                                 CODE OF VIRGINIA

(APPLICABLE TO TAXABLE YEARS BEGINNING ON AND AFTER JANUARY 1, 2028) GUIDELINES
FOR SCHOLARSHIP FOUNDATIONS (§ 58.1-439.28)

A. As a condition for qualification by the Department of Education, a
scholarship foundation, as defined in &#xA7; 58.1-439.25 and included on the
list published annually by the Department of Education pursuant to this section,
shall disburse an amount at least equal to 90 percent of the value of the
donations it receives (for which tax credits were issued under this article)
during each 12-month period ending on June 30 by the immediately following June
30 for qualified educational expenses through scholarships to eligible students.
Tax-credit-derived funds not used for such scholarships may only be used for the
administrative expenses of the scholarship foundation. Any scholarship
foundation that fails to meet such disbursal requirement shall, for the first
offense, be required to pay a civil penalty equal to the difference between 90
percent of the value of the tax-credit-derived donations it received in the
applicable 12-month period and the amount that was actually disbursed. Such
civil penalty shall be remitted by the scholarship foundation to the Department
of Education within 30 days after the end of the one-year period and deposited
to the general fund. For a second offense within a five-year period, the
scholarship foundation shall be removed from the annual list published pursuant
to this section and shall not be entitled to request preauthorization for
additional tax credits, nor shall it be entitled to receive and administer
additional tax-credit-derived funds for two years. After two years, the
scholarship foundation shall be eligible to reapply to be included on the annual
list to receive and administer tax-credit derived funds. If a scholarship
foundation is authorized to be added to the annual list after such
reapplication, the scholarship foundation shall not be considered to have any
previous offenses for purposes of this subsection. The required disbursement
under this section shall begin with donations received for the period January 1,
2013, through June 30, 2014.

B. By September 30 of each year beginning in 2016, the scholarship foundation
shall provide the following information to the Department of Education: (i) the
total number and value of donations received by the foundation during the
12-month period ending on June 30 of the prior calendar year for which tax
credits were issued by the Superintendent of Public Instruction, (ii) the dates
when such donations were received, and (iii) the total number and dollar amount
of qualified educational expenses scholarships awarded from tax-credit-derived
donations and disbursed by the scholarship foundation during the 24-month period
ending on June 30 of the current calendar year. Any scholarship foundation that
fails to provide this report by September 30 shall, for the first offense, be
required to pay a $1,000 civil penalty. Such civil penalty shall be remitted by
the scholarship foundation to the Department of Education by November 1 of the
same year and deposited to the general fund. For a second offense within a
five-year period, the scholarship foundation shall be removed from the annual
list published pursuant to this section and shall not be entitled to request
preauthorization for additional tax credits, nor shall it be entitled to receive
and administer additional tax-credit-derived funds. After two years, the
scholarship foundation shall be eligible to reapply to be included on the annual
list to receive and administer tax-credit derived funds. If a scholarship
foundation is authorized to be added to the annual list after such
reapplication, the scholarship foundation shall not be considered to have any
previous offenses for purposes of this subsection.

C. In awarding scholarships from tax-credit-derived funds, the scholarship
foundation shall (i) provide scholarships for qualified educational expenses
only to students whose family&#8217;s annual household income is not in excess
of 300 percent of the current poverty guidelines, eligible students with a
disability, or eligible pre-kindergarten children; (ii) not limit scholarships
to students of one school; and (iii) comply with Title VI of the Civil Rights
Act of 1964, as amended. Payment of scholarships from tax-credit-derived funds
by the eligible scholarship foundation shall be by individual warrant or check
made payable to and mailed to the eligible school that the student&#8217;s
parent or legal guardian indicates. In mailing such scholarship payments, the
eligible scholarship foundation shall include a written notice to the eligible
school that the source of the scholarship was donations made by persons
receiving tax credits for the same pursuant to this article.

D. 1. Scholarship foundations shall ensure that schools selected by students to
which tax-credit-derived funds may be paid (i) are in compliance with the
Commonwealth&#8217;s and locality&#8217;s health and safety laws and codes; (ii)
hold a valid occupancy permit as required by the locality; (iii) comply with
Title VI of the Civil Rights Act of 1964, as amended; and (iv) are (a) for
students in grades K through 12, nonpublic schools that comply with nonpublic
school accreditation requirements as set forth in § 22.1-19 and administered by
the Virginia Council for Private Education or nonpublic schools that maintain an
assessment system that annually measures scholarship students&#8217; progress in
reading and math using a national norm-referenced achievement test, including
but not limited to the Stanford Achievement Test, California Achievement Test,
and Iowa Test of Basic Skills and (b) for eligible pre-kindergarten children,
nonpublic pre-kindergarten programs.

   2. Each nonpublic pre-kindergarten program shall (i) provide to the eligible
   pre-kindergarten child a curriculum that is aligned with Virginia&#8217;s
   Foundation Blocks for Early Learning: Comprehensive Standards for
   Four-Year-Olds as published by the Department of Education, or any successor
   standards published by the Department of Education; (ii) have maximum class
   sizes of 20 students with a teacher-student ratio of not fewer than two
   teachers for every 20 students; (iii) provide at least half-day services and
   operate for at least the school year; (iv) agree to provide the Department of
   Education with student information for each eligible pre-kindergarten child
   receiving a scholarship foundation scholarship for purposes of allowing the
   Department of Education to conduct studies comparing the academic performance
   of such children while attending primary or secondary school with other
   children attending primary or secondary school who have attended a
   pre-kindergarten program, including programs funded under the Virginia
   Preschool Initiative; and (v) require professional development of program
   teachers, which enables such teachers to engage in high-quality interactions
   with eligible pre-kindergarten children and provide high-quality instruction
   in accordance with the curriculum described under clause (i). Each nonpublic
   pre-kindergarten program teacher at a minimum shall have earned a certificate
   from a nationally recognized early childhood education certificate program,
   including but not limited to any early childhood education program provided or
   sponsored by the Virginia Community College System.
   				In awarding scholarships to eligible pre-kindergarten children,
   scholarship foundations shall award scholarships from tax-credit-derived funds
   only to such children who are enrolled in or attending nonpublic
   pre-kindergarten programs that meet the conditions of this subdivision as
   certified by the Virginia Council for Private Education or the Virginia Early
   Childhood Foundation.

   3. Eligible schools shall compile the results of any national norm-referenced
   achievement test for each of its students receiving tax-credit-derived
   scholarships and shall provide the respective parents or legal guardians of
   such students with a copy of the results on an annual basis, beginning with
   the first year of testing of the student. Such schools also shall annually
   provide to the Department of Education for each such student the achievement
   test results, beginning with the first year of testing of the student, and
   student information that would allow the Department to aggregate the
   achievement test results by grade level, gender, family income level, number
   of years of participation in the scholarship program, and race. Beginning with
   the third year of testing of each such student and test-related data
   collection, the Department of Education shall ensure that the achievement test
   results and associated learning gains are published on the Department of
   Education&#8217;s website in accordance with such classifications and in an
   aggregate form as to prevent the identification of any student. Eligible
   schools shall annually provide to the Superintendent of Public Instruction
   graduation rates of its students participating in the scholarship program in a
   manner consistent with nationally recognized standards. In publishing and
   disseminating achievement test results and other information, the
   Superintendent of Public Instruction and the Department of Education shall
   ensure compliance with all student privacy laws.
   				The provisions of this subdivision shall not apply to eligible
   pre-kindergarten children.

E. 1. The aggregate amount of scholarships provided to each student for any
single school year by all eligible scholarship foundations from eligible
donations shall not exceed the lesser of (i) the actual qualified educational
expenses of the student or (ii) 100 percent of the per-pupil amount distributed
to the local school division (in which the student resides) as the state&#8217;s
share of the standards of quality costs using the composite index of ability to
pay as defined in the general appropriation act.

   2. In the case of eligible pre-kindergarten children, the aggregate amount of
   scholarships provided to each child for any single school year by all eligible
   scholarship foundations from eligible donations shall not exceed the lesser of
   the actual qualified educational expenses of the child or the state share of
   the grant per child under the Virginia Preschool Initiative for the locality
   in which the eligible pre-kindergarten child resides.

F. Scholarship foundations shall develop procedures for disbursing scholarships
in quarterly or semester payments throughout the school year to ensure
scholarships are portable.

G. Scholarship foundations that receive donations of marketable securities for
which tax credits were issued under this article shall be required to sell such
securities and convert the donation into cash immediately, but in no case more
than 21 days after receipt of the donation.

H. Each scholarship foundation with total revenues (including the value of all
donations) (i) in excess of $100,000 for the foundation&#8217;s most recent
fiscal year ended shall have an audit or review performed by an independent
certified public accountant of the foundation&#8217;s donations received in such
year for which tax credits were issued under this article or (ii) of $100,000 or
less for the foundation&#8217;s most recent fiscal year ended shall have a
compilation performed by an independent certified public accountant of the
foundation&#8217;s donations received in such year for which tax credits were
issued under this article. A summary report of the audit, review, or compilation
shall be made available to the public and the Department of Education upon
request.

I. The Department of Education shall publish annually on its website a list of
each scholarship foundation qualified under this article. Once a foundation has
been qualified by the Department of Education, it shall remain qualified until
the Department removes the foundation from its annual list. The Department of
Education shall remove a foundation from the annual list if it no longer meets
the requirements of this article. The Department of Education may periodically
require a qualified foundation to submit updated or additional information for
purposes of determining whether or not the foundation continues to meet the
requirements of this article.

J. Actions of the Superintendent of Public Instruction or the Department of
Education relating to the awarding of tax credits under this article and the
qualification of scholarship foundations shall be exempt from the provisions of
the Administrative Process Act (&#xA7; 2.2-4000 et seq.). Decisions of the
Superintendent of Public Instruction or the Department of Education shall be
final and not subject to review or appeal.

HISTORY: 2012, cc. 731, 842; 2013, cc. 713, 716; 2016, cc. 751, 767; 2019, cc.
808, 817.