[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5340 Introduced in House (IH)]

111th CONGRESS
  2d Session
                                H. R. 5340

 To allow a State to opt out of K-12 education grant programs and the 
 requirements of those programs, to amend the Internal Revenue Code of 
 1986 to provide a credit to taxpayers in such a State, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 19, 2010

  Mr. Garrett of New Jersey introduced the following bill; which was 
  referred to the Committee on Ways and Means, and in addition to the 
   Committee on Education and Labor, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
 To allow a State to opt out of K-12 education grant programs and the 
 requirements of those programs, to amend the Internal Revenue Code of 
 1986 to provide a credit to taxpayers in such a State, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Local Education 
Authority Returns Now Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
 TITLE I--ABILITY OF STATES TO OPT OUT OF K-12 EDUCATION GRANT PROGRAMS

Sec. 101. Determinations by Secretary of Treasury as to which States 
                            are opt-out States.
Sec. 102. Amounts creditable to States.
Sec. 103. Opt-out States not eligible to receive grants under K-12 
                            education grant programs.
Sec. 104. Requirements of K-12 education grant programs do not apply to 
                            opt-out States.
Sec. 105. Definitions.
             TITLE II--CREDIT TO TAXPAYERS IN OPT-OUT STATE

Sec. 201. Refundable opt-out State education credit.

 TITLE I--ABILITY OF STATES TO OPT OUT OF K-12 EDUCATION GRANT PROGRAMS

SEC. 101. DETERMINATIONS BY SECRETARY OF TREASURY AS TO WHICH STATES 
              ARE OPT-OUT STATES.

    (a) Deadline.--Not later than February 1 of each calendar year 
(hereinafter in this title referred to as the ``determination year''), 
the Secretary of the Treasury shall determine which States, if any, are 
opt-out States for the calendar year (hereinafter in this title 
referred to as the ``opt-out year'') that follows the determination 
year.
    (b) Determination.--The Secretary of the Treasury shall determine 
that a State is an opt-out State for an opt-out year under subsection 
(a) if, and only if, there is transmitted to the Secretary a copy of a 
law, in effect as of January 1 of the determination year, that can 
fairly be read to mean that the policy of the State is to not accept 
grant funds under the K-12 education grant programs, and thereby to not 
be bound by the requirements of those programs, for that opt-out year.
    (c) Notification.--Upon making a determination under subsection 
(a), the Secretary of the Treasury shall transmit that determination to 
the Secretary of Education and to Congress.

SEC. 102. AMOUNTS CREDITABLE TO STATES.

    (a) In General.--For purposes of determinations relating to the 
refundable opt-out State education credit under section 36B of the 
Internal Revenue Code of 1986, as early as practicable for a calendar 
year, the Secretary of Education shall, for each State, determine the 
amount creditable to that State for that calendar year and make 
available that determination.
    (b) Amount Creditable.--The Secretary shall determine the amount 
creditable to a State for a calendar year as follows:
            (1) If the State was not an opt-out State for the preceding 
        calendar year, the amount creditable for the calendar year 
        shall be equal to the aggregate K-12 funding (as determined 
        under subsection (d)) for that State for that preceding 
        calendar year.
            (2) If the State was an opt-out State for the preceding 
        calendar year, the amount creditable for the calendar year 
        shall be equal to--
                    (A) the extrapolated amount (as determined under 
                subsection (c)) for that preceding calendar year, plus
                    (B) the amount that results when the amount 
                creditable for that preceding calendar year is 
                subtracted from the extrapolated amount (as determined 
                under subsection (c)) for that preceding calendar year.
    (c) Extrapolated Amount.--
            (1) In general.--The Secretary of Education shall determine 
        the extrapolated amount for a State for a calendar year. The 
        determination shall be based on--
                    (A) the amount of grant funds that would have been 
                received other than on a competitive basis, as direct 
                grants, subgrants, or otherwise, under the K-12 
                education grant programs, by the State or any public 
                educational entity in the State for that calendar year, 
                had it elected not to be an opt-out State for that 
                calendar year; plus
                    (B) the average annual amount of all grant funds 
                that would have been received on a competitive basis, 
                as direct grants, subgrants, or otherwise, under the K-
                12 education grant programs, by the State or any public 
                educational entity in the State for that calendar year 
                and the four preceding calendar years, had it elected 
                not to be an opt-out State for those calendar years.
            (2) Regulations.--The Secretary shall prescribe regulations 
        for making determinations required by this subsection. The 
        initial regulations shall be prescribed not later than 6 months 
        after the date of the enactment of this Act.
    (d) Aggregate K-12 Funding.--The aggregate K-12 funding for a State 
for a calendar year shall be equal to--
            (1) the amount of all grant funds received other than on a 
        competitive basis, as direct grants, subgrants, or otherwise, 
        under the K-12 education grant programs, by the State or any 
        public educational entity in the State for that calendar year; 
        plus
            (2) the average annual amount of all grant funds received 
        on a competitive basis, as direct grants, subgrants, or 
        otherwise, under the K-12 education grant programs, by the 
        State or any public educational entity in the State for that 
        calendar year and the four preceding calendar years.

SEC. 103. OPT-OUT STATES NOT ELIGIBLE TO RECEIVE GRANTS UNDER K-12 
              EDUCATION GRANT PROGRAMS.

    (a) In General.--When a State is an opt-out State for a calendar 
year, neither the State nor any public educational entity in the State 
is eligible to receive, as direct grants, subgrants, or otherwise, any 
funds under any of the K-12 education grant programs for that calendar 
year.
    (b) Reallocation.--Any funds under a K-12 education grant program 
that are not allocated to a State or public educational entity in the 
State by reason of subsection (a) shall be returned to the Treasury.

SEC. 104. REQUIREMENTS OF K-12 EDUCATION GRANT PROGRAMS DO NOT APPLY TO 
              OPT-OUT STATES.

    When a State is an opt-out State for a calendar year, neither the 
State nor any public educational entity in the State is subject to any 
statutory or regulatory requirement of a K-12 education grant program 
for that calendar year.

SEC. 105. DEFINITIONS.

    In this title:
            (1) The term ``K-12 education grant program'' means any 
        grant program carried out under any title of the Elementary and 
        Secondary Education Act of 1965, except for the following:
                    (A) Indian, native hawaiian, and alaska native 
                education.--Title VII (20 U.S.C. 7401 et seq.).
                    (B) Impact aid.--Title VIII (20 U.S.C. 7701 et 
                seq.).
            (2) The term ``public educational entity'' means, with 
        respect to a State, the State educational agency, any local 
        educational agency in the State, or any public elementary or 
        secondary school in the State.

             TITLE II--CREDIT TO TAXPAYERS IN OPT-OUT STATE

SEC. 201. REFUNDABLE OPT-OUT STATE EDUCATION CREDIT.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable credits) 
is amended by inserting after section 36A the following new section:

``SEC. 36B. OPT-OUT STATE EDUCATION CREDIT.

    ``(a) General Rule.--In the case of an eligible individual, there 
shall be allowed as a credit against the tax imposed by this chapter 
for the taxable year the opt-out State education amount.
    ``(b) Opt-Out State Education Amount.--For purposes of this 
section--
            ``(1) In general.--The term `opt-out State education 
        amount' means, with respect to a taxpayer for a taxable year 
        beginning in an opt-out year, the amount equal to--
                    ``(A) the amount creditable under section 102 of 
                the Local Education Authority Returns Now Act to an 
                opt-out State (determined under section 101 of such 
                Act), multiplied by--
                    ``(B) a fraction--
                            ``(i) the numerator of which is the 
                        taxpayer's household tax burden from such State 
                        for the opt-out year, and
                            ``(ii) the denominator of which is the 
                        total tax revenue of such State for the opt-out 
                        year.
            ``(2) Household tax burden.--The household tax burden from 
        a State for an opt-out year is the sum of--
                    ``(A) the State real property taxes,
                    ``(B) the State personal property taxes,
                    ``(C) the State income, war profits, and excess 
                profits taxes, plus
                    ``(D) the State general sales taxes,
        for the calendar year in which the second preceding taxable 
        year ends and within which paid or accrued by the taxpayer. For 
        purposes of this section, terms used in the preceding sentence 
        which are also used in section 164 shall have the respective 
        meanings given such terms by section 164.
            ``(3) Total tax revenue.--The total tax revenue of a State 
        for an opt-out year is the amount determined by the Secretary 
        to be the aggregate tax revenue of such State for the calendar 
        year in which the second preceding taxable year ends.
    ``(c) Eligible Individual.--For purposes of this section--
            ``(1) In general.--The term `eligible individual' means an 
        individual whose principal place of abode (within the meaning 
        of section 121) was in the opt-out State for the entire taxable 
        year.
            ``(2) Dependents.--The term `eligible individual' does not 
        include any individual if a deduction under section 151 with 
        respect to such individual is allowed to another taxpayer for a 
        taxable year beginning in the calendar year in which such 
        individual's taxable year begins.
    ``(d) Opt-Out Year.--The term `opt-out year' means a calendar year 
for which the Secretary determines a State to be an opt-out State under 
section 101 of the Local Education Authority Returns Now Act.
    ``(e) Amount of Credit Shall Be Determined Under Tables.--
            ``(1) In general.--The credit under subsection (a) shall be 
        determined under tables prescribed by the Secretary.
            ``(2) Requirements for tables.--The tables prescribed under 
        paragraph (1) shall--
                    ``(A) reflect the provisions of this section, and
                    ``(B) take into account filing status, State of 
                residence, and adjusted gross income.''.
    (b) Conforming Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting ``36B,'' after ``36A,''.
            (2) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of the Internal Revenue Code of 1986 
        is amended by inserting after the item relating to section 36A 
        the following new item:

``Sec. 36B. Opt-out State education credit.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.
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