SB 400 - This act creates the Challenge Scholarship, a reimbursement for post-secondary education expenses claimed on Missouri state individual income tax returns by an eligible student of at least twenty-four years of age or on behalf of any eligible student who has completed credit hours in a public or private postsecondary education institution approved by the Coordinating Board for Higher Education.

To be eligible for a scholarship, a student must be enrolled in an eligible institution and must be in compliance with the eligibility requirements of the Missouri Student Financial Assistance Program, excluding the requirements of full-time enrollment and financial need, and must also meet additional requirements specified in the act.

The amount of the Challenge Scholarship shall be the difference of the actual cost of tuition, books and fees for the allowed credit hours (not to exceed five thousand dollars) less all other student financial aid which may be used for those costs multiplied by a fraction based upon the income of the claimant as shown in the following table:

If the claimant's Missouri The scholarship

adjusted gross income is: fraction shall be:

Under $25,000 100%

$25,000 to $35,000 90%

$35,001 to $45,000 80%

$45,001 to $55,000 70%

$55,001 to $65,000 60%

$65,001 to $75,000 .50%

$75,001 to $85,000 40%

$85,001 to $95,000 30%

$95,001 to $105,000 . 20%

Over $105,000 10%

.The scholarship amount determined using the fraction listed above shall be prorated at one-third for calendar year 1998, two-thirds for calendar year 1999 and at full funding for calendar year 2000 and thereafter.

Students who participate in the A+ Schools program may use the Challenge Scholarship for the sixty credit hours following the exhaustion of financial benefits under the A+ schools program. No other student may claim Challenge Scholarship reimbursement for credit hours earned after earning sixty credit hours after high school graduation.

Every eligible institution shall furnish, to each eligible student enrolled at the institution, a written statement showing the credit hours completed by that student for the calendar year and the age of the student. Claims for the Challenge Scholarship shall be filed with the Missouri income tax return filed by the claimant no later than December thirty-first of the succeeding year.

The Coordinating Board shall provide to the Director of Revenue a list of eligible institutions of postsecondary education. The Director of Revenue shall also provide annually to the Coordinating Board a report showing how many eligible students claimed a Challenge Scholarship, the dollar amount of such scholarships and other information requested by the Coordinating Board. The Coordinating Board, in conjunction with the Director of Revenue, shall prescribe such rules and regulations as are necessary to carry out the provisions of this act.

Challenge scholarship claims may only be filed for the calendar years beginning on or after January 1, 1998.

Fraudulent claims for Challenge Scholarships shall be subject to the same penalties and under the same conditions as are provided by sections 143.911 to 143.951, RSMo, relating to fraudulent claims for income taxes. Any repayment of a fraudulent Challenge Scholarship claim shall include full repayment plus interest. No Challenge Scholarship may be sold or assigned to a third party.

This act is similar to SB 287 from 1997.

The act contains penalty provisions relating to fraudulent scholarship claims.

OTTO FAJEN