(A8, R16, S39)

AN ACT TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY ADDING CHAPTER 8 TO TITLE 59 SO AS TO THE ESTABLISH THE "EDUCATION SCHOLARSHIP TRUST FUND PROGRAM", TO DEFINE NECESSARY TERMS, TO PROVIDE REQUIREMENTS FOR STUDENTS AND SCHOOLS SEEKING TO PARTICIPATE IN THE PROGRAM, TO PROVIDE REQUIREMENTS FOR THE ADMINISTRATION AND OVERSIGHT OF THE PROGRAM, TO ESTABLISH AND PROVIDE FOR THE ADMINISTRATION OF AN EDUCATION SCHOLARSHIP TRUST FUND CONSISTING OF FUNDS APPROPRIATED TO PROVIDE THESE SCHOLARSHIPS, TO PROVIDE LIMITATIONS ON THE NUMBER OF SCHOLARSHIPS THAT MAY BE AWARDED, TO PROVIDE MEASURES FOR EVALUATING THE PERFORMANCE OF PROGRAM PARTICIPANTS, TO ESTABLISH A REVIEW PANEL AND PROVIDE FOR ITS COMPOSITION AND PURPOSES, AND TO CLARIFY STUDENT TRANSFER REQUIREMENTS, AMONG OTHER THINGS.

Be it enacted by the General Assembly of the State of South Carolina:

Education Scholarship Trust Fund

SECTION 1.    Title 59 of the S.C. Code is amended by adding:

Section 59-8-110.    For purposes of this chapter:

(1) "Department" means the South Carolina Department of Education.

(2) "Education Scholarship Trust Fund", "ESTF", or "fund" means the individual account that is administered by the department to which funds are allocated to the parent of an eligible student to pay for qualifying expenses.

(3) "Eligible school" means a South Carolina public school or an independent school that chooses to participate in the program. "Eligible school" does not include a charter school.

(4) "Eligible student" means a student who:

(a) is a resident of this State;

(b)(i) attended a public school in this State during the previous school year;

(ii) had not yet attained the age of five on or before September first of the previous school year but who has attained the age of five on or before September of the current school year; or

(iii) received a scholarship pursuant to this chapter for the previous school year; and

(c)(i) in School Year 2024-2025, has a household income that does not exceed two hundred percent of the federal poverty guidelines;

(ii) in School Year 2025-2026, has a household income that does not exceed three hundred percent of the federal poverty guidelines; and

(iii) in School Year 2026-2027 and all subsequent years, has a household income that does not exceed four hundred percent of the federal poverty guidelines.

"Eligible student" does not include students participating in the Educational Credit for Exceptional Needs Children's Fund program, as provided in Section 12-6-3790.

(5) "IDEA" means the Individuals with Disabilities Education Act found in 20 U.S.C. Section 1400, et seq.

(6) "Parent" means a resident of this State who is the natural or adoptive parent, legal guardian, custodian, or other person with legal authority to act on behalf of an eligible student.

(7) "Education service provider" means a person or organization approved by the department that receives payments from ESTF to provide educational goods and services to scholarship students.

(8) "Program" means the ESTF program created by this chapter.

(9) "Resident school district" means the public school district in which the student is domiciled.

(10) "Scholarship" means education funding allocated from an account established pursuant to this chapter.

(11) "Scholarship student" means an eligible student who is participating in the Education Scholarship Trust Fund program.

(12) "Substantial misuse" means wilfully and knowingly receiving or spending any portion of a scholarship for any purpose other than a qualifying expense.

(13) "Qualifying expense" means:

(a) tuition and fees of an education service provider;

(b) textbooks, curriculum, or other instructional materials including, but not limited to, any supplemental materials or associated online instruction required by either a curriculum or an education service provider;

(c) tutoring services approved by the department;

(d) computer hardware or other technological devices that are used primarily for a scholarship student's educational needs and approved by the department or a licensed physician;

(e) tuition and fees for an approved nonpublic online education service provider or course;

(f) fees for approved:

(1) national norm-referenced examinations, advanced placement examinations, or similar assessments;

(2) industry certification exams; or

(3) examinations related to college or university admission;

(g) educational services for pupils with disabilities from a licensed or accredited practitioner or provider including, but not limited to, occupational, behavioral, physical, and speech-language therapies;

(h) approved contracted services from a public school district, including individual classes, after school tutoring services, transportation, or fees or costs associated with participation in extracurricular activities;

(i) contracted teaching services and education classes approved by the department;

(j) fees for transportation paid to a fee-for-service transportation provider for the scholarship student to travel to and from an eligible provider as defined in this section, but not to exceed seven hundred fifty dollars for each school year;

(k) fees for ESTF account management by private financial management firms approved by the department; or

(l) any other educational expense approved by the department.

Section 59-8-115.    (A) The department shall create a standard application process and establish the timeline for parents to establish the eligibility of their student for the Education Scholarship Trust Fund program. The application window established shall last at least forty-five days, opening no earlier than January fifteenth and closing no later than March fifteenth each calendar year.

(B) Pursuant to the timeline established pursuant to subsection (A), the department shall:

(1) process applications in the order in which they are received, after a preference has been extended to all prior-year participants and their respective siblings; and

(2) enroll and issue award letters within thirty days of the deadline for receipt of completed applications and all required documentation.

(C) Before awarding a scholarship, the department shall have obtained evidence of the student's eligibility through the card issued in the student's name from the Department of Health and Human Services for Medicaid eligibility included as applicable with application documentation.

(D) Before awarding a scholarship, the department must obtain evidence of all other student eligibility criteria set forth in Section 59-8-110.

(E) The department shall approve an application for scholarship if:

(1) the parent submits an annual application for a scholarship in accordance with the application and procedures established by the department;

(2) the student on whose behalf the parent is applying is an eligible student;

(3) funds are available for the ESTF; and

(4) the parent signs an annual agreement with the department:

(a) to provide, at a minimum, a program of academic instruction for the eligible student in at least the subjects of English/language arts to include writing, mathematics, social studies, and science;

(b) to acknowledge and agree to comply with the education service provider's prescribed curriculum, dress code, and other requirements of enrolled students;

(c) to ensure the scholarship student takes assessments as referenced in Section 59-8-150 or provides assessments in a similar manner through other means if the scholarship student does not receive full-time instruction from an education service provider;

(d) to use program funds for qualifying expenses only for an approved provider to educate the scholarship student, subject to penalty;

(e) not to enroll their scholarship student in a public school as a full-time student in the resident school district, as defined in this chapter;

(f) not to participate in a home instruction program under Sections 59-65-40, 59-65-45, or 59-65-47;

(g) that includes documentation of the consultation process between the parent, the resident school district, the education service provider, and any school district that the education service provider contracts with under an IEP or services plan, for each scholarship student with a disability regarding the special education and related services, and the manner by which these services as listed in the student's IEP or services plan, will be provided to a scholarship student with a disability; and

(h) to confirm that, if the parent's child is a student with disabilities, the parent has received notice from the department that participation in the ESTF program is a parental placement of the scholarship student under IDEA, along with an explanation of the rights that parentally placed students possess under IDEA and any applicable state laws and regulations, including the consultation process provided for in 20 U.S.C. Section 1412(a)(10) and the Individual Education Program requirements described in Section 1414(d) of IDEA.

(F) The department shall make available on its website in a conspicuous location information in conformity with 34 C.F.R. Sections 300.130 through 300.144, Assistance to States for the Education of Children with Disabilities, explaining to parents the rights of children with disabilities under IDEA both in public schools and as parentally placed students in private schools.

(G) A parent will be allowed to make payments for the cost of educational goods and services not covered by the funds in their student's ESTF; however, personal deposits into an ESTF account are prohibited.

(H) Funds received pursuant to this section do not constitute taxable income to the parent of the scholarship student or to the student.

(I) A parent's signed agreement under subsection (E)(4) satisfies the state's compulsory attendance law pursuant to Section 59-65-10.

(J) The State Board of Education shall promulgate regulations for the administration of the program as may be applicable.

(K) The department may contract with qualified organizations to administer the program application process or specific functions, maintenance, and monitoring of the program application process as required above.

Section 59-8-120.    (A) There is established at the department, the "South Carolina Education Scholarship Trust Fund" that is separate and distinct from the general fund, consisting of monies appropriated to the department to provide scholarships to eligible students for qualifying expenses. The fund must receive and hold all monies allocated for it as well as all earnings until disbursed as provided in this section.

(B) The department shall administer the fund and is responsible for keeping records, managing accounts, and disbursing scholarships awarded pursuant to this section and as directed by the parent.

(C) Upon request of the parent and approval of an eligible student's application by the department, the State Treasurer shall transfer six thousand dollars per scholarship student to the Education Scholarship Trust Fund as directed by the General Assembly, unless an increased or decreased limit is authorized in the annual general appropriations act.

(D) The department shall create an individual online ESTF account for each scholarship student.

(1) The parent must be able to access the individual online account for the scholarship student using a secure portal.

(2) The individual scholarship student's account must be created within thirty days of the application approval.

(E) The department shall make payments to an individual scholarship student's account from the ESTF on a quarterly basis with the first payment being distributed by July thirty-first of each year.

(F) By September first of each school year and again on January fifteenth and March fifteenth of the school year, the department shall compare the list of scholarship students with the public school enrollment lists to avoid duplicate payments.

(G) Education service providers may not refund, rebate, or share a student's scholarship funds directly with a parent or the scholarship student. The funds in an account may only be used for qualifying expenses as defined in this chapter and provided by the department.

(H) The department may contract with qualified organizations to administer the program.

(I)    The trust fund does not constitute a debt of the State or any political subdivision thereof, including school districts. The trust fund must be held and applies solely toward carrying out the purposes of this chapter.

Section 59-8-125.    (A) The department shall develop an online electronic system for payment for services authorized by participating parents pursuant to this chapter and the guidelines provided by the department. Parents may not be reimbursed for out-of-pocket expenses.

(B) The General Assembly shall appropriate funds to the department for initial costs to create the program. Thereafter, the department shall deduct an amount from the ESTF to cover the costs of overseeing the accounts and administering the program up to a limit of two percent. Annually, on or before December thirty-first, the department shall notify the respective Chairmen of the Senate Finance Committee and House of Representatives Ways and Means Committee regarding the amount deducted for administrative costs and an itemization of the costs incurred to administer the program for the previous school year.

(C) The department may contract with qualified vendors to manage accounts and shall establish reasonable fees for private financial management firms participating in the program based upon market rates.

(D) The department may contract with qualified organizations to administer the program or specific functions of the program.

(E) Payments made by the department must remain in force until a parent or scholarship student is proven to have participated in a prohibited activity specified in this chapter, a scholarship student returns to a public school in his resident public school district, or a scholarship student graduates from high school or attains twenty-two years of age, whichever occurs first. A scholarship student who enrolls in his resident public school district is considered to have returned to a public school for the purpose of determining the end of the term.

(F) The department may suspend or deactivate an account for substantial misuse or the scholarship student leaves the program for any reason, at which time any remaining funds must revert to the ESTF.

(G) Unused funds must be rolled over to the following school year for a scholarship student who applies and continues to meet eligibility requirements to participate in the program.

(H) A scholarship terminates automatically if the student is no longer domiciled in this State, and any money remaining in the account reverts to the ESTF.

(I) Only one account may be established for a scholarship student.

Section 59-8-130.    If a scholarship student's program of academic instruction is terminated for any reason before the end of the semester or school year and the student does not resume instruction within thirty days, then the parent shall notify the department and remaining funds in the account revert to the ESTF.

Section 59-8-135.    (A) Beginning with the 2024-2025 School Year, the annual number of ESTF students is limited by the following capacity:

(1) in School Year 2024-2025, the program is limited to five thousand scholarship students;

(2) in School Year 2025-2026, the program is limited to ten thousand scholarship students; and

(3) in School Year 2026-2027, and for all subsequent school years, the program is limited to fifteen thousand scholarship students.

(B) In 2027, and every five years thereafter, the department shall conduct an eligibility and use review of the program and shall make recommendations to the General Assembly to improve the program.

Section 59-8-140.    (A)(1) The department must develop an application approval process for participation in the ESTF program for education service providers.

(2) The department must require an independent school that applies to be an education service provider to be located in the State, to have an educational curriculum that includes courses set forth in the state's diploma requirements and to meet the compulsory attendance and State Board of Education approval requirements in Section 59-65-10.

(3) An education service provider that participated in the program in the previous school year and desires to participate in the program in the current school year shall reapply to the department. The education service provider reapplying shall certify to the department that it continues to meet all program requirements. An education service provider required to administer academic testing shall provide to the department test score data from the previous school year. If individual student test score data is not submitted, then the department shall remove the education service provider from the program.

(4) By February first of each year, the department will certify the list of approved education service providers for participation in the program that meet all program requirements. The department may waive the deadline requirement upon good cause shown by an education service provider.

(5) An education service provider that is denied approval pursuant to this section may seek review by filing a request for a contested case hearing with the Administrative Law Court in accordance with the court's rules of procedure.

(6) By February fifteenth of each year, the department shall publish on its website a comprehensive list of approved education service providers. The list must include the name, address, telephone number, and website address for each education service provider.

(B) If approved by the department, new education service providers may be added to the list of approved providers on a rolling basis. The providers will be added to the comprehensive list available on the department's website.

(C) The department may bar an education service provider from the program if the department establishes that the education service provider has:

(1) failed to comply with the accountability standards established in this section; or

(2) failed to provide the scholarship student with the educational services