Article 1 - Early Childhood Education Accountability and Scholarships

Section 1.  Provider Choice.  Modifies the child care chapter of law, specifically the section related to child care provider choice, by requiring a parent who resides in a Parent Aware Plus Region to choose a rated provider for eligible children, unless a waiver is granted by the commissioner.

Section 2.  Provider Rate Differential for Accreditation.  Requires Parent Aware Four-Star Programs to be paid a 15 percent differential above the maximum child care rate established for the child care assistance program.

Section 3.  Definitions.  Defines "commissioner," "eligible program," "minimum threshold," "Parent Aware," "Parent Aware Plus Region," "Parent Aware Region," and "rated program" for the purposes of this section.

Section 4.  Parent Aware.

Subdivision 1.  Department of Administration; request for proposal.  Requires the Department of Administration to develop a request for proposal for an organization to develop the standards and indicators that determine quality for Parent Aware, develop methods to monitor compliance, conduct onsite assessments, develop and maintain data quality, and develop a system for sharing the data with the public.

Subdivision 2.  Criteria; measure.  Requires Parent Aware to use quality ratings shown to be linked to improving children's school readiness outcomes and evaluate how providers perform in:  family partnership, tracking learning, teacher training and education, and teaching materials and strategies.  Requires a star rating system, with four stars being the best possible rating.

Subdivision 3.  Rated programs.  Requires the entity awarded the contract in subdivision 1 to submit a list of rated providers to the commissioner to serve as the commissioner's rating.  Makes the decision of the commissioner final.

Subdivision 4.  Evaluation.  Requires the commissioner to contract with a private organization and use private funds to evaluate the Parent Aware quality rating system.

Section 5.  Selection Process for Parent Aware Regions.

Subdivision 1.  Eligibility.  Requires a minimum of two-thirds of the school districts, two-thirds of the counties, and two-thirds of the Head Start programs in an economic development region to agree to apply as a Parent Aware Region.

Subdivision 2.  Approval criteria.  Requires that regions be selected based on the percent of preschool aged children who are from families with income at or below 47 percent of the state median income, the regions' efforts to use resources to align program quality with Parent Aware, the level of community support, and the support from local nonprofits and foundations.

Subdivision 3.  Preparation; quality.  Requires a resource and referral organization to work with the commissioner and eligible programs in their region for approval to become a Parent Aware Region.

Subdivision 4.  Region approval.  Requires the commissioner to develop an application process, requires the commissioner to use the criteria in subdivision 2 to make a decision.  Sets a timeline for all regions to begin applying and be approved.

Subdivision 5.  Parent Aware Plus Regions; commissioner approval.  Requires the commissioner to designate a Parent Aware Region as Parent Aware Plus when the region's capacity meets a minimum threshold.  Once a region is designated as a Parent Aware Plus Region, the programs in that region can begin accepting scholarships.

Section 6.  Early Childhood Education Scholarships.

Subdivision 1.  Early childhood education scholarship locations.  Reinstates the prekindergarten exploratory project areas beginning in FY 1012 and establishes new locations based on Parent Aware Plus Regions.

Subdivision 2.  Scholarship eligibility.  Establishes eligibility for early childhood education scholarships for every child aged three or four that has income equal to 47 percent of the state median income.

Subdivision 3.  Eligibility determination.

Paragraph (a).  Requires the commissioner of revenue to identify taxpayers who are eligible to receive a scholarship using criteria in subdivision 2 and the parent or legal guardian's federal adjusted income.

Paragraph (b).  Requires the commissioner of revenue to provide the commissioner of human services a list of names and addresses of taxpayers who meet the eligibility.  Outlines how the commissioner of human services will notify taxpayers and what the notification includes.

Paragraph (c).  Requires the commissioner of revenue to provide a list of names and addresses of eligible taxpayers to departments coordinating the scholarships and requires that the departments use this list to only approve the payment of early childhood education scholarships.

Paragraph (d).  Authorizes the commissioners of education and human services to accept self-declaration from parents who did not receive notification under paragraph (b).

Paragraph (e).  Authorizes the commissioner to accept children identified in other public funding eligibility processes.

Subdivision 4.  Scholarship value.  Establishes the scholarship value at $4,000 for each eligible child.

Subdivision 5.  Scholarship use.

Paragraph (a).  Requires that a scholarship be used within 13 months to pay fees or charges associated with their eligible child's education at a rated program.

Paragraph (b).  Requires a parent or legal guardian to begin using the scholarship within six months of receiving the scholarship.

Paragraph (c).  Allows a parent or legal guardian to divide a scholarship between programs and reduce the scholarship value paid to a program.  Requires the commissioner to determine a method to allow a parent or legal guardian to reduce or divide a scholarship.

Subdivision 6.  Quality standard; transition.

Paragraph (a).  Establishes that rated programs that received a 3 or 4-star rating and are located in a Parent Aware Plus Region are eligible to receive early childhood scholarships for the payment of fees.

Paragraph (b).  Permits a program that has one or two starts to receive scholarships as payment in the first two years after the program's region has become a Parent Aware Plus Region.

Subdivision 7.  Redeeming a scholarship.  Establishes a process for an eligible program to remit a scholarship to receive payment.

Subdivision 8.  Earned income calculation.  Prohibits scholarships from being counted as earned income for the purposes of other state programs.

Subdivision 9.  Agency coordination.  Requires the Departments of Revenue, Human Services, and Education to coordinate efforts to manage the scholarship program.

Section 7.  Program Requirements.  Requires a school readiness program provider to arrange for early childhood screening and referral and serve children a minimum of 12 hours per week.

Section 8.  Application and Reporting Requirements.  Changes the school readiness application process to conform with the repeal of school readiness revenue.

Section 9.  Disclosure to Commissioner of Human Services.  Requires the commissioner of revenue to disclose tax data to the Department of Human Services to implement the early childhood education scholarship.s

Section 10.  Disclosure to Commissioner of Education.  Requires the commissioner of revenue to disclose tax data to the Department of Education to implement the early childhood education scholarships.

Section 11.  Scholarship Notification.  Establishes an alternate schedule in the scholarship's first year of implementation for the Department of Revenue to report names and addresses to the lead agency of taxpayers who are eligible to receive scholarships.

Section 12.  Programmatic Streamlining.  Requires the commissioner of human services, in coordination with the commissioner of education, to report to the Legislature on a framework for incorporating the existing state programs that provide access to early learning and care programming into a single scholarship program that funds access to high-quality early learning and care programs for low-income children in Minnesota.

Section 13.  Childcare Development Funds; Parent Aware.  Requires the commissioner of human services to direct $7 million in federal child care development funds in fiscal years 2012 and 2013 for purposes of implementing Parent Aware.  Requires that $1.2 million be appropriated to the commissioner of administration to administer the Parent Aware contract.

Section 14.  Waiver Process Related to Child Care Provider Choice.  Requires the commissioner of human services to develop a simple waiver process related to section 1.

Section 15.  Appropriations.  Appropriates funds to the Department of Human Services for grants to early childhood education scholarships.

Section 16.  Repealer.  Repeals section 124D.16 (school readiness aid).

Article 2 - Tax Credits

Section 1.  Additions to Federal Taxable Income.  Requires taxpayers to add to federal taxable income any amount claimed as a charitable deduction for which the taxpayer receives an Early Childhood Education Access to Quality credit or Early Childhood Services and Facilities Improvements credit.  Effective beginning tax year 2011.

Section 2.  Corporations; Additions to Federal Taxable Income.  Requires corporate taxpayers to add to federal taxable income any amount claimed as a charitable deduction for which the corporate taxpayer receives an Early Childhood Education Access to Quality credit or Early Childhood Services and Facilities Improvement credit.  Effective beginning in tax year 2011.

Section 3.  Credit Allowed.  Reduces the kindergarten through grade 12 allowable tax credit.

Section 4.  Early Childhood Train and Retain Credit.

Subdivision 1.  Statement of intent.  As required by section 3.192, provides the purpose of the credit is to encourage and reward early childhood education professionals for furthering their education and measures the success of the credit by comparing the claimants over a period of years.

Subdivision 2.  Credit allowed. Allows a credit ranging from $500 to $3,000 for an early childhood professional who has been employed at the same qualified program for at least a year and has a requisite educational background.  For tax year 2011, the maximum aggregate credits must not exceed $500,000 and for tax year 2012, the maximum aggregate credit must not exceed $1,000,000.

Subdivision 3.  Definitions.  Defines "eligible early childhood education professional," "quality program," and "early education experience points" for purposes of the credit.

Subdivision 4.  Application for credit certificates.  Provides a process for applying for credit certificates for tax years 2011 and 2012.

Subdivision 5.  Credit refundable.  Allows the credit to be refunded to the extent it exceeds the claimant's liability for tax.

Subdivision 6.  Appropriation.  Appropriates to the commissioner of revenue an amount sufficient to pay the refunds.

Section 5.  Early Childhood Education Access to Quality Credit.

Subdivision 1.  Statement of intent.  As required by section 3.192, provides the purpose of the credit is to increase the amount of private contributions available to provide low-income children with access to high-quality early childhood education and measures the success of the credit by the total amount of contributions that are made to provide scholarships and are eligible for the credit.

Subdivision 2.  Definitions.  Defines "qualified student," "early childhood education access to quality donation," and "qualified early childhood education program" for purposes of this section.

Subdivision 3.  Credit allowed.  Allows individual and corporate taxpayers a credit equal to 75 percent of the amount donated to a qualified early childhood education program.  The maximum aggregate credits are capped at $500,000 for tax year 2011 and $1,000,000 for tax year 2012 and later. 

Subdivision 4.  Application for credit certificates.  Provides a process for applying for credit certificates for tax years 2011 and 2012.

Subdivision 5.  Responsibilities of qualified early childhood education programs.  Requires qualified early childhood education programs that receive donations to:  notify the commissioner of its intent to participate in the program; demonstrate that it meets the definition of a qualified program; provide a receipt for donations; conduct background checks on employees and board members; demonstrate financial accountability; use amounts received as donations within one year of the date of donations; and report to the commissioner on the total amount of donations received and scholarships awarded.

Subdivision 6.  Responsibilities of commissioner.  Requires the commissioner of revenue to provide a standardized format for programs to report; post on the Department's Web site the names and addresses of programs that qualify for or have been barred from the program; and conduct a financial review or audit upon finding evidence of fraud or misreporting.

Section 6.  Early Childhood Education Quality Improvement Credit.

Subdivision 1.  Statement of intent. As required by section 3.192, provides the purpose of the credit is to encourage contributions that result in improvements to the quality of programming provided by early childhood education providers and measures the success of the credit by determining the amount spent to improve programming as a result of contributions qualifying for the credit.

Subdivision 2.  Definitions.  Defines for purposes of the section, "eligible early childhood education provider" and "resource and referral agency."

Subdivision 3.  Credit allowed.  Allows an individual or corporate taxpayer an amount equal to 75 percent of the amount donated to an eligible early childhood education provider or a resource and referral agency.  Donations must be used to improve program quality consistent with the standards set forth by the quality rating and improvement system.  The maximum aggregate credits are capped at $500,000 for tax year 2011 and $1,000,000 for tax year 2012.  There is no cap for subsequent tax years.

Subdivision 4.  Application for credit certificates.  Provides a process for applying for credit certificates for tax years 2011 and 2012.

Subdivision 5.  Responsibilities of early childhood education providers and resource referral agencies.  Requires providers and referral agencies that receive contributions to:  notify the commissioner of revenue of its intent to participate in the program; demonstrate that it meets the requirements of this section; provide a receipt for donations; perform criminal background checks on employees and board members; demonstrate financial accountability; and use amount received as donations to improve program quality within one year from the date of receiving a donation.

Subdivision 6.  Responsibilities of commissioner.  Requires the commissioner of revenue to provide a standardized format for programs to report; post on the Department's Web site the names and addresses of programs that qualify for or have been barred from the program; and conduct a financial review or audit upon finding evidence of fraud or misreporting.

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