Amended in Assembly April 1, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 2422

Introduced by Assembly Member Nestande

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(Coauthor: Assembly Member Allen)

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February 21, 2014

begin delete An act relating to taxation. end delete begin insert An act to add and repeal Section 23691 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 2422, as amended, Nestande. begin delete Corporation tax: credits. end delete begin insert Corporation Tax Law: credits: STEAM Investment Incentives Act. end insert

The Corporation Tax Law allows various credits against the begin delete taxes end delete begin insert tax end insert imposed by begin delete those laws end delete begin insert that law end insert .

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This bill would, for taxable years beginning on or after January 1, 2015, and before January 1, 2020, allow a credit against the tax imposed under that law for 50% of monetary contributions to nonprofit education improvement organizations, as defined, to fund qualified grants for K-12 education innovative programs relating to science, technology, engineering, math literacy, and the arts for private, public, or charter schools. The bill would provide that the credit would not exceed $200,000 per taxpayer, that the credit would be awarded on a first-come, first-serve basis, and that the credit would have an aggregate cap of $50,000,000 for each calender year. The bill would require the Franchise Tax Board and the State Department of Education to administer the credit, as specified.

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This bill would take effect immediately as a tax levy.

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This bill would state that it is the intent of the Legislature to enact legislation to allow a credit against the tax imposed by the Corporation Tax Law in the amount of 50% of a charitable donation to a nonprofit educational improvement organization that supports innovative programs in the arts or science, technology, engineering, and math learning for students in kindergarten or grades 1 to 12, inclusive, that attend public or private schools located in attendance areas with a high concentration of students from low-income families.

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Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

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begin insert This act shall be known and may be cited as the end insert begin insert STEAM Investment Incentives Act end insert begin insert . end insert

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begin insert SEC. 2. end insert   

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begin insert The Legislature finds and declares the following: end insert

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(a) Providing tax incentives to encourage private investments
for the common good is sound public policy.

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(b) Expanding educational opportunities and improving the
quality of, and access to, educational services within the state are
valid public purposes that the Legislature may promote using its
sovereign power to determine tax policy.

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(c) Creative tax policy can inspire greater charitable
contributions and public-private partnerships that ensure
additional resources for the education of all children in California.

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(d) Encouraging voluntary support for education, without
prejudice for or against any state-sanctioned educational
enterprise promotes the state’s interest and common good in
providing the highest quality education to all children in the state.

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(e) At a time when fiscal realities challenging California school
communities demand innovative ways to deliver vital education
services to public and private pupils in kindergarten and grades
1 to 12, inclusive, charitable giving for educational purposes
should be stimulated.

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(f) Expanding science, technology, engineering, and
mathematics (STEM) learning and education in the arts is vital
for our state and particularly for students from
financially-disadvantaged families to help close their achievement
gap.

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begin insert SEC. 3. end insert   

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begin insert Section 23691 is added to the end insert begin insert Revenue and Taxation
Code end insert begin insert , to read: end insert

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begin insert 23691. end insert   

(a) For each taxable year beginning on or after
January 1, 2015, and before January 1, 2020, there shall be
allowed as a credit against the “tax,” as defined in Section 23036,
an amount equal to 50 percent of a monetary contribution provided
by a taxpayer to a nonprofit education improvement organization
to fund a qualified grant for a K-12 education innovative program
for pupils attending private, public, or charter schools.

(b) For purposes of this section:

(1) “Charter school” means a California school established
pursuant to Part 26.8 (commencing with Section 47600) of Division
4 of Title 2 of the Education Code providing elementary or high
school education that is located in an eligible school attendance
area, as defined in Section 1113 of the federal Elementary and
Secondary Education Act (20 U.S.C. Sec. 6301 et seq.).

(2) “Education improvement organization (EIO)” means a
charitable institution in this state organized and operated as any
of the following types of institutions: (A) art museum, (B) science
center, (C) institution of higher education, (D) districtwide
educational enrichment program, or (E) any other organization
with the primary purpose to provide monetary support to a K-12
education innovative program, that meets all of the following
requirements:

(i) Contributes at least 80 percent of the qualified grants to a
California public or private school for funding K-12 education
innovative programs.

(ii) (I)   Does not have a person that has been convicted of any
sex offense as defined in Section 44010 of the Education Code
supervising or assisting a pupil participating in a K-12 education
innovative program.

(II) For the purposes of this section, a plea or verdict of guilty,
a finding of guilt by a court in a trial without jury, or a conviction
following a plea of nolo contendere shall be deemed to be a
conviction.

(iii) Requires each employee or volunteer, whether prospective
or current, who will directly and personally supervise or assist
any pupil to comply with the provisions of Section 44237 of the
Education Code in order to ascertain whether the prospective or
current employee or volunteer has been convicted of any sex
offense as defined in Section 44010 of the Education Code.

(iv) Has applied with the Franchise Tax Board to receive a
qualified grant.

(3) “Nonprofit” means an organization that meets all of the
following requirements:

(A) Is formed as any of the following:

(i) A nonprofit public benefit corporation described in Part 2
(commencing with Section 5110) of Division 2 of Title 1 of the
Corporations Code.

(ii) A nonprofit religious corporation described in Part 4
(commencing with Section 9110) of Division 2 of Title 1 of the
Corporations Code.

(iii) Any other charitable corporation, as defined by Section
12582.1 of the Government Code.

(iv) A duly authorized foreign nonprofit corporation that has
complied with all registration requirements under Section 6910
of, and Chapter 21 (commencing with Section 2100) of Division
1 of Title 1 of, the Corporations Code.

(B) Is an organization exempt from federal income tax as an
organization described in Section 501(c)(3) of the Internal Revenue
Code.

(4) (A)   “Qualified grant” means a grant that does all the
following:

(i) Includes guidelines that detail what specific programs may
be funded by the grant moneys.

(ii) Limits the amount of grant moneys that may be used for
administration or overhead costs.

(iii) Is included on a list created by the State Department of
Education pursuant to clause (i).

(B) A qualified grant may include cash payments to a California
private, public, or charter school to carry on a K-12 education
innovative program or may include costs incurred by an EIO in
providing a program to, or in conjunction with, a California
private, public, or charter school.

(5) “K-12 education innovative program” means instruction,
programs, or other activities in science, technology, engineering,
and math learning, or the visual and performing arts for a private,
public, or charter school with a kindergarten or any grades 1 to
12, inclusive, that involve one or more of the following:

(A) An advanced academic or similar program that is not part
of the regular program of a private, public, or charter school, but
enhances the curriculum of the school.

(B) A creative focus or delivery, including Internet-based and
distance learning technologies, methodology, or skill training that
enriches the academic program of the school.

(C) An integration of out-of-school time programs, offered
before or after school hours, on weekends, as a summer program,
or as a year-round program, that reinforces learning in the areas
of science, technology, engineering, and mathematics, or visual
and performing arts education of the curriculum year round.

(D) A cocurricular activity for pupils that is an elected
educational activity that supplements education, including, but
not limited to, gifted programs, visual and performing arts,
academic clubs, and educational field trips.

(6) “Private school” means a person, firm, association,
partnership, or corporation offering or conducting private school
instruction in the State of California that is located in an eligible
school attendance area, as defined in Section 1113 of the federal
Elementary and Secondary Education Act (20 U.S.C. Sec. 6301,
et seq.) and that meets all of the following requirements:

(A) Is accredited by the Western Association of Schools and
Colleges or an affiliated organization.

(B) Has filed a current private school affidavit with the State
Department of Education in accordance with Section 33190 of the
Education Code.

(C) Complies with applicable provisions of the Health and
Safety Code.

(D) Complies with applicable provisions of the Fair Employment
and Housing Act (Part 2.8 (commencing with Section 12900) of
Division 3 of Title 2 of the Government Code).

(E) Utilizes background checks in connection with hiring all
school employees, consistent with the standards set forth in
subdivision (a) of Section 44237 of the Education Code.

(7) “Public school” means any California day or evening
elementary, middle, junior high, or high school established by
statute or by municipal or district authority that is located in an
eligible school attendance area, as defined in Section 1113 of the
federal Elementary and Secondary Education Act (20 U.S.C. Sec.
6301 et seq.).

(c) The amount of the credit shall not exceed two hundred
thousand dollars ($200,000) per taxpayer, per taxable year.

(d) The taxpayer shall receive a certification by the Franchise
Tax Board upon determining that the contribution meets the
requirements of this section and shall apply with the Franchise
Tax Board to receive a credit.

(e) In the case where the credit allowed by this section exceeds
the “tax,” the excess may be carried over to reduce the “tax” in
the following year, and succeeding five years if necessary, until
the credit is exhausted.

(f) This credit shall be in lieu of any other credit or deduction
that the taxpayer may otherwise claim pursuant to this part with
respect to a monetary contribution described in subdivision (a).

(g) This credit shall be claimed on a timely filed original return.

(h) (1) The aggregate amount of credits allowed under this
section shall not exceed fifty million dollars ($50,000,000) for
each calendar year.

(2) The allocation of credits shall be on a first-come, first-serve
basis.

(3) The Legislature may increase the amount in paragraph (1).

(i) The Franchise Tax Board and the State Department of
Education shall administer this credit.

(1) The Franchise Tax Board shall perform all of the following:

(A) Promulgate rules and regulations as necessary or
appropriate to implement this credit.

(B) Establish application forms and procedures.

(C) Track credits claimed.

(D) Post aggregate totals of the credits claimed on the Internet
Web site of the Franchise Tax Board.

(E) Determine when the aggregate total of credits reaches fifty
million dollars ($50,000,000) for a calender year.

(F) Certify that the contributions meet the requirements of this
section.

(2) The State Department of Education shall do the following:

(A) Adopt rules necessary to determine whether the following
meet the requirements of this section:

(i) An EIO.

(iii) A contribution.

(B) Submit a list of eligible EIOs that comply with the
requirements of this section to the Franchise Tax Board annually
by March 15.

(j) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code shall not apply to
the guidelines or regulations adopted pursuant to this section.

(k) This section shall remain in effect only until December 1,
2020, and as of that date is repealed.

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begin insert SEC. 4. end insert   

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This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.

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SECTION 1.  

It is the intent of the Legislature to enact
legislation to allow a credit against the tax imposed by the
Corporation Tax Law in the amount of 50 percent of a charitable
donation to a nonprofit educational improvement organization that
supports innovative programs in the arts or science, technology,
engineering, and math learning for students in kindergarten or
grades 1 to 12, inclusive, that attend public or private schools
located in attendance areas with a high concentration of students
from low-income families. It is the intent of the Legislature that
this credit would not exceed $200,000 per taxpayer, be awarded
on a first-come, first-serve basis, and have an aggregate cap of
$50,000,000.

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