Bill > A1578

Introduced Session

This bill directs the Director of the Division of Taxation to establish a five-year pilot program to provide tax credits to taxpayers that make contributions to a selected scholarship organization that provides scholarships to certain low-income children to attend a nonpublic school or an out-of-district public school. The program would allow a taxpayer to claim a tax credit against the corporate business tax or gross income tax equal to 100% of any contribution made to the scholarship organization; in the case of the gross income tax credit, a taxpayer must contribute a minimum of $100 to the scholarship organization in order to be eligible to receive the tax credit. The maximum amount of tax credits allowable in each State fiscal year would equal 120% of the total value of scholarships awarded and administrative fees collected from school districts. Tax credits would be allowed in the order in which the contributions are received. The bill creates the Opportunity Scholarship Board and directs it to select one scholarship organization to administer the program. The scholarship organization would receive contributions made to the program and award scholarships to the parents or guardians of eligible students. The maximum number of scholarships that may be awarded each year is: 2,500 in the first year, 5,000 in the second year, 7,500 in the third year, and 10,000 in the fourth and fifth years. The number of available scholarships would be allocated to each targeted district based on the number of students enrolled in the district's chronically failing school relative to the enrollment in chronically failing schools located in targeted districts. If the number of eligible students applying for a scholarship exceeds the number of available scholarships in a targeted district, then the scholarship organization would be responsible for conducting a lottery to determine scholarship awards in that district. To be eligible to receive a scholarship, a low-income child must either: 1) attend a chronically failing school, 2) received a scholarship in the previous school year and continue to reside in the targeted district, 3) reside in a targeted district and attend one of the district's public schools that is not a chronically failing school, or 4) in the subsequent school year, would be eligible to enroll in a chronically failing school in the lowest grade, other than preschool, operated by the school. The last category of students would include those currently enrolled in a nonpublic 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 60% of the students did not pass either the language arts or mathematics subject areas. Additionally, the school must be located in one of eight targeted districts: Asbury Park, Camden, Elizabeth, Lakewood, Newark, Orange, Passaic, or Perth Amboy. A child is considered low-income if the child lives in a household in which the income does not exceed 250% of the federal poverty threshold. Scholarships would be awarded to eligible students in the following order or priority: 1) low-children either attending a chronically failing school or eligible to enroll in a chronically failing school in the next school year, and 2) children who attend a public school, other than a chronically failing school, in a targeted district. 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) does not require a parent or guardian to make a payment in addition to the scholarship for a child's attendance at 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 continues to reside in the targeted district; (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; and (4) within the first 30 days of a scholarship's student's enrollment in the school, and once each year thereafter, administer a grade-level appropriate assessment to all scholarship students. 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) 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; and (3) obtains written acknowledgment from the parent or guardian that notification has been received that a nonpublic school may not provide the same level of special education instructional programs and support services that may be available in a public school.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. The commissioner may approve a school that does not meet the previous requirements if the school submits an application that includes information regarding: 1) the school's objectives and strategy for meeting those objectives, 2) a demonstration of the school's financial viability, 3) a list of faculty, including the individual's educational attainment and relevant work experience, 4) a statement regarding the adequacy of the school's facilities and equipment, 5) documentation that the school is a qualified nonprofit entity; and 6) a list of board members. The scholarship organization would have a number of program responsibilities, including: managing the application process in each district, verifying applicants' eligibility to receive a scholarship, maintaining an inventory of vacancies in eligible schools, conducting any necessary lotteries to determine scholarship awards, monitoring the enrollment of scholarship students, and managing the acceptance of contributions made to the program. Additionally, the scholarship organization must prepare an annual report, to be submitted to the State Treasurer, Commissioner of Education, and the scholarship board, enter into a contract with an independent entity to conduct an annual audit, and commission an independent study of the pilot program. The scholarship organization may apply to the Opportunity Scholarship Board to amend programmatic procedures as necessary to ensure the effective and efficient administration of the programs. Amendments that may be considered may include, but need not be limited to, the administration of the tax credits, the need to conduct lotteries, and reporting requirements related to the independent evaluation of the pilot program. The board shall not approve any amendments that would materially alter the goals and objectives of the pilot program. For each resident student who receives a scholarship, a targeted district's State aid will be reduced by an amount equal to the scholarship awarded to the student plus the scholarship organization's administrative fee. The administrative fee will equal $750 per scholarship in the first year, $400 per scholarship in the second year, $250 per scholarship in the third year, $200 per scholarship in the fourth year, and $210 per scholarship in the final year. The targeted district would also be responsible for providing transportation services to a scholarship student who attends a school outside of the district on the same basis that the district provides transportation services to nonpublic school students pursuant to N.J.S.18A:39-1.

AI Summary

Committee Categories

Sean Kean (R)*,  Michael Inganamort (R),  Jay Webber (R), 

Introduced, Referred to Assembly Education Committee (on 01/13/2026)

Official Document