BILL ANALYSIS Ó
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 1571 HEARING: 4/25/12
AUTHOR: DeSaulnier FISCAL: Yes
VERSION: 4/18/12 TAX LEVY: No
CONSULTANT: Faulkner
VOLUNTARY CONTRIBUTION FUNDS: SCHOOL SUPPLIES
Creates the School Supplies for Homeless Children Tax
Check-off
Background and Existing Law
Existing state law allows taxpayers to contribute money to
one or more of 18 voluntary contribution funds (VCFs) by
checking a box on their state income tax return.
California law requires contributions made through
check-offs to be made from taxpayers' own resources and not
from their tax liability, as is possible on federal tax
returns. Check-off amounts may be claimed as charitable
contributions on taxpayers' tax returns during the
subsequent year.
The Franchise Tax Board (FTB) designs tax returns to
provide for the designation of contributions to specified
funds either on the return itself or on a separate schedule
that must be attached to the return. With a few
exceptions, VCFs remain on the return until they are either
repealed or fail to meet their minimum contribution amount.
The minimum contribution amounts are adjusted annually for
inflation. For most VCFs, the minimum contribution amount
is $250,000 in the fund's second year. By September 1st of
each year, the FTB must determine the minimum contribution
amount required for each fund to remain on the form for the
following calendar year and whether estimated contributions
to each fund will be less than the minimum contribution
amount for that calendar year. If the FTB estimates that a
fund will fail to meet the minimum contribution amount,
that fund is repealed the following year.
SB 608 (DeSaulnier, 2011) allows the Prison Industry
Authority to offer its products and services to a
tax-exempt nonprofit organization, provided they are given
SB 1571 -- 4/18/12 -- Page 2
to public school students at no cost and the nonprofit has
a memorandum of understanding with the local education
agency. K to College sponsored this bill.
SB 1571 -- 4/18/12 -- Page 3
Proposed Law
Senate Bill 1571 creates the School Supplies for Homeless
Children Fund. The fund will be added to the personal
income tax form when another VCF is removed and remain on
the form until January 1st of the 5th taxable year
following its first appearance or sooner if the FTB
estimates the fund will not meet the minimum contribution
amount. All monies transferred to the fund are allocated
to the FTB and Controller for reimbursement of their costs
with the balance to the State Department of Education for
distribution to K to College, a California nonprofit public
benefit corporation, to provide school supplies to homeless
children as defined by the federal McKinney-Vento Homeless
Assistance Act.
State Revenue Impact
The FTB estimates this bill will result in a revenue loss
of $20,000 each fiscal year the fund is in place.
Comments
1. Purpose of the bill . The author states, "K to College,
a non-profit corporation based in the East Bay, operates
the state's largest free school supply and dental supply
kit program for students from disadvantaged backgrounds.
Since 2010, they have distributed more than $12 million of
supplies to more than 180,000 students in 50 school
districts. Originally focused on the East Bay and San
Francisco, this fall K to College expanded their focus to
the homeless populations (as defined by the federal
McKinney Vento Homeless Assistance Act) in nine Bay Area
counties and began building the infrastructure to serve
this population throughout the state.
While the McKinney Vento Homeless Assistance Act requires
every learning education agency (LEA) to designate a
homeless liaison and some receive additional competitive
grants, few resources are for basic needs assistance. This
is especially troubling at a time when the state's
homelessness rate is on the rise, increasing 14% to 220,738
last year.
SB 1571 -- 4/18/12 -- Page 4
Producing $65-70 worth of materials for every $22 received,
K to College will be able to provide our state's most
at-risk youth with a comprehensive school supply and dental
kit that will help level the materials playing field. All
distributions of the kits are coordinated directly with
homeless liaisons and/or other appropriate LEA staff. Once
the materials are distributed, the LEA will send a
verification letter to K to College, confirming the details
of the distribution."
2. One organization . K to College is a non-profit founded
in 2008 by a group of UC Berkeley students and alumni.
According to its website, it operates the largest free
school and dental supply program for impoverished students
in California. Kits distributed by K to College are
assembled at Folsom Prison and include items such as paper,
pencils, erasers, folders, glue sticks, index cards, art
supplies, a white board, a dental hygiene kit and a tote
bag. Through a partnership with Give Something Back Office
Supplies, K to College is able to leverage a network of
manufacturers willing to produce up to a 200% in-kind match
on every dollar.
Committee Staff found other organizations that collect and
distribute donated school supplies to children in-need.
Cursory research shows K to College, operating on a
year-round basis, contributes at the highest level. It is
uncertain if there are other organizations dedicated to the
sole purpose of providing students with school supplies.
In a news release dated February 12, 2012, Santa Clara
County Superintendent Dr. Charles Weis stated: "At a time
when funding for our schools is historically low, K to
College offers a solution to a basic but critical need of
every student - the instructional materials necessary to
learn. The partnership between K to College and our school
districts ensures that important materials and benefits go
to the students who need them the most."
In general, tax check-offs do not benefit a single charity
but rather a particular need such as housing for veterans,
cancer research, or the safe surrender of babies. If SB
1571 is enacted in its current form, the Committee may wish
to consider if they are setting a precedent for an
individual charity to be the sole beneficiary of a tax
check-off.
SB 1571 -- 4/18/12 -- Page 5
3. Author's amendments . Senator DeSaulnier will take an
amendment in Committee adding a "claw back" provision to
the bill. It will include a biannual audit by the State
Department of Education ensuring that the kits are for
homeless children only, as defined by the federal
McKinney-Vento Homeless Assistance Act, that they are
distributed on a statewide basis by a 501(c) (3)
organization, that less than 2% of the funds are spent for
administrative purposes, and that 100% of the funds are
matched with corporate donations. If these requirements
are not met, the fund will be removed from the tax form the
following year.
Additionally, the Senator will take an amendment stating
the State Department of Education shall be reimbursed for
costs from the proceeds of the check-off.
4. Many worthy causes . Countless worthy causes may be
funded by tax check-offs. The current system remains
subjective and is limited to those groups that can convince
the Legislature to include them on the form. These
check-offs give the state a role in collecting money for
charity. The Committee may wish to consider whether the
state should use the tax code to encourage contributions to
certain charitable organizations or should reform the
process to administratively allow any organization an
opportunity on the tax form.
SB 1571 -- 4/18/12 -- Page 6
5. 2011 check-offs . Following is a list of 2011
check-offs and contribution amounts received in calendar
year 2011 with 2010 tax returns:
-------------------------------------------------------------
|ALS/Lou Gehrig's Disease |Initial Tax Return 2011 |
|Research Fund | |
|------------------------------+------------------------------|
|Alzheimer's Disease/Related |$462,357 |
|Disorders Fund | |
|------------------------------+------------------------------|
|Arts Council Fund |$164,298 |
|------------------------------+------------------------------|
|CA Breast Cancer Research |$459,694 |
|Fund | |
|------------------------------+------------------------------|
|CA Cancer Research Fund |$451,042 |
|------------------------------+------------------------------|
|CA Firefighters' Memorial |$157,166 |
|Fund | |
|------------------------------+------------------------------|
|CA Fund for Senior Citizens |$308,763 |
|------------------------------+------------------------------|
|CA Peace Officer Memorial |$137,782 |
|Foundation Fund | |
|------------------------------+------------------------------|
|CA Police Activities League |$69,431 |
|(CALPAL) Fund | |
|------------------------------+------------------------------|
|CA Sea Otter Fund |$359,699 |
|------------------------------+------------------------------|
|CA Seniors Special Fund |$53,813 |
|------------------------------+------------------------------|
|CA Veterans Homes Fund |$211,089 |
|------------------------------+------------------------------|
|Child Victims of Human |Initial Tax Return 2011 |
|Trafficking Fund | |
|------------------------------+------------------------------|
|Emergency Food for Families |$598,157 |
|Fund | |
|------------------------------+------------------------------|
|Municipal Shelter Spay-Neuter |Initial tax Return 2011 |
|Fund | |
|------------------------------+------------------------------|
|Rare & Endangered Species |$605,220 |
|Preservation Program | |
SB 1571 -- 4/18/12 -- Page 7
|------------------------------+------------------------------|
|Safely Surrendered Baby Fund |$184,866 |
|------------------------------+------------------------------|
|State Children's Trust for |$409,043 |
|the Prevention of Child Abuse | |
-------------------------------------------------------------
6. Similar Legislation . AB 1589 (Huffman) creates the
California State Parks Stewardship Act of 2012 as a means
of sustaining state parks and includes a provision for the
California State Parks Protection Fund. The Assembly
Revenue and Taxation Committee will hear the bill on May
7th.
In the 2011 Legislative Session, eight VCF bills were
introduced. One of the eight, SBX1 3 (LaMalfa), would have
created the Help Our State Fund for taxpayers to contribute
to the General Fund. The bill died at the Assembly Desk.
Five bills became law: SB 164 (Simitian) extended the
repeal dates of both the State Children's Trust Fund for
the Prevention of Child Abuse and the Rare and Endangered
Species Preservation Program for five years; SB 583
(Vargas) reestablished the ALS/Lou Gehrig's Disease
Research Fund; AB 564 (Smyth) reestablished the Municipal
Shelter Spay-Neuter Fund; AB 764 (Swanson) created the
Child Victims of Human Trafficking Fund; and AB 971
(Monning) reestablished the California Sea Otter Fund.
Two bills remain from the 2011 Legislative Session: SB 803
(DeSaulnier) creates the California Youth Leadership
Project and the California Youth Leadership Fund. The bill
is being held at the Assembly Desk. AB 233 (Hall) creates
the California YMCA Youth and Government Fund. The bill is
in this Committee.
Support and Opposition (4/18/12)
Support : K to College.
Opposition : Unknown.