Provides a tax credit for a service paid by a parent of a child with special needs who would have received that service from the State pursuant to the Felix v. Cayetano consent decree.

A BILL FOR AN ACT

SECTION 1. The legislature finds that the federal consent decree issued as a result of Felix v. Cayetano will cost the State an estimated $350,000,000 for fiscal year 2001-2002, which represents approximately one-fourth of the Department of Education's total budget of $1,200,000,000.

As a result of this overwhelming financial burden and other systemic demands upon the public school system, many of our students are doing without well-maintained classrooms and updated textbooks. Over-burdened teachers are dealing with tremendous amounts of paperwork instead of a much-deserved pay raise.

This Act is intended to recognize the tremendous costs of the current compliance system for the Felix consent decree administered by the departments of education, health, human services, and the attorney general that provide individualized education plans, individualized family service plans, individualized transition plans, and modification plans. These services cost in excess of $30,000 annually per Felix student, family, or both.

While the State recognizes the strong educational needs of students with mental and physical health concerns, the current compliance system for the Felix consent decree places a substantial burden on teachers and administrators. It forces the public school system to spend an inordinate amount of time and a disproportionate share of resources away from students with regular needs. The legislature finds that we need to achieve balance.

The purpose of this Act is to provide an alternative to the present compliance system for Felix consent decree families by providing tax credits that they may use as they best see fit, including seeking educational services at the private school of their choice.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235- Felix education income tax credit. (a) There shall be allowed to each eligible taxpayer subject to the taxes imposed by this chapter, a Felix education income tax credit which shall be applied against the eligible taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the tax credit is properly claimed.

The amount of the Felix education income tax credit shall be determined by a weighted system that shall apply to every eligible taxpayer for special education services rendered to the taxpayer's child who would have received such services from the State; provided that the total tax credit allowed to a taxpayer shall not exceed $       for any taxable year the tax credit is claimed.

(b) Filing of the tax credit by the taxpayer shall absolve the State from any legal duty or obligation owed to the taxpayer or the taxpayer's child with respect to the Felix v. Cayetano consent decree for the period the taxpayer or the taxpayer's child is outside the Felix/Hawaii public school system. By filing, the taxpayer waives any and all claims the taxpayer has or would have had against the State with respect to the Felix v. Cayetano consent decree during the period the taxpayer or the taxpayer's child is outside the Felix/Hawaii public school system.

(c) If a taxpayer's child leaves the Hawaii public school system after the taxpayer claims the tax credit provided under this section, the taxpayer's child may return to the Hawaii public school system the school year following the year in which the tax credit is claimed.

(d) For the purposes of this section:

"Eligible taxpayer" means:

"Felix education services" means services rendered by the State pursuant to the consent decree under the Felix v. Cayetano (Civil No. 93-00367), as amended.

"Net income tax liability" means net income tax liability reduced by all other credits allowed under this chapter.

(e) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of credits over liability shall be refunded to the taxpayer; provided that no refunds or payment on account of the tax credits allowed by this section shall be made for amounts less than $1. All claims, including any amended claims, for tax credits under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(f) The director of taxation may:

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval and shall apply to taxable years beginning after December 31, 2000.