Senate BillNo. 594


Introduced by Senator Steinberg

February 22, 2013


An act to add Part 38 (commencing with Section 64200) to Division 4 of Title 2 of the Education Code, and to add Sections 17057.6 and 23610.6 to the Revenue and Taxation Code, relating to education.

LEGISLATIVE COUNSEL’S DIGEST

SB 594, as introduced, Steinberg. California Career Pathways Investment.

The Personal Income Tax Law and The Corporation Tax Law authorize various credits against the taxes imposed by those laws.

This bill, in accordance with legislative findings contained in this bill and for calendar years beginning on or after January 1, 2014, would, for a business entity, as described, that provides career technical education, authorize a credit against those taxes, subject to specified limitations, in an amount equal to that allocated by the California Career Pathways Investment Committee, a committee established by this bill. This bill would require each school district and community district to create a Career Pathways Investment Trust Fund, the funds in which would be used for the purposes of financing program and administrative costs relating to the operation of career pathways programs, as provided.

This bill would impose specified duties on school districts with regard to career pathways programs.

Existing law authorizes the governing board of a community college district to establish contract education programs within or outside the state by agreement with any public or private agency, corporation, association, or any other person or body, to provide specific educational programs or training to meet the specific needs of these bodies. Existing law authorizes the governing board of any school district to initiate and carry on any program or activity, or may otherwise act in any manner that is not in conflict with or inconsistent with, or preempted by, any law and that is not in conflict with the purposes for which school districts are established.

This bill would authorize a school district or a community college district to enter into social impact bonds, as defined, in accordance with applicable laws, to fund career pathways programs, as defined.

 The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement shall be made pursuant to these statutory provisions for costs mandated by the state pursuant to this act, but would recognize that local agencies and school districts may pursue any available remedies to seek reimbursement for these costs.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

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

P2    1

SECTION 1.  

Part 38 (commencing with Section 64200) is
2added to Division 4 of Title 2 of the Education Code, to read:

3 

4PART 38.  Career Pathways Investment Credit
5and Trust Fund

6

 

7

64200.  

(a) The Legislature finds and declares the following:

8(1) After five years of deep recession and high rates of
9unemployment, the California economy has begun to recover.

10(2) One of the most important actions California can take to
11hasten that recovery is to invest in the development of a skilled
12workforce to perform well-paying jobs in growing and emerging
13sectors of its regional economies.

14(3) The fastest growing occupations are expected to be those
15that require scientific, technical, engineering, or mathematics
16(STEM) skills, such as jobs in biotechnology, digital media arts,
17green technology, or computer-related and health-related fields.

18(4) California’s systems of public education, which includes
19primary and secondary schools, technical training, apprenticeship,
20two-year and four-year colleges, and graduate schools, play a
P3    1critical role in workforce preparation, one that could be
2significantly strengthened by a tighter focus on education and
3training that delivers the skills and capacities most called for in
4high-opportunity sectors.

5(5) This kind of workforce preparation is best accomplished in
6concert with regional business and industry, so that students receive
7the most current and relevant education that prepares them to
8compete for good jobs in their communities after graduation from
9high school or postsecondary education and training.

10(6) Work-based educational and training opportunities enhance
11the employment prospects of low- and moderate-income
12individuals and contribute to the stability and economic
13development of their communities.

14(b) It is the intent of the Legislature that federal bank regulators,
15specifically, the Federal Reserve Bank, the Office of the
16Comptroller of the Currency, the Federal Deposit Insurance
17Corporation, and the Office of Thrift Supervision, give credit to
18federally insured banks and thrifts on their compliance exams
19under the Community Reinvestment Act of 1977 for grants,
20investments, and loans to educational institutions, nonprofit
21organizations, and businesses in support of career pathways
22programs.

23(c) It is the intent of the Legislature to establish fiscal incentives,
24such as tax credits, that encourage California businesses and
25industry to enter into partnerships with schools and community
26colleges that strengthen the nature and quality of education
27 provided by those institutions. These partnerships will connect
28high school pupils and teachers, and college students and faculty,
29to real world experience that provides sustained exposure to applied
30academics, skill development, work-related experience, and
31potential future employment. This experience will keep students
32on track to graduation, further education, and productive careers.

33(d) The dissolution of redevelopment agencies will increase
34property tax revenues to K-14 school and community college
35districts, including the one-time distribution of redevelopment
36agency cash assets expected to occur in the 2012-13 and 2013-14
37fiscal years. It is the intent of the Legislature that school and
38community college districts capitalize the Career Pathways Trust
39Funds established pursuant to this act for the purposes of funding
P4    1grants and loans to businesses and offsetting administrative costs
2of the program.

3

64201.  

For the purposes of this part:

4(a) “Applicant” means a business entity that enters into a
5contract or memorandum of understanding with a local educational
6agency, community college, or workforce investment board to
7provide career technical education that connects pupils to
8real-world experience and provides sustained exposure to applied
9academics, skill development, work-related education, and potential
10future employment, and that applies to the committee for the Career
11Pathways Investment Credit.

12(b) “Authentic application” means an activity in the context of
13a middle, high school, or community college course that requires
14pupils to work actively with academic and technical concepts,
15facts, and skills in a realistic, work-like setting that emulates the
16problems encountered by professionals and the practices they use
17to address them. These applications typically require pupils to
18examine a task from a variety of perspectives, to draw upon
19multiple resources, to collaborate with others, and to accomplish
20tasks and projects by working in teams rather than individually.

21(c) “Budget” means an estimate of all qualified expenditures to
22be paid or incurred in providing the career pathways program over
23the period for which the applicant is applying for the career
24pathways investment credit.

25(d) “Career pathways programs” means programs that support
26the following:

27(1) High school pathways programs delivered through high
28schools, regional occupation centers or programs, California
29Partnership Academies and other career academies, alternative
30education programs, including continuation schools and programs
31administered by county offices of education, or adult education
32programs, that integrate academic and technical learning to prepare
33pupils for both postsecondary education and careers in high-growth
34or high-need sectors of the economy. These programs include core
35academic courses emphasizing authentic applications, sequences
36or clusters of three or more courses that align with the State Board
37of Education approved career technical education standards and
38frameworks that also integrate key academic concepts and skills,
39work-based learning opportunities, additional services like
P5    1counseling or supplementary instruction in reading, writing, and
2mathematics.

3(2) Curriculum and professional development.

4(3) Middle school career exploration activities.

5(4) Externship opportunities that expose middle school and high
6school teachers to the skills and competencies that pupils need for
7successful employment in high-growth sectors of the California
8economy.

9(5) Active engagement by business and industry in pathway
10design and implementation, work-based learning, assessment of
11student work, and other aspects of effective preparation for success
12in further postsecondary education and careers.

13(e) “Committee” means the California Career Pathways
14Investment Committee.

15(f) “Qualified expenditures” includes the following:

16(1) Paid jobs or internships for high school pupils or community
17college students that are related to course work in a career pathway
18program.

19(2) Support and supervision for unpaid internships or other
20work-based learning opportunities that give pupils the opportunity
21to connect what they are learning in high school or community
22college to its application in the real world.

23(3) Teacher or faculty externships.

24(4) Contributions to programs administered by postsecondary
25institutions that provide support to middle school, high school, or
26community college career pathways programs. This support may
27include, but shall not be limited to, teacher training, curriculum
28development, and other forms of technical assistance.

29(5) Equipment and instructional materials, including equipment
30and software to support technology-based instruction that provides
31all of the following:

32(A) Accelerated learning opportunities.

33(B) Identification of skill and knowledge gaps.

34(C) Targeted remediation to prepare pupils for college and
35careers.

36(6) Employees to provide instruction, in partnership with
37credentialed teachers employed by the school district or faculty
38employed by the community college, at the school site or college
39campus.

P6    1(7) Contributions to support staff who link career pathway
2programs with regional business entities and assist in the
3development of the memoranda of understanding provided in
4subdivision (f) of Section 64203. The staff may be employed by
5local education agencies, community colleges, or regional
6intermediary organizations.

7(g) “Social impact bond” means a contract between a school
8district or a community college district and private investors who
9provide capital in exchange for a share of governmental payments
10that become available if performance targets are met. Financial
11returns to investors may vary pursuant to the measured level of
12performance. The bond issuer may use operating funds from the
13sale of the bonds to contract with service providers to deliver the
14services necessary to meet the performance targets.

15

64202.  

A school district or community college district may
16enter into social impact bonds, in accordance with applicable laws,
17to fund career pathways programs.

18

64203.  

(a) The California Career Pathways Investment
19Committee is hereby established in state government.

20(b) The committee shall be composed of the following members:

21(1) The Chancellor of the California Community Colleges, or
22his or her designee, who will serve as the chairperson of the
23committee.

24(2) The Chancellor of the California Community Colleges, or
25his or her designee.

26(3) The Chair of the California Workforce Investment Board,
27or his or her designee.

28(4) One appointee of the Senate Committee on Rules, who will
29serve a four-year term.

30(5) One appointee of the Speaker of the Assembly, who will
31serve a four-year term.

32(c) The committee is granted the sole authority to allocate to
33applicants the Career Pathways Investment Credits authorized in
34the annual Budget Act, pursuant to Section 64205.

35(d) The committee shall establish criteria and guidelines for
36evaluating applications for Career Pathways Investment Credits,
37including requirements for commitments of financial or other
38resources by applicants or a local education agency, community
39college, or workforce investment board.

P7    1(e) The committee may prepare forms, establish procedures, set
2priorities, assess, and perform other administrative functions as
3necessary.

4(f) The Superintendent of Public Instruction, the Chancellor of
5the Community Colleges, and the California Workforce Investment
6Board shall enter into a memorandum of understanding to allocate
7staff resources to the committee. The costs to these entities shall
8be offset by fees charged to applicants for Career Pathways Tax
9Credits.

10

64204.  

Moneys in the Career Pathways Investment Trust Fund
11shall be used for any of the following purposes:

12(a) Qualified expenditures.

13(b) Administrative costs.

14(c) Grants, loans, and program costs associated with career
15pathways programs.

16

64205.  

For calendar years beginning on or after January 1,
172014, the committee shall allocate the Career Pathways Investment
18Credit in an amount authorized in the Budget Act for that calendar
19year. For purposes of this section, the committee shall do all of
20the following:

21(a) Allocate the career pathways investment credit for up to 5
22calendar years for each application the committee approves, as
23long as the amount allocated does not exceed the amount authorized
24in the Budget Act.

25(b) (1) Give priority in allocating tax credits to the following:

26(A) Applicants that have entered into a contract or memorandum
27of understanding with local educational agencies, community
28colleges, or workforce investment boards in communities that have
29an unemployment rate higher than the statewide unemployment
30rate, as determined by the United States Census, and a high school
31graduation rate lower than the statewide high school graduation
32rate, as determined by the committee using the California
33Longitudinal Pupil Achievement Data System.

34(B) Applicants that have entered into a contract or memorandum
35of understanding with local educational agencies, community
36colleges, or workforce investment boards with proportions of
37private funding support that exceed the one-to-one match
38requirement described in paragraph (1) of subdivision (e).

39(C) Applicants that have entered into a contract or memorandum
40of understanding with local educational agencies or community
P8    1colleges that offer articulated pathways connecting high school
2and postsecondary certificate and degree programs in their region.

3(D) Applicants that are not seeking tax credits for existing
4activities. However, priority shall be given to applicants that seek
5to expand or augment existing investments in career pathway
6programs.

7(2) To the maximum extent practicable, subject to paragraph
8(1), give priority in allocating career pathways investment credits
9to applicants that seek to expand or augment existing investments
10in career pathway programs.

11(3) The committee shall not give priority to any applicant by
12virtue of the date of submission of its application, except to allocate
13credits where two or more applicants have the same rating.

14(c) An applicant shall enter into an enforceable contract or
15memorandum of understanding with the committee to comply with
16the requirements of this part, Sections 17057.6 and 23610.6 of the
17Revenue and Taxation Code, any applicable state laws, and any
18additional requirements the department deems necessary or
19appropriate to serve the purposes of this part. The contract or
20memorandum of understanding shall also provide for legal action
21to obtain specified performance or monetary damages for breach
22of contract and shall require regular programmatic audits.

23(d) Adopt criteria that awards credits to applicants that
24demonstrate that either the applicant or the local educational
25agency, community college, or workforce investment board meets
26the following criteria:

27(1) The effectiveness of the career pathway program toward
28preparing students for productive, high-wage employment in
29growing or high-need sectors of the California economy.
30Effectiveness criteria shall include:

31(A) Pathway completion rates.

32(B) High school graduation rates or community college
33completion rates, as appropriate.

34(C) Percentages of students attaining an industry certification.

35(D) Percentages of students transitioning successfully to
36postsecondary education or apprenticeship.

37(E) Employment and earnings after high school.

38(2) The level of the applicant’s investment in, oversight of, and
39ability to leverage and sustain current career pathways programs
40and current career technical education programs.

P9    1(e) Develop and provide forms for the purposes of informing
2potential applicants of the purposes of this part.

3(f) The amount of the credit reserved for a calendar year shall
4not exceed 50 percent of the qualified expenditures estimated by
5the applicant for the calendar year.

6(g) The committee shall report to the Franchise Tax Board, once
7each year, the identity of the qualified taxpayers for whom the
8career pathways credits are allocated each year.

9(h) The committee may, in its discretion, consult with the
10Treasurer and the California Tax Credit Allocation Committee
11regarding the allocation of tax credits. If a request for consultation
12is made, the Treasurer and the California Tax Credit Allocation
13Committee shall aid the committee.

14(i)  Establish audit requirements. The committee may share
15information established during an audit with the Franchise Tax
16Board.

17

64206.  

A Career Pathways Investment Trust Fund is hereby
18established in each school or community college district for the
19purpose of financing program and administrative costs relating to
20the operation of career pathways programs. The trust fund may
21accept revenues from any source, including one-time property tax
22revenues resulting from the dissolution of the assets of the former
23redevelopment agencies, proceeds from the sale of social impact
24bonds, other tax revenues, grants, loans, and contributions or
25employment training funds made available through the employment
26training panel or workforce investment boards. The trust fund shall
27be administered by each school or community college district.

28

SEC. 2.  

Section 17057.6 is added to the Revenue and Taxation
29Code
, to read:

30

17057.6.  

(a) For each taxable year beginning on or after
31January 1, 2014, there shall be allowed to a qualified taxpayer as
32a credit against the “net tax,” as defined in Section 17039, an
33amount equal to that allocated to a qualified taxpayer by the
34California Career Pathways Investment Committee pursuant to
35Section 64204 of the Education Code.

36(b) For purposes of this section a “qualified taxpayer” means
37an applicant, as defined in Section 64201 of the Education Code,
38who is either the sole owner if an individual, partners if the
39taxpayer is a partnership, or shareholders if the taxpayer is an “S”
40corporation, and who was awarded an allocation of the career
P10   1pathways investment credit by the California Career Pathways
2Investment Committee.

3(c) In the case where the credit allowed under this section
4exceeds the “net tax,” the excess credit may be carried over to
5reduce the “net tax” in the following taxable year, and succeeding
6taxable years, if necessary, until the credit has been exhausted.

7(d) If a qualified taxpayer fails to comply with the requirements
8of this section or with Part 38 (commencing with Section 64200)
9of Division 4 of Title 2 of the Education Code, the credit shall be
10disallowed and assessed and collected under Section 19051 until
11the requirements are satisfied.

12

SEC. 3.  

Section 23610.6 is added to the Revenue and Taxation
13Code
, to read:

14

23610.6.  

(a) For each taxable year beginning on or after
15January 1, 2014, there shall be allowed to a qualified taxpayer as
16a credit against the “tax,” as defined in Section 23036, an amount
17equal to that allocated to a qualified taxpayer by the California
18Career Pathways Investment Committee pursuant to Section 64204
19of the Education Code.

20(b) For purposes of this section a “qualified taxpayer” means
21an applicant, as defined in Section 64201 of the Education Code,
22that is subject to the taxes imposed by this part.

23(c) In the case where the credit allowed under this section
24exceeds the “tax,” the excess credit may be carried over to reduce
25the “tax” in the following taxable year, and succeeding taxable
26years, if necessary, until the credit has been exhausted.

27(d) If a qualified taxpayer fails to comply with the requirements
28of this section or with Part 38 (commencing with Section 64200)
29of Division 4 of Title 2 of the Education Code, the credit shall be
30disallowed and assessed and collected under Section 19051 until
31the requirements are satisfied.

32

SEC. 4.  

 No reimbursement shall be made pursuant to Part 7
33(commencing with Section 17500) of Division 4 of Title 2 of the
34Government Code for costs mandated by the state pursuant to this
35act. It is recognized, however, that a local agency or school district
36may pursue any remedies to obtain reimbursement available to it
37under Part 7 (commencing with Section 17500) and any other
38provisions of law.



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