BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair


          SB 1571 (DeSaulnier) - Income tax checkoff: School Supplies for 
          Homeless Children Fund.
          
          Amended: May 1, 2012            Policy Vote: G&F 5-1
          Urgency: No                     Mandate: No
          Hearing Date: May 21, 2012      Consultant: Mark McKenzie
          
          This bill does not meet the criteria for referral to the 
          Suspense File. 
          SB 1571 FAILED PASSAGE on May 14, 2012 on a vote of 2-3,  
          RECONSIDERATION granted, 7-0.
          
          Bill Summary: SB 1571 would establish the School Supplies for 
          Homeless Children Fund as a voluntary contribution fund (VCF) on 
          the personal income tax form when another VCF is removed.

          Fiscal Impact: 
              Annual estimated tax revenue loss of approximately $15,000 
              to $20,000 (General Fund) for up to five years beginning in 
              2013-14. (see staff comments)

              Estimated Department of Education (CDE) staffing costs of 
              approximately $100,000 in 2013-14 to establish the grant 
              program.  Ongoing CDE administrative costs of approximately 
              $50,000 annually for up to four additional years.  All costs 
              to CDE are covered by taxpayer contributions deposited into 
              the School Supplies for Homeless Children Fund.

          Background: Existing law allows taxpayers to make voluntary 
          contributions of their own funds to one or more of the 18 VCFs 
          currently on the personal income tax return.  As charitable 
          contributions, the taxpayer may deduct the amount donated to VCF 
          "checkoff" programs on the subsequent year's tax return.  All 
          but one of the existing VCFs has a sunset date and most require 
          a minimum annual contribution amount of $250,000, adjusted 
          annually for inflation, to ensure that a program has sufficient 
          public support to warrant continued placement on the tax return.

          Proposed Law: SB 1571 would establish the School Supplies for 
          Homeless Children Fund when another VCF is removed from the 
          income tax return.  The fund would stay on the tax return for 
          five years, but would be repealed earlier if the checkoff does 








          SB 1571 (DeSaulnier)
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          not maintain the minimum contribution amount of $250,000, 
          adjusted for inflation, for each year after the second year that 
          the checkoff appears on the tax return.  Revenues generated by 
          the checkoff would be allocated, upon appropriation by the 
          Legislature, to FTB, the Controller, and CDE to cover 
          administrative costs, and to CDE for allocation to tax-exempt 
          nonprofit organizations that provide school supplies and 
          health-related products to homeless children, as specified.

          The bill would authorize CDE to develop a grant process to 
          administer the distribution of available funds, and would 
          require grant applicants to: (1) match grant funds with 100 
          percent in-kind corporate donations; (2) distribute the school 
          supplies and health-related products on a statewide basis; and 
          (3) spend less than two percent of the grant funds for 
          administrative purposes.

          Staff Comments:  Using an average marginal tax rate of 6 
          percent, the revenue loss associated with taxpayer deductions of 
          $250,000 would be approximately $15,000.  FTB estimates a 
          revenue loss of approximately $20,000, which is based upon the 
          average contribution level of $330,000 for all VCFs for the 2009 
          taxable year.  Actual losses would depend upon the total amount 
          contributed to the School Supplies for Homeless Children Fund, 
          and whether taxpayers claim the contributions as deductions.

          CDE indicates that it could incur annual costs in the range of 
          $100,000 to $150,000 to establish and administer the grant 
          program.  Staff estimates, however, that although initial costs 
          to establish the program could be in the range of $100,000, 
          ongoing administrative costs are likely to be relatively minor, 
          perhaps in the range of $50,000 annually.  Staff notes that all 
          CDE costs are covered by the voluntary contributions to the 
          School Supplies for Homeless Children Fund.