65100.

 This chapter shall be known, and may be cited, as the Cal Grant K–12.

65101.

 For purposes of this chapter, all of the following definitions apply:

(a) “Account” means a parent-directed education scholarship account established pursuant to this chapter that is composed of scholarship funds deposited by the scholarship-granting organization on behalf of a participating pupil and that may be used for qualified education expenses.

(b) “Account funds” means the funds awarded on behalf of a participating pupil.

(c) “Curriculum” means a complete course of study for a content area or grade level.

(d) “Education service provider” means a person or organization who provides qualified education services pursuant to this chapter and is not a participating school.

(e) “Eligible pupil” means a pupil who is in kindergarten or any of grades 1 to 12, inclusive, and is a resident of the state.

(f) “Parent” means a resident of the state who is a parent, guardian, custodian, or other person authorized to act on behalf of the pupil.

(g) “Participating pupil” means a pupil who receives an account pursuant to this chapter.

(h) “Participating school” means a private school that provides education to pupils in kindergarten or any of grades 1 to 12, inclusive, and has notified the scholarship-granting organization of its intent to participate in the program and comply with the program’s requirements.

(i) “Postsecondary educational institution” means the California Community Colleges, the California State University, the University of California, an independent institution of higher education, as defined in Section 66010, or a private postsecondary educational institution, as defined in Section 94858.

(j) “Private tutoring” means tutoring services provided by a tutoring facility or a tutor who is any of the following:

(1) A teacher licensed in any state.

(2) A person who has taught at a postsecondary educational institution.

(3) A person who is a subject matter expert.

(4) A person who is otherwise approved by the department.

(k) “Program” means the Cal Grant K–12 established in Section 65102.

(l) “Qualified education expenses” means expenses prescribed in subdivision (d) of Section 65104.

(m) “Scholarship-granting organization” means the nonprofit organization designated by the California Department of Tax and Fee Administration pursuant to subdivision (b) of Section 65102 to receive donations and distribute scholarship funds to participating pupil accounts.

(n) “School year” means from July 1 of a year to June 30 of the following year, inclusive.

65102.

 (a) The Cal Grant K–12 is hereby established under the administration of the scholarship-granting organization for purposes of receiving donations and granting scholarships to eligible pupils to be used for qualified educational expenses.

(b) The California Department of Tax and Fee Administration shall, in consultation with the Student Aid Commission, competitively select a nonprofit organization that is an exempt organization under Section 501(c)(3) of the Internal Revenue Code to serve as the scholarship-granting organization for purposes of this chapter.

(c) The scholarship-granting organization may receive donations from individuals and corporations for purposes of the program and may use up to 8 percent of the received donations to cover the costs of overseeing the accounts and administering the program.

65103.

 The scholarship-granting organization shall do all of the following:

(a) Establish and publicize an application window of no less than six months’ duration in which parents can apply for scholarships under the program.

(b) Create a standard form that parents can submit to enroll their child in the program, and ensure that the application is publicly available and may be submitted through various sources, including through an internet website.

(c) Require that each parent provide on their application proof of meeting any eligibility requirement or condition for priority under this chapter.

(d) Select participating pupils and provide scholarships in accordance with subdivision (a) of Section 65104.

65104.

 (a) In accordance with the following, the scholarship-granting organization shall use its discretion to allocate periodic scholarship payments totaling not more than seven thousand five hundred dollars ($7,500) and not less than three thousand seven hundred fifty dollars ($3,750) each school year into the account of a participating pupil:

(1) A pupil who provides proof of acceptance at a participating school and who meets the income eligibility criteria for priority described in paragraph (1) of subdivision (b) is eligible to receive up to the full amount of seven thousand five hundred dollars ($7,500) per school year.

(2) A pupil who provides proof of acceptance at a participating school and who does not meet the income eligibility criteria for priority described in paragraph (1) of subdivision (b) is eligible to receive no more than six thousand seven hundred fifty dollars ($6,750) per school year.

(3) Notwithstanding paragraphs (1) and (2), if a pupil states on their application that they intend to remain enrolled in a school district, county office of education, or charter school, the pupil is eligible to receive no more than five thousand two hundred fifty dollars ($5,250) and no less than three thousand seven hundred fifty dollars ($3,750) for the pupil to use on approved supplemental services, as described in subdivision (d). The pupil reserves the right to reapply for a full scholarship to use at a participating school in the next school year.

(4) For purposes of continuity of educational choice, to the extent funds are available, the scholarship payments made under this subdivision shall be renewed each school year until a participating pupil no longer meets the eligibility requirements for the scholarship payment, graduates from high school, or attains 22 years of age, whichever occurs first.

(5) Funds shall be distributed to accounts on a quarterly basis.

(b) If applications to the program exceed available funds, the scholarship-granting organization shall prioritize eligible pupils according to the following criteria:

(1) First priority shall be given to eligible pupils who live at or below 300 percent of the federal poverty level.

(2) Once the scholarship-granting organization has granted scholarships to all eligible pupils who meet the requirements of paragraph (1), remaining scholarships shall be awarded to otherwise eligible pupils in the order in which applications were received.

(c) (1) Account funds may only be used for qualified education expenses. Any refund or rebate for goods or services purchased with a participating pupil’s account funds shall be credited directly to the participating pupil’s account.

(2) A parent may pay for the costs of qualified education expenses and other educational programs and services not covered by funds in their participating pupil’s account. Personal deposits into an account are prohibited.

(3) Funds received pursuant to this chapter do not constitute taxable income of the participating pupil or the parent of the participating pupil pursuant to Section 17131.15 of the Revenue and Taxation Code.

(4) Account funds saved over the course of an entire school year are eligible to roll over to the following school year. If a parent removes their pupil from the program before the end of a school year, any remaining account funds from that school year shall return to the scholarship-granting organization to provide additional scholarships.

(5) Accounts shall remain active and account funds usable until any of the following occur:

(A) Account funds are revoked by the scholarship-granting organization for misuse.

(B) A pupil graduates from high school or attains 22 years of age, whichever occurs first.

(C) After two consecutive school years of account inactivity.

(d) Parents participating in the program shall agree to only use the funds deposited in their participating pupil’s account for any of the following qualified education expenses:

(1) Tuition, fees, and required textbooks and uniforms at a participating school.

(2) Private tutoring.

(3) 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.

(4) Educational services and therapies for pupils who are individuals with exceptional needs from a licensed or accredited practitioner or provider, including, but not limited to, occupational, behavioral, physical, and speech-language therapies, and telehealth.

(5) Computer hardware, software, or other technological devices, including those that provide internet connectivity, that are used solely for a pupil’s educational needs and approved by the scholarship-granting organization or a licensed physician.

(6) Tuition and fees for a nonpublic online learning course or program, approved by the scholarship-granting organization.

(7) Fees for national norm-referenced examinations, Advanced Placement examinations, or similar examinations, fees associated with state-recognized industry certification exams, and any other examinations related to college or university admission.

(8) Tuition, fees, and instructional materials at a career technical education provider.

(9) Contracted educational services provided at a school district, county office of education, or charter school.

(10) Fees for transportation paid to a fee-for-service transportation provider for the participating pupil to travel to and from a participating school or education service provider, but not to exceed one thousand dollars ($1,000) per school year.

(11) Tuition or fees for summer education programs and specialized after school education programs.

(12)  Any other valid education expense approved by the scholarship-granting organization, including other approved supplemental services.

65105.

 (a) The scholarship-granting organization shall do all of the following:

(1) Maintain an up-to-date list of participating schools, services, and providers and ensure that the list is publicly available through various sources, including on an internet website.

(2) Ensure that eligible pupils and their parents are informed annually of their ability to participate in the program. Special attention shall be paid to ensuring that families eligible for priority under paragraph (1) of subdivision (b) of Section 65104 are made aware of the program and their options. Special attention shall also be paid to informing parents of their eligibility in their native language, to the extent feasible.

(3) Provide parents of participating pupils with a written explanation of the allowable uses of the pupil accounts, information on selecting education service providers, the responsibilities of parents under this chapter, the role of any private organizations that the scholarship-granting organization may contract with to administer the program, and the duties of the scholarship-granting organization.

(4) Compare the list of participating pupils in the program with public school enrollment lists before each program payment to avoid duplicate payments to participating schools.

(b) The scholarship-granting organization may bar a participating school or education service provider from the program if the scholarship-granting organization establishes that the participating school or education service provider has done either of the following:

(1) Routinely failed to comply with requirements and accountability standards established in this chapter.

(2) Failed to provide a participating pupil with the educational services paid for from the pupil’s account.

(c) The scholarship-granting organization shall develop a system for parents to direct account funds to participating schools and education service providers by electronic funds transfer, automated clearing house transfer, or another system that the scholarship-granting organization finds to be commercially viable, cost-effective, and easy for parents of participating pupils to use. The scholarship-granting organization shall not adopt a system that relies solely on reimbursing parents for out-of-pocket expenses, but may determine certain qualified education expenses that require reimbursement or preapproval for purchase.

(d) The scholarship-granting organization shall demonstrate financial accountability by doing both of the following:

(1) Annually submitting to the California Department of Tax and Fee Administration a financial information report for the organization that complies with uniform financial accounting standards established by the California Department of Tax and Fee Administration and conducted by a certified public accountant.

(2) Provide to the California Department of Tax and Fee Administration a report on the results of an annual financial audit of the organization or its relevant accounts and records pertaining to tax-credit eligible donations conducted by an independent certified public accountant in accordance with auditing standards generally accepted in the United States, government auditing standards, and rules promulgated by the California Department of Tax and Fee Administration.

65106.

 (a) In order to ensure that participating pupils are treated fairly and kept safe, a participating school shall do all of the following:

(1) Comply with all health and safety laws that apply to private schools.

(2) Hold a valid occupancy permit if required by its city or county.

(3) Certify to the scholarship-granting organization that it complies with the nondiscrimination policies set forth in Section 1981 of Title 42 of the United States Code.

(4) Submit a notice to the scholarship-granting organization that it wishes to participate in the program.

(5) Conduct criminal background checks on its employees and do both of the following:

(A) Exclude from employment any person not permitted by state law to work in a nonpublic school.

(B) Exclude from employment any person that might reasonably pose a threat to the safety of pupils.

(b) To ensure that account funds under this chapter are expended appropriately, a participating school and an education service provider shall do all of the following:

(1) Provide parents with a receipt for all qualifying expenses at the participating school or from the education service provider.

(2) Demonstrate its financial viability to the scholarship-granting organization by its ability to repay any funds that might be provided from pupil accounts, if it is to receive fifty thousand dollars ($50,000) or more during the school year, by doing both of the following:

(A) Filing with the scholarship-granting organization before the start of the school year a surety bond payable to the state in an amount equal to the aggregate amount of the funds from pupil accounts expected to be paid during the school year from participating pupils admitted to the participating school or for services contracted by participating pupils from an education service provider.

(B) Filing with the scholarship-granting organization before the start of the school year financial information that demonstrates the school or the education service provider can pay an aggregate amount equal to the amount of the funds from pupil accounts expected to be paid during the school year on behalf of pupils admitted to the participating school or for services contracted for from an education service provider.

65107.

 (a) It is the intent of the Legislature to impose testing requirements in order to allow parents and taxpayers to measure the achievements of the program.

(b) In grades that require testing under the state’s accountability testing laws for public schools, all participating pupils shall take either the state achievement tests or nationally norm-referenced tests identified by the scholarship-granting organization that measure learning gains in mathematics and English language arts, and provide for value-added assessment. Pupils who are individuals with exceptional needs and for whom standardized testing is not appropriate, as determined in the pupil’s individualized education program or by a physician licensed in the state, are exempt from this requirement. The results of these tests shall be provided on an annual basis by the participating school to the scholarship-granting organization or an organization chosen by the department. The scholarship granting organization or an organization chosen by the department shall annually report the test results to the department in a manner that is not personally identifiable and would allow the department to aggregate data by grade level, gender, family income level, and race. The scholarship-granting organization or the organization chosen by the department shall be informed of a participating pupil’s graduation from high school by the participating school.

(c) For participating pupils not enrolled in participating schools, the scholarship-granting organization shall create a process for pupils to be administered an applicable exam and to have the results reported in accordance with subdivision (b).