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H 3420

Providing Academic Choice in Education (PACE)

2025-2026 Regular Session Introduced by Steven Long and 1 co-sponsor

The bill authorizes a state income tax credit for donations to nonprofit scholarship funding organizations that fund tuition or curriculum grants for eligible SC students attending

Referred to Committee on Ways and Means
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Bill Summary · H 3420

Summary — H 3420: Providing Academic Choice in Education (PACE)

Status: Referred to Committee on Ways and Means (introduced Feb 27, 2025)
(Committee hearing held 04/09/2025; reporting date extended to 12/03/2025)

Note: The materials supplied include a truncated full text. This summary focuses on the South Carolina PACE provisions (addition of S.C. Code §12-6-3791). Some implementation details (credit percentage, annual caps, exact claim mechanics) are not present in the provided text.

Purpose

Establish an individual and/or entity state income tax credit for donations to nonprofit Scholarship Funding Organizations (SFOs) that provide tuition or curriculum grants enabling eligible South Carolina students to attend qualifying independent (including religious) schools or to support home schooling. The bill also repeals the existing educational credit for the Exceptional Needs Children’s Fund (S.C. Code §12-6-3790).

Key provisions

  • Adds S.C. Code §12-6-3791 to authorize an income tax credit for contributions to certified nonprofit scholarship funding organizations.
  • Creates detailed definitions for:
    • Eligible School (private/independent, non‑discriminatory, located in SC, curriculum aligned with state diploma requirements and accredited or a member of specified associations).
    • Eligible students: “exceptional needs” children, “disadvantaged” children (free/reduced lunch + Medicaid-eligible families), and “PACE Scholarship children” (students transferring from or eligible for public school; certain waivers for students assigned to low-performing schools or victims of documented school-based violence).
    • Home school and home school curriculum fees.
    • Nonprofit scholarship funding organization (must be 501(c)(3), allocate ≥95% of annual contributions to grants, limit administrative costs to ≤5%, restrictions to prevent favoritism toward a single school, conflict-of-interest and felony-disqualification rules for staff/board, donor/student privacy protections).
  • Specifies that SFO grant funds must be used for tuition, curriculum fees, or related school expenses and that grants must be directed to qualifying student groups.
  • Authorizes the State Treasurer and Department of Revenue to enforce program provisions and monitor compliance.
  • Requires certain program and organizational information to be made public (transparency provisions referenced).

Who is affected

  • Donors: Individuals or entities who make qualifying contributions and may receive state tax credits (details on credit amount/caps not provided).
  • Nonprofit SFOs: Must meet strict operating and reporting requirements to certify and receive contributions eligible for the credit.
  • Private/independent schools and home-school families: Potential new source of tuition/curriculum funding for qualifying students.
  • Public school districts: Possible enrollment and funding impacts if students transfer out.
  • State fiscal authorities: Potential reduction in income tax revenue and administrative/oversight responsibilities for Treasurer and DOR.

Process, oversight, and enforcement

  • State Treasurer and Department of Revenue tasked with enforcing eligibility and monitoring SFOs.
  • SFOs must maintain allocation and administrative caps; the Treasurer may disallow credits if an SFO improperly benefits a single school or violates rules.
  • Public reporting and transparency requirements are included (specific report content not fully shown in the truncated text).

Fiscal and policy implications

  • Likely reduces state income tax revenue (magnitude depends on credit rate, per-donor caps, and program cap, none of which are specified in the provided excerpt).
  • Seeks to direct private funds to expand school choice for low-income, special needs, and students from identified low-performing schools.
  • Introduces compliance and oversight burdens for state agencies to certify SFOs, monitor allocations, and enforce prohibitions on conflicts and privacy violations.

Procedural timeline (selected)

  • Prefiled: 12/05/2024
  • Introduced / Referred to Ways and Means: 01/14/2025 and 02/27/2025 (documents show both dates)
  • Hearing: 04/09/2025
  • Reporting date extended to 12/03/2025

Important caveat

The provided bill text is truncated and omits key operational details—most importantly the credit rate, annual and per-donor caps, application process for credits, required reporting formats, and other implementation specifics. These items are essential for fully assessing fiscal impacts and operational feasibility and should be reviewed in the complete bill text.

Compiled from official sources — confirm details with the bill’s official record.

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