53E-7-405. Program donations — Scholarship granting organization requirements.
(1)
A person that makes a donation to a scholarship granting organization to help fund scholarships through the program may be eligible to receive a nonrefundable tax credit as described in Sections 59-7-625 and 59-10-1041.
Terms Used In Utah Code 53E-7-405
Employee: means an individual working in a position in which the individual's salary, wages, pay, or compensation, including as a contractor, is paid from:
(i)
program donations to a scholarship granting organization; or
(ii)
scholarship money allocated to a qualifying school by a scholarship granting organization under Section 53E-7-405. See Utah Code 53E-7-401
Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
Officer: means :
(a)
a member of the board of a scholarship granting organization or qualifying school; or
(b)
the chief administrative officer of a scholarship granting organization or qualifying school. See Utah Code 53E-7-401
Relative: means a father, mother, husband, wife, son, daughter, sister, brother, uncle, aunt, nephew, niece, first cousin, mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law, or daughter-in-law. See Utah Code 53E-7-401
Scholarship: means a grant awarded to an eligible student:
(a)
by a scholarship granting organization out of program donations; and
(b)
for the purpose of paying for a scholarship expense. See Utah Code 53E-7-401
Scholarship expense: means an expense that a parent or eligible student incurs in the education of the eligible student for goods or a service that a qualifying school provides or facilitates, including:
(a)
tuition and fees of a qualifying school;
(b)
fees and instructional materials at a technical college;
(c)
tutoring services;
(d)
fees for after-school or summer education programs;
(e)
textbooks, curricula, or other instructional materials, including any supplemental materials or associated online instruction that a curriculum or a qualifying school recommends;
(f)
educational software and applications;
(g)
supplies or other equipment related to an eligible student's educational needs;
(h)
computer hardware or other technological devices that are intended primarily for an eligible student's educational needs;
(i)
fees for the following examinations, or for a preparation course for the following examinations, that the scholarship granting organization approves:
(i)
a national norm-referenced or standardized assessment described in Section 53F-6-410, an advanced placement examination, or another similar assessment;
(ii)
a state-recognized industry certification examination; and
(iii)
an examination related to college or university admission;
(j)
educational services for students with disabilities from a licensed or accredited practitioner or provider, including occupational, behavioral, physical, audiology, or speech-language therapies;
(k)
contracted services that the scholarship granting organization approves and that an LEA provides, including individual classes, after-school tutoring services, transportation, or fees or costs associated with participation in extracurricular activities;
(l)
ride fees or fares for a fee-for-service transportation provider to transport the eligible student to and from a qualifying school, not to exceed $750 in a given school year;
(m)
expenses related to extracurricular activities, field trips, educational supplements, and other educational experiences; or
Scholarship granting organization: means an organization that is:
(a)
qualified as tax exempt under Section 501(c)(3), Internal Revenue Code; and
(b)
recognized through an agreement with the state board as a scholarship granting organization, as described in Section 53E-7-404. See Utah Code 53E-7-401
Scholarship student: means an eligible student who receives a scholarship under this part. See Utah Code 53E-7-401
State: when applied to the different parts of the United States, includes a state, district, or territory of the United States. See Utah Code 68-3-12.5
In accordance with Section 53E-7-404, an organization may enter into an agreement with the state board to be a scholarship granting organization.
(3)
A scholarship granting organization shall:
(a)
accept program donations and allow a person that makes a program donation to designate a qualifying school to which the donation shall be directed for scholarships;
(b)
adopt an application process in accordance with Subsection (5);
(c)
review scholarship applications and determine scholarship awards;
(d)
allocate scholarship money to a scholarship student‘s parent or, on the parent’s behalf, to a qualifying school in which the scholarship student is enrolled;
(e)
adopt a process, with state board approval, that allows a parent to use a scholarship to pay for a nontuition scholarship expense for the scholarship student;
(f)
ensure that during the state fiscal year:
(i)
at least 92% of the scholarship granting organization’s revenue from program donations is spent on scholarships;
(ii)
up to 5% of the scholarship granting organization’s revenue from program donations is spent on administration of the program;
(iii)
up to 3% of the scholarship granting organization’s revenue from program donations is spent on marketing and fundraising costs; and
(iv)
all revenue from program donations’ interest or investments is spent on scholarships;
(g)
carry forward no more than 60% of the scholarship granting organization’s program donations, less funds for a scholarship that has been awarded, and funds expended for administration and marketing, from the state fiscal year in which the scholarship granting organization received the program donations to the following state fiscal year;
(h)
at the end of a state fiscal year, remit to the state treasurer donation amounts greater than the amount described in Subsection (3)(g);
(i)
prohibit a scholarship granting organization employee or officer from handling, managing, or processing program donations, if, based on a criminal background check conducted by the state board in accordance with Section 53E-7-404, the state board identifies the employee or officer as posing a risk to the appropriate use of program donations;
(j)
ensure that a scholarship can be transferred during the school year to a different qualifying school that accepts the scholarship student;
(k)
report to the state board on or before October 1 of each year the following information, prepared by a certified public accountant:
(i)
the name and address of the scholarship granting organization;
(ii)
the total number and total dollar amount of program donations that the scholarship granting organization received during the previous calendar year;
(iii)
(A)
the total number and total dollar amount of scholarships the scholarship granting organization awarded during the previous state fiscal year to eligible students described in Subsection 53E-7-401(1)(a); and
(B)
the total number and total dollar amount of scholarships the scholarship granting organization awarded during the previous state fiscal year to eligible students described in Subsection 53E-7-401(1)(b); and
(iv)
the percentage of first-time scholarship recipients who were enrolled in a public school during the previous school year or who entered kindergarten or a higher grade for the first time in Utah;
(l)
issue tax credit certificates as described in Section 53E-7-407; and
(m)
require a parent to notify a scholarship granting organization if the parent’s scholarship recipient:
(i)
receives scholarship money for tuition expenses; and
(ii)
does not have continuing enrollment and attendance at a qualifying school.
(4)
The state treasurer shall deposit the money described in Subsection (3)(h) into the Income Tax Fund.
(5)
(a)
An application for a scholarship shall contain an acknowledgment by the applicant’s parent that the qualifying school selected by the parent for the applicant to attend using a scholarship is capable of providing the level of disability services required for the student.
(b)
A scholarship application form shall contain the following statement: “I acknowledge that: (1) A private school may not provide the same level of disability services that are provided in a public school; (2) I will assume full financial responsibility for the education of my scholarship recipient if I accept this scholarship; (3) Acceptance of this scholarship has the same effect as a parental refusal to consent to services as described in 24 C.F.R. § 300.300, issued under the Individuals with Disabilities Education Act, 20 U.S.C. § 1400 et seq.; and (4) My child may return to a public school at any time.”
(c)
Upon acceptance of a scholarship, the parent assumes full financial responsibility for the education of the scholarship recipient.
(d)
Acceptance of a scholarship has the same effect as a parental refusal to consent to services as described in 24 C.F.R. § 300.300, issued under the Individuals with Disabilities Education Act, 20 U.S.C. § 1400 et seq.
(e)
The creation of the program or granting of a scholarship does not:
(i)
imply that a public school did not provide a free and appropriate public education for a student; or
(ii)
constitute a waiver or admission by the state.
(6)
A scholarship granting organization shall demonstrate the scholarship granting organization’s financial accountability by annually submitting to the state board a financial information report that:
(a)
complies with the uniform financial accounting standards described in Section 53E-7-404; and
(b)
is prepared by a certified public accountant.
(7)
(a)
If a scholarship granting organization allocates $500,000 or more in scholarships annually through the program, the scholarship granting organization shall:
(i)
contract for an annual audit, conducted by a certified public accountant who is independent from:
(A)
the scholarship granting organization; and
(B)
the scholarship granting organization’s accounts and records pertaining to program donations; and
(ii)
in accordance with Subsection (7)(b), report the results of the audit to the state board for review.
(b)
For the report described in Subsection (7)(a)(ii), the scholarship granting organization shall:
(i)
include the scholarship granting organization’s financial statements in a format that meets generally accepted accounting standards; and
(ii)
submit the report to the state board no later than 120 days after the last day of the state fiscal year.
(c)
The certified public accountant shall conduct an audit described in Subsection (7)(a)(i) in accordance with generally accepted auditing standards and rules made by the state board.
(d)
(i)
The state board shall review a report submitted under this section and may request that the scholarship granting organization revise or supplement the report if the report is not in compliance with the provisions of this Subsection (7) or rules adopted by the state board.
(ii)
A scholarship granting organization shall provide a revised report or supplement to the report no later than 45 days after the day on which the state board makes a request described in Subsection (7)(d)(i).
(8)
(a)
A scholarship granting organization may not allocate scholarship money to a qualifying school if:
(i)
the scholarship granting organization determines that the qualifying school intentionally or substantially misrepresented information on overpayment;
(ii)
the qualifying school fails to refund an overpayment in a timely manner; or
(iii)
the qualifying school routinely fails to provide scholarship recipients with promised educational goods or services.
(b)
A scholarship granting organization shall notify a scholarship recipient if the scholarship granting organization stops allocation of the recipient’s scholarship money to a qualifying school under Subsection (8)(a).
(9)
If a scholarship recipient transfers to another qualifying school during the school year, the scholarship granting organization may prorate scholarship money between the qualifying schools according to the time the scholarship recipient spends at each school.
(10)
A scholarship granting organization may not:
(a)
award a scholarship to a relative of the scholarship granting organization’s officer or employee; or
(b)
allocate scholarship money to a qualifying school at which the scholarship recipient has a relative who is an officer or an employee of the qualifying school.
Amended by Chapter 190, 2023 General Session Amended by Chapter 353, 2023 General Session
