Alabama House Bill HB393

Alabama 2022 Regular Session

• Introduced: 2/22/22
• Refer: 2/22/22
• Refer: 3/2/22

Caption

Schools, failing, scholarships for students assigned to in order to attend another public or nonpublic school, income tax credits for contributions to scholarship granting organizations increased, Sec. 16-6D-9 am'd.

Impact

If enacted, HB393 would significantly reshape the landscape of educational scholarships in Alabama by incentivizing greater taxpayer participation in funding educational options for students, particularly those zoned to attend failing schools. The bill emphasizes supporting nonpublic schools and may lead to increased financial resources for these institutions, thereby potentially enhancing educational opportunities for students who may otherwise not be able to afford them.

Summary

House Bill 393 aims to amend the existing laws concerning scholarship granting organizations by allowing taxpayers to claim a tax credit equal to 100 percent of their tax liability for contributions made to these organizations. This change increases the maximum credit per taxpayer from $50,000 to $100,000 while maintaining an annual cap on cumulative credits at $30 million. Additionally, the bill establishes a requirement that scholarship funds must be expended within three calendar years, thus modifying the timelines for scholarship allocation and usage.

Contention

However, proponents of the bill argue that it provides necessary support to students in failing schools, whereas opponents express concerns that it may divert public funding away from traditional public schools. Critics fear that prioritizing funding to nonpublic institutions could exacerbate inequalities in educational access. The new stipulations regarding fund usage also raise concerns among scholarship organizations about maintaining their operational standards while complying with stricter timelines.

Regulatory oversight

To ensure compliance and accountability, the Department of Revenue will assume an oversight role, requiring scholarship granting organizations to submit annual financial reports and demonstrating overall accountability. This includes criminal background checks for employees of these organizations and stringent requirements on the management of funds allocated through scholarships, promoting transparency throughout the process.