BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                          SB 803 (DeSaulnier)
          
          Hearing Date: 05/26/2011        Amended: 05/04/2011
          Consultant: Mark McKenzie       Policy Vote: G&F 7-2
          _________________________________________________________________
          ____
          BILL SUMMARY: SB 803 would establish the California Youth 
          Leadership Project under the State Department of Education and 
          create a new scholarship program to support youth who 
          participate in civic engagement programs that meet specified 
          criteria.  This bill would also establish the California Youth 
          Leadership Project Fund tax-checkoff program for up to five 
          years to allow taxpayers to designate contributions to the fund 
          on their income tax returns to support the scholarship program
          _________________________________________________________________
          ____
                            Fiscal Impact (in thousands)

           Major Provisions         2011-12      2012-13       2013-14     Fund
           CDE: program administration                   $50       
          $50General
                                            $25         $25       Special*
          Taxpayer donations (revenue)                  ($250)    
          ($250)Special*
          Tax revenue loss                  $16         $16       General
          FTB administration     minor annual administrative costs, 
          General
                                   reimbursed from donations
          Scholarship program    future cost pressures of $250-$300 
          afterGeneral
                                   the repeal of the tax checkoff 
          provisions
          __________
          * California Youth Leadership Project Fund 
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          ____

          STAFF COMMENTS:  SUSPENSE FILE. 

           Tax check-off program
           Currently, there are 15 "check-off" programs on the personal 
          income tax return which allow taxpayers to donate their own 
          funds for various purposes.  Generally, each tax check-off 








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          program has a specific sunset date and an initial contribution 
          limit of $250,000, adjusted annually for inflation, with 
          specified exceptions.  Donations to check-off programs are 
          deductable as charitable contributions on taxpayers' tax returns 
          during the subsequent tax year.

          SB 803 would establish the California Youth Leadership Fund 
          check-off program that would be added to income tax forms when 
          the Franchise Tax Board (FTB) removes an existing voluntary 
          contribution program or determines space is available on the 
          form.  The designation would appear on tax forms for five years 
          unless contributions do not meet the minimum threshold of 
          $250,000 per year, adjusted for inflation, in which case the 
          check-off program would be repealed.  Donated funds would be 
          allocated, upon appropriation by the Legislature, to the State 
          Controller and FTB for administering these provisions, and to 
          the State Department of Education (CDE) to provide for the 
          California Youth Leadership Project.

          Assuming the check-off appears on the 2011 tax return and the 
          minimum donation amount of $250,000 is achieved, the estimated 
          tax revenue loss would be about $15,625 annually (applying the 
          average marginal tax rate of 6.25%), beginning in 2012-13, 
          because contributions would be claimed as an itemized deduction 
          in the following tax year.  Costs for FTB to administer the 
          program are minor and reimbursed from donated amounts.
           
          California Youth Leadership Project
           SB 803 would establish the California Youth Leadership Project 
          (CYLP) under the CDE to award scholarships to youth who 
          participate in civic engagement programs that meet specified 
          criteria.  The CYLP would be overseen by a CYLP Committee, which 
          is chaired by the Superintendent of Public Instruction (SPI) and 
          comprised of no more than six members, as specified.  The 
          Committee would, either on its own or through an interagency 
          agreement with CDE, carry out the following administrative 
          duties: develop and provide scholarship applications, promote 
          the program, establish selection criteria, establish a meeting 
          schedule, and submit an annual report to CDE.  SB 803 authorizes 
          the CYLP to accept gifts and grants from any source, public or 
          private, to help perform its functions.  However, the bill also 
          prohibits the use of state funds to support the CYLP, except for 
          those provided under the tax checkoff program.  If the CYLP 
          Committee determines that there are insufficient funds to cover 








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          all costs of the program, all CYLP activities would cease.

          SB 803 specifies that up to 10 percent of all funds available to 
          the CYLP Committee may be used for administrative purposes, but 
          it is unlikely that $25,000 would be sufficient to fully support 
          the program's administration (assuming the minimum taxpayer 
          donation amount of $250,000 is achieved).  It is unclear whether 
          the administrative duties would fall to the Committee or to CDE, 
          pursuant to a future interagency agreement.  Staff estimates 
          that total costs to administer the scholarship program would 
          likely exceed $50,000 annually.  To the extent that insufficient 
          funds are generated to cover the full administrative costs of 
          the program, the bill would create cost pressures.  Furthermore, 
          the bill would create additional cost pressures of $250,000 to 
          $300,000 annually to fund the scholarship program after the tax 
          checkoff program is repealed (either for failure to meet minimum 
          donation thresholds or expiration of the five-year checkoff 
          program) since the provisions related to the CYLP would remain 
          in statute following the repeal of the funding source.  Staff 
          recommends that the bill be amended to sunset the CYLP 
          provisions (Section 2 of the bill) on January 1, 2018.