SF 388

1st Engrossment - 87th Legislature (2011 - 2012) Posted on 03/09/2012 11:12am

A bill for an act
relating to education; establishing enrollment options for students at
low-performing schools; modifying education tax credit; establishing equity and
opportunity in education income tax credit; amending Minnesota Statutes 2010,
section 290.0674, subdivision 1; Minnesota Statutes 2011 Supplement, section
290.01, subdivisions 19a, 19c; proposing coding for new law in Minnesota
Statutes, chapters 124D; 290.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [124D.031] ENROLLMENT OPTIONS FOR STUDENTS AT
LOW-PERFORMING SCHOOLS.
new text end

new text begin Subdivision 1. new text end

new text begin Student enrollment options. new text end

new text begin (a) A student who attends a persistently
low-performing school for at least one school year and whose family income is equal to or
less than 175 percent of the federal poverty level is eligible to enroll in a nonpublic school
under this section or a nonresident district school or program under section 124D.03.
new text end

new text begin (b) For the purposes of this section, "persistently low-performing school" means
a school that has student performance levels for at least three consecutive school years
immediately preceding the school year a student is enrolling in a nonpublic school under
this section or a nonresident district school or program under section 124D.03 in one
or more of the following:
new text end

new text begin (1) the total percentage of students scoring at the "does not meet standards" level
for the reading Minnesota Comprehensive Assessments exceeds 25 percent for all grades
tested; or
new text end

new text begin (2) the total percentage of scoring at the "does not meet standards" level for the
mathematics Minnesota Comprehensive Assessments exceeds 40 percent for all grades
tested.
new text end

new text begin Subd. 2. new text end

new text begin Eligible nonpublic schools. new text end

new text begin To be eligible to participate under this section,
a nonpublic school must comply with chapter 363A and administer the statewide reading
and math tests under section 120B.30 to its students enrolled under this section.
new text end

new text begin The commissioner shall ensure that the nonpublic school complies with the
requirements of this subdivision.
new text end

new text begin Subd. 3. new text end

new text begin Tuition funding for students transferring to nonpublic schools. new text end

new text begin If a
student transfers to a nonpublic school under this section, and upon receiving proof that
the student is enrolled in the nonpublic school, the commissioner shall make quarterly
payments to the student's parent or guardian in an amount equal to the lesser of the
state average general education revenue per pupil unit, calculated without transportation
sparsity revenue or the nonpublic school's operating and debt service cost per pupil that is
related to educational programming, as determined by the commissioner. The total amount
of the payments must not exceed the tuition and fees charged at the nonpublic school
or the amount calculated under this subdivision, whichever is less. The commissioner
shall send the check to the nonpublic school and the parent or guardian shall restrictively
endorse the check for the nonpublic school's use.
new text end

new text begin Subd. 4. new text end

new text begin Student transportation. new text end

new text begin A resident school district is responsible for
providing transportation within the district's borders for a student who enrolls in a
nonpublic school under this section and shall receive transportation funding equal to the
actual costs in the current school year for those transportation services.
new text end

new text begin Subd. 5. new text end

new text begin Funding for student testing. new text end

new text begin The state shall pay the nonpublic school
costs of administering tests given under section 120B.30.
new text end

new text begin Subd. 6. new text end

new text begin List of nonpublic schools. new text end

new text begin The commissioner shall publish a list of
participating nonpublic schools.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment
and applies to the 2012-2013 school year and later.
new text end

Sec. 2.

Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19a, is
amended to read:

Subd. 19a.

Additions to federal taxable income.

For individuals, estates, and
trusts, there shall be added to federal taxable income:

(1)(i) interest income on obligations of any state other than Minnesota or a political
or governmental subdivision, municipality, or governmental agency or instrumentality
of any state other than Minnesota exempt from federal income taxes under the Internal
Revenue Code or any other federal statute; and

(ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
Code, except:

(A) the portion of the exempt-interest dividends exempt from state taxation under
the laws of the United States; and

(B) the portion of the exempt-interest dividends derived from interest income
on obligations of the state of Minnesota or its political or governmental subdivisions,
municipalities, governmental agencies or instrumentalities, but only if the portion of the
exempt-interest dividends from such Minnesota sources paid to all shareholders represents
95 percent or more of the exempt-interest dividends, including any dividends exempt
under subitem (A), that are paid by the regulated investment company as defined in section
851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
defined in section 851(g) of the Internal Revenue Code, making the payment; and

(iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
government described in section 7871(c) of the Internal Revenue Code shall be treated as
interest income on obligations of the state in which the tribe is located;

(2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid or
accrued within the taxable year under this chapter and the amount of taxes based on net
income paid, sales and use, motor vehicle sales, or excise taxes paid to any other state
or to any province or territory of Canada, to the extent allowed as a deduction under
section 63(d) of the Internal Revenue Code, but the addition may not be more than the
amount by which the itemized deductions as allowed under section 63(d) of the Internal
Revenue Code exceeds the amount of the standard deduction as defined in section 63(c) of
the Internal Revenue Code, disregarding the amounts allowed under sections 63(c)(1)(C)
and 63(c)(1)(E) of the Internal Revenue Code, minus any addition that would have been
required under clause (21) if the taxpayer had claimed the standard deduction. For the
purpose of this paragraph, the disallowance of itemized deductions under section 68 of
the Internal Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise
taxes are the last itemized deductions disallowed;

(3) the capital gain amount of a lump-sum distribution to which the special tax under
section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;

(4) the amount of income taxes paid or accrued within the taxable year under this
chapter and taxes based on net income paid to any other state or any province or territory
of Canada, to the extent allowed as a deduction in determining federal adjusted gross
income. For the purpose of this paragraph, income taxes do not include the taxes imposed
by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;

(5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10
other than expenses or interest used in computing net interest income for the subtraction
allowed under subdivision 19b, clause (1);

(6) the amount of a partner's pro rata share of net income which does not flow
through to the partner because the partnership elected to pay the tax on the income under
section 6242(a)(2) of the Internal Revenue Code;

(7) 80 percent of the depreciation deduction allowed under section 168(k) of the
Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
in the taxable year generates a deduction for depreciation under section 168(k) and the
activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
limited to excess of the depreciation claimed by the activity under section 168(k) over the
amount of the loss from the activity that is not allowed in the taxable year. In succeeding
taxable years when the losses not allowed in the taxable year are allowed, the depreciation
under section 168(k) is allowed;

(8) 80 percent of the amount by which the deduction allowed by section 179 of the
Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
Revenue Code of 1986, as amended through December 31, 2003;

(9) to the extent deducted in computing federal taxable income, the amount of the
deduction allowable under section 199 of the Internal Revenue Code;

(10) for taxable years beginning before January 1, 2013, the exclusion allowed
under section 139A of the Internal Revenue Code for federal subsidies for prescription
drug plans;

(11) the amount of expenses disallowed under section 290.10, subdivision 2;

(12) for taxable years beginning before January 1, 2010, the amount deducted for
qualified tuition and related expenses under section 222 of the Internal Revenue Code, to
the extent deducted from gross income;

(13) for taxable years beginning before January 1, 2010, the amount deducted for
certain expenses of elementary and secondary school teachers under section 62(a)(2)(D)
of the Internal Revenue Code, to the extent deducted from gross income;

(14) the additional standard deduction for property taxes payable that is allowable
under section 63(c)(1)(C) of the Internal Revenue Code;

(15) the additional standard deduction for qualified motor vehicle sales taxes
allowable under section 63(c)(1)(E) of the Internal Revenue Code;

(16) discharge of indebtedness income resulting from reacquisition of business
indebtedness and deferred under section 108(i) of the Internal Revenue Code;

(17) the amount of unemployment compensation exempt from tax under section
85(c) of the Internal Revenue Code;

(18) new text begin the amount of the deduction under section 170 of the Internal Revenue Code
that represents contributions to a qualified foundation under section 290.0682;
new text end

new text begin (19) new text end changes to federal taxable income attributable to a net operating loss that the
taxpayer elected to carry back for more than two years for federal purposes but for which
the losses can be carried back for only two years under section 290.095, subdivision
11, paragraph (c);

deleted text begin (19) deleted text end new text begin (20) new text end to the extent included in the computation of federal taxable income in
taxable years beginning after December 31, 2010, the amount of disallowed itemized
deductions, but the amount of disallowed itemized deductions plus the addition required
under clause (2) may not be more than the amount by which the itemized deductions as
allowed under section 63(d) of the Internal Revenue Code exceeds the amount of the
standard deduction as defined in section 63(c) of the Internal Revenue Code, disregarding
the amounts allowed under sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue
Code, and reduced by any addition that would have been required under clause (21) if the
taxpayer had claimed the standard deduction:

(i) the amount of disallowed itemized deductions is equal to the lesser of:

(A) three percent of the excess of the taxpayer's federal adjusted gross income
over the applicable amount; or

(B) 80 percent of the amount of the itemized deductions otherwise allowable to the
taxpayer under the Internal Revenue Code for the taxable year;

(ii) the term "applicable amount" means $100,000, or $50,000 in the case of a
married individual filing a separate return. Each dollar amount shall be increased by
an amount equal to:

(A) such dollar amount, multiplied by

(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
Revenue Code for the calendar year in which the taxable year begins, by substituting
"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof;

(iii) the term "itemized deductions" does not include:

(A) the deduction for medical expenses under section 213 of the Internal Revenue
Code;

(B) any deduction for investment interest as defined in section 163(d) of the Internal
Revenue Code; and

(C) the deduction under section 165(a) of the Internal Revenue Code for casualty or
theft losses described in paragraph (2) or (3) of section 165(c) of the Internal Revenue
Code or for losses described in section 165(d) of the Internal Revenue Code;

deleted text begin (20) deleted text end new text begin (21) new text end to the extent included in federal taxable income in taxable years beginning
after December 31, 2010, the amount of disallowed personal exemptions for taxpayers
with federal adjusted gross income over the threshold amount:

(i) the disallowed personal exemption amount is equal to the dollar amount of the
personal exemptions claimed by the taxpayer in the computation of federal taxable income
multiplied by the applicable percentage;

(ii) "applicable percentage" means two percentage points for each $2,500 (or
fraction thereof) by which the taxpayer's federal adjusted gross income for the taxable
year exceeds the threshold amount. In the case of a married individual filing a separate
return, the preceding sentence shall be applied by substituting "$1,250" for "$2,500." In
no event shall the applicable percentage exceed 100 percent;

(iii) the term "threshold amount" means:

(A) $150,000 in the case of a joint return or a surviving spouse;

(B) $125,000 in the case of a head of a household;

(C) $100,000 in the case of an individual who is not married and who is not a
surviving spouse or head of a household; and

(D) $75,000 in the case of a married individual filing a separate return; and

(iv) the thresholds shall be increased by an amount equal to:

(A) such dollar amount, multiplied by

(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
Revenue Code for the calendar year in which the taxable year begins, by substituting
"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof; and

deleted text begin (21) deleted text end new text begin (22) new text end to the extent deducted in the computation of federal taxable income,
for taxable years beginning after December 31, 2010, and before January 1, 2013, the
difference between the standard deduction allowed under section 63(c) of the Internal
Revenue Code and the standard deduction allowed for 2011 and 2012 under the Internal
Revenue Code as amended through December 1, 2010.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2011.
new text end

Sec. 3.

Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19c, is
amended to read:

Subd. 19c.

Corporations; additions to federal taxable income.

For corporations,
there shall be added to federal taxable income:

(1) the amount of any deduction taken for federal income tax purposes for income,
excise, or franchise taxes based on net income or related minimum taxes, including but not
limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
another state, a political subdivision of another state, the District of Columbia, or any
foreign country or possession of the United States;

(2) interest not subject to federal tax upon obligations of: the United States, its
possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
state, any of its political or governmental subdivisions, any of its municipalities, or any
of its governmental agencies or instrumentalities; the District of Columbia; or Indian
tribal governments;

(3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
Revenue Code;

(4) the amount of any net operating loss deduction taken for federal income tax
purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
deduction under section 810 of the Internal Revenue Code;

(5) the amount of any special deductions taken for federal income tax purposes
under sections 241 to 247 and 965 of the Internal Revenue Code;

(6) losses from the business of mining, as defined in section 290.05, subdivision 1,
clause (a), that are not subject to Minnesota income tax;

(7) the amount of any capital losses deducted for federal income tax purposes under
sections 1211 and 1212 of the Internal Revenue Code;

(8) the exempt foreign trade income of a foreign sales corporation under sections
921(a) and 291 of the Internal Revenue Code;

(9) the amount of percentage depletion deducted under sections 611 through 614 and
291 of the Internal Revenue Code;

(10) for certified pollution control facilities placed in service in a taxable year
beginning before December 31, 1986, and for which amortization deductions were elected
under section 169 of the Internal Revenue Code of 1954, as amended through December
31, 1985, the amount of the amortization deduction allowed in computing federal taxable
income for those facilities;

(11) the amount of any deemed dividend from a foreign operating corporation
determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend
shall be reduced by the amount of the addition to income required by clauses (20), (21),
(22), and (23);

(12) the amount of a partner's pro rata share of net income which does not flow
through to the partner because the partnership elected to pay the tax on the income under
section 6242(a)(2) of the Internal Revenue Code;

(13) the amount of net income excluded under section 114 of the Internal Revenue
Code;

(14) any increase in subpart F income, as defined in section 952(a) of the Internal
Revenue Code, for the taxable year when subpart F income is calculated without regard to
the provisions of Division C, title III, section 303(b) of Public Law 110-343;

(15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
has an activity that in the taxable year generates a deduction for depreciation under
section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
amount of the loss from the activity that is not allowed in the taxable year. In succeeding
taxable years when the losses not allowed in the taxable year are allowed, the depreciation
under section 168(k)(1)(A) and (k)(4)(A) is allowed;

(16) 80 percent of the amount by which the deduction allowed by section 179 of the
Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
Revenue Code of 1986, as amended through December 31, 2003;

(17) to the extent deducted in computing federal taxable income, the amount of the
deduction allowable under section 199 of the Internal Revenue Code;

(18) for taxable years beginning before January 1, 2013, the exclusion allowed
under section 139A of the Internal Revenue Code for federal subsidies for prescription
drug plans;

(19) the amount of expenses disallowed under section 290.10, subdivision 2;

(20) an amount equal to the interest and intangible expenses, losses, and costs paid,
accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
of a corporation that is a member of the taxpayer's unitary business group that qualifies
as a foreign operating corporation. For purposes of this clause, intangible expenses and
costs include:

(i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
use, maintenance or management, ownership, sale, exchange, or any other disposition of
intangible property;

(ii) losses incurred, directly or indirectly, from factoring transactions or discounting
transactions;

(iii) royalty, patent, technical, and copyright fees;

(iv) licensing fees; and

(v) other similar expenses and costs.

For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
applications, trade names, trademarks, service marks, copyrights, mask works, trade
secrets, and similar types of intangible assets.

This clause does not apply to any item of interest or intangible expenses or costs paid,
accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
to such item of income to the extent that the income to the foreign operating corporation
is income from sources without the United States as defined in subtitle A, chapter 1,
subchapter N, part 1, of the Internal Revenue Code;

(21) except as already included in the taxpayer's taxable income pursuant to clause
(20), any interest income and income generated from intangible property received or
accrued by a foreign operating corporation that is a member of the taxpayer's unitary
group. For purposes of this clause, income generated from intangible property includes:

(i) income related to the direct or indirect acquisition, use, maintenance or
management, ownership, sale, exchange, or any other disposition of intangible property;

(ii) income from factoring transactions or discounting transactions;

(iii) royalty, patent, technical, and copyright fees;

(iv) licensing fees; and

(v) other similar income.

For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
applications, trade names, trademarks, service marks, copyrights, mask works, trade
secrets, and similar types of intangible assets.

This clause does not apply to any item of interest or intangible income received or accrued
by a foreign operating corporation with respect to such item of income to the extent that
the income is income from sources without the United States as defined in subtitle A,
chapter 1, subchapter N, part 1, of the Internal Revenue Code;

(22) the dividends attributable to the income of a foreign operating corporation that
is a member of the taxpayer's unitary group in an amount that is equal to the dividends
paid deduction of a real estate investment trust under section 561(a) of the Internal
Revenue Code for amounts paid or accrued by the real estate investment trust to the
foreign operating corporation;

(23) the income of a foreign operating corporation that is a member of the taxpayer's
unitary group in an amount that is equal to gains derived from the sale of real or personal
property located in the United States;

(24) for taxable years beginning before January 1, 2010, the additional amount
allowed as a deduction for donation of computer technology and equipment under section
170(e)(6) of the Internal Revenue Code, to the extent deducted from taxable income; deleted text begin and
deleted text end

(25) discharge of indebtedness income resulting from reacquisition of business
indebtedness and deferred under section 108(i) of the Internal Revenue Code new text begin ; and
new text end

new text begin (26) the amount of the deduction under section 170 of the Internal Revenue Code
that represents contributions to a qualified foundation under section 290.0682 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2011.
new text end

Sec. 4.

Minnesota Statutes 2010, section 290.0674, subdivision 1, is amended to read:

Subdivision 1.

Credit allowed.

An individual is allowed a credit against the
tax imposed by this chapter in an amount equal to 75 percent of the amount paid for
education-related expenses for a qualifying child in kindergarten through grade 12. For
purposes of this section, "education-related expenses" means:

(1) fees or tuition for instruction by an instructor under section 120A.22, subdivision
10, clause (1), (2), (3), (4), or (5), or a member of the Minnesota Music Teachers
Association, and who is not a lineal ancestor or sibling of the dependent for instruction
outside the regular school day or school year, including tutoring, driver's education
offered as part of school curriculum, regardless of whether it is taken from a public or
private entity or summer camps, in grade or age appropriate curricula that supplement
curricula and instruction available during the regular school year, that assists a dependent
to improve knowledge of core curriculum areas or to expand knowledge and skills under
the required academic standards under section 120B.021, subdivision 1, and the elective
standard under section 120B.022, subdivision 1, clause (2), and that do not include the
teaching of religious tenets, doctrines, or worship, the purpose of which is to instill such
tenets, doctrines, or worship;

(2) expenses for textbooks, including books and other instructional materials and
equipment purchased or leased for use in elementary and secondary schools in teaching
only those subjects legally and commonly taught in public elementary and secondary
schools in this state. "Textbooks" does not include instructional books and materials
used in the teaching of religious tenets, doctrines, or worship, the purpose of which is
to instill such tenets, doctrines, or worship, nor does it include books or materials for
extracurricular activities including sporting events, musical or dramatic events, speech
activities, driver's education, or similar programs;

(3) a maximum expense of $200 per family for personal computer hardware,
excluding single purpose processors, and educational software that assists a dependent to
improve knowledge of core curriculum areas or to expand knowledge and skills under
the required academic standards under section 120B.021, subdivision 1, and the elective
standard under section 120B.022, subdivision 1, clause (2), purchased for use in the
taxpayer's home and not used in a trade or business regardless of whether the computer is
required by the dependent's school; and

(4) the amount paid to others for new text begin tuition and new text end transportation of a qualifying child
attending an elementary or secondary school situated in Minnesota, North Dakota, South
Dakota, Iowa, or Wisconsin, wherein a resident of this state may legally fulfill the state's
compulsory attendance laws, which is not operated for profit, and which adheres to the
provisions of the Civil Rights Act of 1964 and chapter 363A.

For purposes of this section, "qualifying child" has the meaning given in section
32(c)(3) of the Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2011.
new text end

Sec. 5.

new text begin [290.0682] EQUITY AND OPPORTUNITY IN EDUCATION TAX
CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms
have the meanings given.
new text end

new text begin (b) "Eligible student" means a student who:
new text end

new text begin (1) is a member of a household whose total annual income during the year, without
consideration of the benefits under this program, does not exceed an amount equal to 1.85
times the income standard used to qualify for a reduced-price meal under the National
School Lunch Program, as specified in United States Code, title 42, section 1758. Once a
student is eligible under this program, the student remains eligible regardless of household
income until the student graduates from high school or reaches 21 years of age, whichever
occurs first;
new text end

new text begin (2) was eligible to attend a public school in the preceding semester or is starting
school in Minnesota for the first time; and
new text end

new text begin (3) resides in Minnesota.
new text end

new text begin (c) "Equity and opportunity in education donation" means a donation to a qualified
foundation that makes qualified grants.
new text end

new text begin (d) "Qualified foundation" means a foundation fulfilling the requirement under
subdivision 4.
new text end

new text begin (e) "Qualified school" means a school operated in Minnesota that is either:
new text end

new text begin (1) a nonpublic elementary or secondary school in Minnesota wherein a resident
may legally fulfill the state's compulsory attendance laws, which is not operated for profit,
and that adheres to the provisions of United States Code, title 42, section 1981; or
new text end

new text begin (2) a high quality preschool.
new text end

new text begin (f) "Qualified grant" means a grant from a qualified foundation to the parents or
guardians of an eligible student for use at a qualified school.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin (a) An individual or corporate taxpayer is allowed a credit
against the tax due under this chapter equal to 100 percent of the amount donated to a
qualified foundation during the taxable year.
new text end

new text begin (b) The maximum aggregate statewide credits must not exceed $20,000,000 per
taxable year.
new text end

new text begin (c) A taxpayer must provide a copy of the receipt provided by the qualified
foundation when claiming the credit for the equity and opportunity in education donation.
new text end

new text begin Subd. 3. new text end

new text begin Application for credit certificate. new text end

new text begin (a) A taxpayer must apply to the
commissioner for an equity and opportunity in education tax credit certificate. Tax credit
certificates under this section must be made available on a first-come, first-served basis
until the maximum aggregate statewide credit amount has been reached. The maximum
statewide credit amounts must not exceed $20,000,000 per taxable year for donations and
commitments to qualified nonpublic schools or preschools.
new text end

new text begin (b) The commissioner must not issue a tax credit certificate for an amount greater
than the limits under subdivision 2.
new text end

new text begin Subd. 4. new text end

new text begin Qualified foundations. new text end

new text begin (a) Each qualified foundation that receives equity
and opportunity in education donations directly from taxpayers under this section must:
new text end

new text begin (1) notify the commissioner of its intent to participate in this program;
new text end

new text begin (2) demonstrate to the commissioner that it has been granted an exemption from
the federal income tax as an organization described in section 501(c)(3) of the Internal
Revenue Code;
new text end

new text begin (3) provide a receipt or verification on a form approved by the commissioner to
taxpayers for donations and commitments made to qualified foundations;
new text end

new text begin (4) conduct criminal background checks on all of its employees and board members
and exclude from employment or governance any individuals that might reasonably pose a
risk to the appropriate use of contributed funds;
new text end

new text begin (5) demonstrate its financial accountability by:
new text end

new text begin (i) submitting a financial information report for the organization that complies with
uniform financial accounting standards established by the commissioner and conducted by
a certified public accountant; and
new text end

new text begin (ii) having the auditor certify that the report is free of material misstatements;
new text end

new text begin (6) demonstrate its financial viability, if it is to receive donations of $150,000 or
more during the school year, by filing financial information with the commissioner prior
to September 1 of each year that demonstrates the financial viability of the qualified
foundation;
new text end

new text begin (7) allocate at least 90 percent of annual revenues for tuition grants;
new text end

new text begin (8) use amounts received as donations to make qualified grants within two years
of the date of receiving the donation; and
new text end

new text begin (9) ensure that qualified schools that receive qualified grants or enroll eligible
students:
new text end

new text begin (i) comply with all health and safety laws or codes that apply to nonpublic schools;
new text end

new text begin (ii) hold a valid occupancy permit if required by its municipality;
new text end

new text begin (iii) certify that their admissions policy adheres to provisions in United States Code,
title 42, section 1981; and
new text end

new text begin (iv) provide academic accountability to parents of students in the program by
regularly reporting to the parent on the student's progress.
new text end

new text begin (b) A qualified foundation that receives equity and opportunity in education
donations directly from taxpayers under this program must report to the commissioner by
June 1 of each year the following information prepared by a certified public accountant
regarding its grants in the previous calendar year:
new text end

new text begin (1) the total number and total dollar amount of donations from taxpayers received
during the previous calendar year; and
new text end

new text begin (2) the total number and total dollar amount of qualified scholarships or qualified
grants awarded during the previous calendar year.
new text end

new text begin (c) If the commissioner decides to bar a qualified foundation from the program for
failure to comply with the requirements in paragraph (a), clauses (1) to (9), the qualified
foundation must notify taxpayers who have donated to the qualified foundation in writing
within 30 days.
new text end

new text begin Subd. 5. new text end

new text begin Responsibilities of commissioner. new text end

new text begin (a) The commissioner must prescribe a
standardized format for a receipt to be issued by a qualified foundation to a taxpayer to
indicate the value of a donation received.
new text end

new text begin (b) The commissioner must prescribe a standardized format for qualified foundations
to report the information required under subdivision 4.
new text end

new text begin (c) The commissioner must post on the department's Web site the names and
addresses of qualified foundations and regularly update the names and addresses of any
qualified foundations that have been barred from participating in the program.
new text end

new text begin (d) The commissioner may conduct either a financial review or audit of a qualified
foundation upon finding evidence of fraud or intentional misreporting.
new text end

new text begin (e) The commissioner may bar a qualified foundation from participating in the
program if the commissioner establishes that the qualified foundation has intentionally and
substantially failed to comply with the requirements in subdivision 4. If the commissioner
determines that a qualified foundation should be barred from the program, the
commissioner must notify the qualified foundation within 60 days of that determination.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2011.
new text end

Sec. 6. new text begin TUITION FUNDING, NONPUBLIC SCHOOLS, FISCAL YEARS 2013
AND 2014.
new text end

new text begin (a) Notwithstanding Minnesota Statutes, section 124D.031, subdivision 3, in fiscal
year 2013 only the quarterly payments calculated under Minnesota Statutes, section
124D.031, subdivision 3, shall be reduced by 40 percent.
new text end

new text begin (b) Notwithstanding Minnesota Statutes, section 124D.031, subdivision 3, in fiscal
year 2014 only the quarterly payments calculated under Minnesota Statutes, section
124D.031, subdivision 3, shall be reduced by 20 percent.
new text end