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 9  AN ACT enacting the Kansas opportunity scholarship act; providing a
10    credit from income taxation for certain education expenses; amending
11    K.S.A. 1996 Supp. 79-32,117 and repealing the existing section.
12
13  Be it enacted by the Legislature of the State of Kansas:
14    New Section 1.  This act shall be known and may be cited as the
15  Kansas opportunity scholarship act. It is the purpose of this act to establish
16  a pilot program under which eligible children are awarded scholarships
17  which provide the financial assistance necessary to avail such children and
18  their parents of an opportunity to exercise choice in the selection of
19  schools. The program shall be conducted in Sedgwick county and Wy-
20  andotte county in the 1997-98 through 2000-01 school years. The selec-
21  tion of schools by parents under the Kansas opportunity scholarship act
22  shall not be construed as or presumed to be an act of the state or any
23  political subdivision of the state.
24    New Sec. 2.  As used in this act:
25    (a)  ``Scholarship eligible child'' means any child who is: (1) A resident
26  of this state; (2) school age and enrolled in or eligible for enrollment in
27  an opportunity scholarship school and for attendance at kindergarten or
28  any of the grades one through 12; and (3) eligible for free or reduced
29  cost meals under the national school lunch act.
30    (b)  ``Parent'' means and includes natural parents, adoptive parents,
31  stepparents, foster parents and persons acting as parents.
32    (c)  ``Person acting as parent'' means: (1) A guardian or conservator;
33  or (2) a person, other than a parent, who is liable by law to maintain, care
34  for, or support the child, or who is liable by law to maintain, care for or
35  support the child, or who has actual care and control of the child and is
36  contributing the major portion of the cost of support of the child, or who
37  has actual care and control of the child with the written consent of a
38  person who has legal custody of the child, or who has been granted cus-
39  tody of the child by a court of competent jurisdiction.
40    (d)  ``Opportunity scholarship school'' means any nonpublic school
41  which: (1) Is accredited by the state board of education; (2) is located in
42  Sedgwick county or in Wyandotte county; (3) is operated by a board of
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 1  education or other governing authority that has elected to participate in
 2  the Kansas opportunity scholarship program; and (4) administers the met-
 3  ropolitan achievement test as a part of its pupil assessment program.
 4    (e)  ``Opportunity scholarship'' means a voucher in the amount of
 5  $2,000, which is awarded in the name of a scholarship eligible child for
 6  redemption by a parent of the child at an opportunity scholarship school
 7  for provision of educational services to the child.
 8    (f)  ``Satisfactory academic achievement'' means scoring at or above
 9  the national average on the metropolitan achievement test.
10    (g)  ``Scholarship impact aid'' means financial assistance in the form
11  of grants of state moneys provided to school districts, all or any part of
12  which are located in Sedgwick county or in Wyandotte county, in order
13  to lessen the impact on such districts of any decrease in enrollment ex-
14  perienced by the districts as a result of implementation and maintenance
15  of the opportunity scholarship pilot program.
16    (h)  ``State board'' means the state board of education.
17    New Sec. 3.  (a) In order to achieve the purpose of this act, the state
18  board shall establish and effectuate a pilot program under which the par-
19  ent of any scholarship eligible child, upon application, receives from the
20  state board in each school year in which the program is maintained an
21  opportunity scholarship that may be redeemed for payment of the costs
22  of enrollment of the child at an opportunity scholarship school selected
23  by the child's parent. Scholarship applications shall be on a form pre-
24  scribed and furnished by the state board. The application shall request
25  such information as necessary to determine program eligibility and to
26  efficiently administer the program.
27    (b)  An application for an opportunity scholarship may be submitted
28  to the state board, to the the board of education of the school district in
29  which the child resides, or to the board of education of the school district
30  in which the opportunity scholarship school selected by the child's parent
31  for enrollment of the child is located. If an application for a scholarship
32  is submitted to the board of education of a school district, the board of
33  education shall transmit the application, immediately upon receipt, to the
34  state board.
35    (c)  Opportunity scholarships received under this act shall be re-
36  deemed upon certification by an opportunity scholarship school that a
37  scholarship eligible child is enrolled and in attendance at the school. The
38  state board shall certify to the director of accounts and reports the amount
39  due the parent of each scholarship eligible child. The director of accounts
40  and reports shall issue a warrant to the parent of the scholarship eligible
41  child and shall cause the warrant to be delivered to the school in which
42  the child is enrolled. The parent of the scholarship eligible child shall use
43  the warrant for payment of the costs of enrollment of the child. If a
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 1  scholarship eligible child discontinues attendance at an opportunity schol-
 2  arship school before the end of the school year, the entire amount which
 3  the child would otherwise qualify to have refunded, if any, up to the
 4  amount paid by the state pursuant to the scholarship redeemed by the
 5  parent of the child, shall be paid by the school to the state board. The
 6  state board shall remit any amounts so received to the state treasurer,
 7  and the state treasurer shall deposit the same in the state treasury to the
 8  credit of the state school district finance fund.
 9    (d)  The amount of an opportunity scholarship redeemed under this
10  act shall not be considered gross income and shall not be taxable for
11  Kansas income tax purposes.
12    New Sec. 4.  (a) Subject to the provisions of subsection (b), an op-
13  portunity scholarship school shall admit scholarship eligible children who
14  have received scholarships and who apply for admission, up to the limit
15  of the school's capacity after reserving places for children required or
16  entitled to be admitted to the school.
17    (b)  An opportunity scholarship school shall establish criteria for the
18  admission of scholarship eligible children. Such criteria shall be consistent
19  with the admissions criteria that the school regularly applies.
20    (c)  An opportunity scholarship school shall provide assurance to the
21  state board that the amount of the costs of enrollment charged a schol-
22  arship eligible child will not be greater than the amount of the costs of
23  enrollment regularly charged by the school.
24    (d)  An opportunity scholarship school shall publish or otherwise make
25  available information regarding the school's program of instruction,
26  achievement data regarding children attending the school (which data
27  shall be stated in the aggregate by grades maintained by the school),
28  incidence of alcohol and drug abuse, if any, and school discipline and
29  safety.
30    (e)  Prior to the commencement of school in each school year in which
31  the opportunity scholarship pilot program is maintained, each opportunity
32  scholarship school shall certify to the state board the amount of the costs
33  of enrollment to be charged in such school year.
34    New Sec. 5.  (a) Prior to the commencement of each school year in
35  which the opportunity scholarship pilot program is maintained, the state
36  board shall prepare and publish in Sedgwick county and in Wyandotte
37  county information regarding the opportunity scholarship program, the
38  procedure to the followed by parents in applying for opportunity schol-
39  arships for their children, and a list of all opportunity scholarship schools.
40  Such information and list shall be maintained on file at the state depart-
41  ment of education and shall be made available to members of the public
42  upon request.
43    (b)  The state board shall monitor the academic performance of schol-
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 1  arship eligible children attending opportunity scholarship schools. If the
 2  state board determines in any school year that a majority of the scholar-
 3  ship eligible children attending any such school are not demonstrating
 4  satisfactory academic achievement or that any such school is not meeting
 5  the requirements of section 4, the school shall not be eligible to accept
 6  scholarships from the parents of scholarship eligible children in the suc-
 7  ceeding school year.
 8    New Sec. 6.  (a) (1) In each school year in which the pilot program
 9  established under the Kansas opportunity scholarship act is maintained,
10  each school district which is eligible for scholarship impact aid may submit
11  an application to the state board for a grant of state moneys. The appli-
12  cation shall be prepared in such form and manner as the state board shall
13  require and shall be submitted at a time to be determined and specified
14  by the state board.  Approval by the state board of applications for grants
15  of state moneys is prerequisite to the award of grants.
16    (2)  The state board shall approve applications of school districts for
17  grants, determine the amount of grants and be responsible for payment
18  of grants to school districts. In determining the amount of a grant which
19  a school district is eligible to receive, the state board shall: (A) Determine
20  the number of scholarship eligible children who were enrolled as pupils
21  in the school district in the preceding school year, who received an op-
22  portunity scholarship, and who are enrolled in an opportunity scholarship
23  school in the current school year; and (B) multiply the amount of $1,000
24  by the number of children determined under subpart (A). The product
25  is the amount of scholarship impact aid the district is eligible to receive.
26  If the amount of appropriations for the payment of grants under this
27  subsection is insufficient to pay in full the amount each school district is
28  determined to be eligible to receive for the school year, the state board
29  shall prorate the amount appropriated among all school districts which
30  are eligible to receive grants of state moneys in proportion to the amount
31  each school district is determined to be eligible to receive.
32    (3)  Each school district which is awarded a grant under this section
33  shall make such periodic and special reports of statistical and financial
34  information to the state board as it may request.
35    (4)  All moneys received by a school district under authority of this
36  subsection shall be deposited in the general fund of the school district
37  and may be expended for operating expenses whether budgeted or not.
38    (b)  Except as provided in K.S.A. 72-8306, and amendments thereto,
39  no school district shall be responsible for the furnishing or provision of
40  transportation for scholarship eligible children to or from any opportunity
41  scholarship school.
42    New Sec. 7.  Upon completion of the 2000-01 school year, the state
43  board shall evaluate the pilot program established under the Kansas op-
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 1  portunity scholarship act, assess the impact the program has had on the
 2  educational systems of the school districts affected by the program, collect
 3  data on the academic achievement of scholarship eligible children, de-
 4  termine the total amount of savings realized by the state due to mainte-
 5  nance of the program, and make a recommendation to the governor and
 6  the legislature with regard to effectuation of the program on a statewide
 7  basis.
 8    New Sec. 8.  For all taxable years commencing after December 31,
 9  1996, there shall be allowed as a credit against the tax liability imposed
10  under the Kansas income tax act of an individual who is a teacher certified
11  by the state board of education and employed by a school district organ-
12  ized and operating under the laws of this state or by a nonpublic school
13  accredited by the state board of education an amount, not to exceed $500,
14  equal to the amount such individual has expended of such individual's
15  personal moneys for the purchase of equipment, materials or supplies
16  used in the classroom for the benefit of the pupils of such individual.
17    New Sec. 9.  For all taxable years commencing after December 31,
18  1996, there shall be allowed as a credit against the tax liability imposed
19  under the Kansas income tax act of an individual an amount equal to the
20  amount, not to exceed $500 for each dependent, the individual has paid
21  for textbooks and other instructional materials for the use of each such
22  dependent attending a nonpublic elementary or secondary school which
23  is located in Kansas and accredited by the state board of education. As
24  used in this section, the term ``textbook and other instructional materials''
25  means books and materials used in elementary and secondary schools for
26  teaching only those subjects legally and commonly taught in elementary
27  and secondary schools maintained by the public school districts organized
28  and operating under the laws of this state and does not include books or
29  materials used in the teaching of religious tenets, doctrines, or worship,
30  the purpose of which is to inculcate those tenets, doctrines, or worship,
31  and does not include books or materials used for extracurricular activities,
32  including sporting events, musical or dramatic events, speech and debate
33  activities, driver's education, or activities of a similar nature.
34    Section 10.  K.S.A. 1996 Supp. 79-32,117 is hereby amended to read
35  as follows: 79-32,117. (a) The Kansas adjusted gross income of an indi-
36  vidual means such individual's federal adjusted gross income for the tax-
37  able year, with the modifications specified in this section.
38    (b)  There shall be added to federal adjusted gross income:
39    (i)  Interest income less any related expenses directly incurred in the
40  purchase of state or political subdivision obligations, to the extent that
41  the same is not included in federal adjusted gross income, on obligations
42  of any state or political subdivision thereof, but to the extent that interest
43  income on obligations of this state or a political subdivision thereof issued
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 1  prior to January 1, 1988, is specifically exempt from income tax under the
 2  laws of this state authorizing the issuance of such obligations, it shall be
 3  excluded from computation of Kansas adjusted gross income whether or
 4  not included in federal adjusted gross income. Interest income on obli-
 5  gations of this state or a political subdivision thereof issued after Decem-
 6  ber 31, 1987, shall be excluded from computation of Kansas adjusted
 7  gross income whether or not included in federal adjusted gross income.
 8    (ii)  Taxes on or measured by income or fees or payments in lieu of
 9  income taxes imposed by this state or any other taxing jurisdiction to the
10  extent deductible in determining federal adjusted gross income and not
11  credited against federal income tax. This paragraph shall not apply to taxes
12  imposed under the provisions of K.S.A. 79-1107 or 79-1108, and amend-
13  ments thereto, for privilege tax year 1995, and all such years thereafter.
14    (iii)  The federal net operating loss deduction.
15    (iv)  Federal income tax refunds received by the taxpayer if the de-
16  duction of the taxes being refunded resulted in a tax benefit for Kansas
17  income tax purposes during a prior taxable year. Such refunds shall be
18  included in income in the year actually received regardless of the method
19  of accounting used by the taxpayer. For purposes hereof, a tax benefit
20  shall be deemed to have resulted if the amount of the tax had been de-
21  ducted in determining income subject to a Kansas income tax for a prior
22  year regardless of the rate of taxation applied in such prior year to the
23  Kansas taxable income, but only that portion of the refund shall be in-
24  cluded as bears the same proportion to the total refund received as the
25  federal taxes deducted in the year to which such refund is attributable
26  bears to the total federal income taxes paid for such year. For purposes
27  of the foregoing sentence, federal taxes shall be considered to have been
28  deducted only to the extent such deduction does not reduce Kansas tax-
29  able income below zero.
30    (v)  The amount of any depreciation deduction or business expense
31  deduction claimed on the taxpayer's federal income tax return for any
32  capital expenditure in making any building or facility accessible to the
33  handicapped, for which expenditure the taxpayer claimed the credit al-
34  lowed by K.S.A. 79-32,177, and amendments thereto.
35    (vi)  Any amount of designated employee contributions picked up by
36  an employer pursuant to K.S.A. 12-5005, 20-2603, 74-4919 and 74-4965,
37  and amendments to such sections.
38    (vii)  The amount of any charitable contribution made to the extent
39  the same is claimed as the basis for the credit allowed pursuant to K.S.A.
40  1996 Supp. 79-32,196, and amendments thereto.
41    (viii)  The amount of any contribution made to a school district or an
42  accredited nonpublic school to the extent the same is claimed as the basis
43  for the credit allowed pursuant to section 8.
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 1    (c)  There shall be subtracted from federal adjusted gross income:
 2    (i)  Interest or dividend income on obligations or securities of any
 3  authority, commission or instrumentality of the United States and its pos-
 4  sessions less any related expenses directly incurred in the purchase of
 5  such obligations or securities, to the extent included in federal adjusted
 6  gross income but exempt from state income taxes under the laws of the
 7  United States.
 8    (ii)  Any amounts received which are included in federal adjusted
 9  gross income but which are specifically exempt from Kansas income tax-
10  ation under the laws of the state of Kansas.
11    (iii)  The portion of any gain or loss from the sale or other disposition
12  of property having a higher adjusted basis for Kansas income tax purposes
13  than for federal income tax purposes on the date such property was sold
14  or disposed of in a transaction in which gain or loss was recognized for
15  purposes of federal income tax that does not exceed such difference in
16  basis, but if a gain is considered a long-term capital gain for federal in-
17  come tax purposes, the modification shall be limited to that portion of
18  such gain which is included in federal adjusted gross income.
19    (iv)  The amount necessary to prevent the taxation under this act of
20  any annuity or other amount of income or gain which was properly in-
21  cluded in income or gain and was taxed under the laws of this state for a
22  taxable year prior to the effective date of this act, as amended, to the
23  taxpayer, or to a decedent by reason of whose death the taxpayer acquired
24  the right to receive the income or gain, or to a trust or estate from which
25  the taxpayer received the income or gain.
26    (v)  The amount of any refund or credit for overpayment of taxes on
27  or measured by income or fees or payments in lieu of income taxes im-
28  posed by this state, or any taxing jurisdiction, to the extent included in
29  gross income for federal income tax purposes.
30    (vi)  Accumulation distributions received by a taxpayer as a beneficiary
31  of a trust to the extent that the same are included in federal adjusted
32  gross income.
33    (vii)  Amounts received as annuities under the federal civil service
34  retirement system from the civil service retirement and disability fund
35  and other amounts received as retirement benefits in whatever form
36  which were earned for being employed by the federal government or for
37  service in the armed forces of the United States.
38    (viii)  Amounts received by retired railroad employees as a supple-
39  mental annuity under the provisions of 45 U.S.C. 228b (a) and 228c (a)(1)
40  et seq.
41    (ix)  Amounts received by retired employees of a city and by retired
42  employees of any board of such city as retirement allowances pursuant to
43  K.S.A. 13-14,106, and amendments thereto, or pursuant to any charter
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 1  ordinance exempting a city from the provisions of K.S.A. 13-14,106, and
 2  amendments thereto.
 3    (x)  For taxable years beginning after December 31, 1976, the amount
 4  of the federal tentative jobs tax credit disallowance under the provisions
 5  of 26 U.S.C. 280 C. For taxable years ending after December 31, 1978,
 6  the amount of the targeted jobs tax credit and work incentive credit dis-
 7  allowances under 26 U.S.C. 280 C.
 8    (xi)  For taxable years beginning after December 31, 1986, dividend
 9  income on stock issued by Kansas Venture Capital, Inc.
10    (xii)  For taxable years beginning after December 31, 1989, amounts
11  received by retired employees of a board of public utilities as pension and
12  retirement benefits pursuant to K.S.A. 13-1246, 13-1246a and 13-1249
13  and amendments thereto.
14    (xiii)  For taxable years beginning after December 31, 1993, the
15  amount of income earned on contributions deposited to an individual
16  development account under K.S.A. 1996 Supp. 79-32,117h, and amend-
17  ments thereto.
18    (d)  There shall be added to or subtracted from federal adjusted gross
19  income the taxpayer's share, as beneficiary of an estate or trust, of the
20  Kansas fiduciary adjustment determined under K.S.A. 79-32,135, and
21  amendments thereto.
22    (e)  The amount of modifications required to be made under this sec-
23  tion by a partner which relates to items of income, gain, loss, deduction
24  or credit of a partnership shall be determined under K.S.A. 79-32,131,
25  and amendments thereto, to the extent that such items affect federal
26  adjusted gross income of the partner.
27    Sec. 11.  K.S.A. 1996 Supp. 79-32,117 is hereby repealed.
28    Sec. 12.  This act shall take effect and be in force from and after its
29  publication in the statute book.