tax credit under section 2005- B.1.

20260HB2632PN3598 - 13 - (5) By January 1 of each year, publish a list of scholarship granting organizations approved to operate during the following fiscal year.

(2) Annually publish a list of low-achieving schools under section 2010-B.1 on the Department of Education's publicly accessible Internet website in a downloadable 20260HB2632PN3651 - 14 - spreadsheet format.

(3) For the purposes of economically disadvantaged 20260HB2632PN3598 - 14 - scholarship programs, annually determine and publish a list of participating nonpublic schools that meet both of the following criteria:

(2) Conduct a compliance audit of a participating 20260HB2632PN3651 - 15 - nonpublic school related to the requirements under section 2011-B.1.

20260HB2632PN3598 - 15 - (3) Publish the audits under paragraphs (1) and (2) on the Auditor General's publicly accessible Internet website.

20260HB2632PN3651 - 16 - (2) Money in the account is appropriated on a continuing basis as follows:

20260HB2632PN3598 - 16 - (i) 40% to the department to offset costs associated with administering this article.

(ii) Provide an application and review process for scholarship applicants that includes a means of verifying 20260HB2632PN3651 - 17 - household income, which may include submission of the household members' most recently available Federal or 20260HB2632PN3598 - 17 - State tax returns, if the household members are required to file the returns.

(2) For purposes of paragraph (1)(i), a scholarship granting organization contributes its annual cash receipts to a scholarship program, early childhood scholarship program, economically disadvantaged scholarship program or educational improvement program when the scholarship granting organization expends or otherwise irrevocably encumbers the 20260HB2632PN3651 - 18 - funds for distribution during the then-current fiscal year of the scholarship granting organization or during the next 20260HB2632PN3598 - 18 - succeeding fiscal year of the scholarship granting organization.

20260HB2632PN3651 - 19 - (a) Application.-- (1) An eligible contributor shall apply to the 20260HB2632PN3598 - 19 - department on a form and in a manner determined by the department for an education options tax credit for contributions to a scholarship granting organization under section 2006-B.1.

(i) If the taxpayer is compliant, communicate a 20260HB2632PN3651 - 20 - clearance status to the department.

(ii) If the taxpayer is not compliant, issue a 20260HB2632PN3598 - 20 - noncompliance letter to the taxpayer and provide the taxpayer with a reasonable opportunity to resolve the compliance issue.