BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 1571
                                                                  Page  1

          Date of Hearing:   August 8, 2012

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                  SB 1571 (DeSaulnier) - As Amended:  May 25, 2012 

          Policy Committee:                             Revenue and 
          Taxation     Vote:                            6-0

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:              

           SUMMARY  

          This bill authorizes the addition of the School Supplies for 
          Homeless Children Fund check-off to the personal income tax 
          (PIT) form upon the removal of another voluntary contribution 
          fund (VCF) from the form.  Specifically, this bill:   

          1)Provides that all money transferred to the School Supplies for 
            Homeless Children Fund, upon appropriation by the Legislature, 
            shall be used for the following purposes:

             a)   To the Franchise Tax Board (FTB), the State Controller, 
               and the State Department of Education (CDE) for 
               reimbursement of all costs incurred in administering the 
               check-off., 

             b)   To the CDE, for distribution of grants to school 
               districts for assisting pupils in California under the 
               federal McKinney-Vento Homeless Assistance Act by providing 
               school supplies and health-related products to homeless 
               children.    

          2)Requires the CDE to develop a formal grant process that 
            includes application forms, deadlines, and audit procedures, 
            subject to the specified requirements.

          3)Provides for the automatic repeal of the check-off on January 
            1 of the fifth taxable year following the fund's first 
            appearance on the PIT return or on an earlier date if the 
            check-off fails to meet a minimum contribution amount 
            initially set at $250,000 and adjusted for inflation annually 
            thereafter.  








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          FISCAL EFFECT  

          1)Based on past tax check-offs, annual revenues are expected to 
            be in the $300,000-$800,000 range, although some check-offs 
            have received less revenues.

          2)FTB estimates this bill will cost the state about $20,000 per 
            year in lost revenues.  This estimate assumes the check-off is 
            added in the 2012-13 fiscal year, donations meet the average 
            amount for the other tax check-offs and taxpayers deduct these 
            charitable donations.  Revenue losses would be similar in 
            subsequent years.

          3)The Department of Education estimates that it will cost 
            approximately $100,000-$150,000 to administer the program 
            established by this bill.  The costs for FTB and the State 
            Controller are minor and absorbable.



































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           COMMENTS  

           1)Purpose.   The author states that California has the nation's 
            largest population of homeless children.  As of 2010, there 
            were upwards of 300,000 homeless students attending California 
            elementary, middle and high schools.  The author notes, among 
            many other problems, homeless students often lack basic school 
            supplies like backpacks, binders and pencils or pens, as well 
            as dental supplies essential to good oral health, leaving them 
            at a critical disadvantage in school.  The author states these 
            students consistently test well below average in math and 
            English, and only 25% graduate from high school.  The author 
            argues while it will not solve all of the problems that come 
            with homelessness, SB 1571 will help by giving compassionate 
            taxpayers the opportunity to cover the costs of basic school 
            supplies and health services for homeless children.

           2)Voluntary Contribution Funds.   California taxpayers can make 
            voluntary contributions to any of 15 funds listed on the state 
            PIT return.  The contributions are in addition to tax 
            liabilities so they do not directly reduce the amount of state 
            taxes in that tax year.  As charitable contributions, the 
            taxpayer may deduct the amount of the check-off on the 
            subsequent year's income tax return, reducing state tax 
            collections.  These voluntary contributions support various 
            purposes, including cancer research, endangered species 
            preservation and emergency food assistance.  Contributions 
            have historically ranged from $300,000 to $800,000 per year.  
            Except for the California Seniors Special Fund, all have 
            sunset dates, and most must meet a minimum annual contribution 
            to remain on the return.

           3)Related legislation  .  SB 803 (DeSaulnier) establishes the 
            California Youth Leadership Project (Project) under the State 
            Department of Education (CDE) to promote youth civic 
            engagement and authorizes the addition of the California Youth 
            Leadership Fund (Fund) check-off to the PIT form.
            
           4)Previous legislation  .  The following bills PIT check-offs were 
            introduced in 2011.

             a)   AB 233 (Hall), authorizes the addition of the California 
               YMCA Youth and Government Fund check-off to the PIT form 
               upon the removal of another VCF from the form.  This bill 
               is in the Senate Appropriations Committee.








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             b)   AB 564 (Smyth), Chapter 549, Statutes of 2011, 
               reauthorized the addition of the Municipal Shelter 
               Spay-Neuter Fund check-off to the PIT return upon the 
               removal of another VCF from the form.  

             c)   AB 764 (Swanson), Chapter 465, Statutes of 2011, 
               authorized the addition of the Child Victims of Human 
               Trafficking Fund check-off to the PIT return upon the 
               removal of another VCF from the form.  

             d)   AB 971 (Monning), Chapter 209, Statutes of 2011, 
               reauthorized the addition of the California Sea Otter Fund 
               check-off to the PIT form beginning with the 2011 return.

             e)   SB 164 (Simitian), Chapter 699, Statutes of 2011, 
               extended, from January 1, 2013, to January 1, 2018, the 
               sunset date for two VCFs currently on the PIT return the 
               State Children's Trust Fund and the Rare and Endangered 
               Species Preservation Program.

             f)   SB 583 (Vargas), Chapter 711, Statutes of 2011, 
               reauthorized the addition of the ALS/Lou Gehrig's Disease 
               Research Fund check-off to the PIT return upon the removal 
               of another VCF from the form.   

           Analysis Prepared by  :    Roger Dunstan / APPR. / (916) 319-2081