BILL ANALYSIS                                                                                                                                                                                                    Ó




                                                                  SB 761
                                                                  Page A
          SENATE THIRD READING
          SB 761 (DeSaulnier)
          As Amended  August 18, 2014
          2/3 vote.  Urgency

           SENATE VOTE  :30-1  
           
           REVENUE & TAXATION  9-0         APPROPRIATIONS      17-0        
           
           ----------------------------------------------------------------- 
          |Ayes:|Bocanegra, Harkey, Beth   |Ayes:|Gatto, Bigelow,           |
          |     |Gaines, Gordon, Bloom,    |     |Bocanegra, Bradford, Ian  |
          |     |Dahle, Pan,               |     |Calderon, Campos,         |
          |     |V. Manuel Pérez, Ting     |     |Donnelly, Eggman, Gomez,  |
          |     |                          |     |Holden, Jones, Linder,    |
          |     |                          |     |Pan, Quirk,               |
          |     |                          |     |Ridley-Thomas, Wagner,    |
          |     |                          |     |Weber                     |
          |-----+--------------------------+-----+--------------------------|
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
          SUMMARY  :  Modifies, in several respects, the statutory  
          provisions governing the allocation of moneys from the School  
          Supplies for Homeless Children Fund (Fund).  Specifically,  this  
          bill  :   

          1)Transfers administrative responsibility for the Fund from the  
            State Department of Education (CDE) to the State Department of  
            Social Services (CDSS).  

          2)Provides that all moneys transferred to the Fund, upon  
            appropriation by the Legislature, shall first be allocated to  
            the Franchise Tax Board (FTB), the CDSS, and the State  
            Controller for reimbursement of all costs incurred in  
            administering the Fund. 

          3)Provides that, for the 2014-15 fiscal year, the State  
            Controller shall transfer the funds appropriated to the CDE  
            for this purpose from Budget Items 6110-001-8075 and  
            6110-101-8075 to the CDSS.  Funds transferred may be used for  
            state operations or local assistance expenditures and for  
            distribution to a nonprofit organization exempt from federal  
            income tax under Internal Revenue Code Section 501(c)(3) for  
            the sole purpose of assisting California pupils on a statewide  
            basis under the federal McKinney-Vento Homeless Assistance Act  









                                                                  SB 761
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            by providing school supplies and health-related products to  
            partnering local education agencies for distribution to  
            homeless children, as defined.  

          4)Requires the nonprofit organization to provide a minimum 100%  
            match for all funds received from the Fund.  If the nonprofit  
            organization provides in-kind materials towards the 100%  
            match, then the value of the in-kind materials shall be  
            verified by the donor donating the in-kind materials and  
            cannot exceed the market value of the materials if sold at  
            retail.    

          5)Requires the CDSS to enter into a subvention services  
            agreement<1> with the nonprofit organization.  

          6)Provides that the CDSS' first designation of a nonprofit  
            organization shall be valid until January 1, 2017.  On that  
            date, and every three calendar years thereafter, the CDSS  
            shall designate the same or a different nonprofit  
            organization.  

          7)Authorizes the CDSS to revoke the designation should the  
            nonprofit organization fail to comply with this bill's  
            provisions.  If a designation is revoked, the CDSS shall  
            designate a new nonprofit organization within three calendar  
            months or as soon as administratively feasible.  

          8)Provides that funds shall be distributed by the CDSS only  
            after evidence is presented to the CDSS demonstrating that the  
            local education agencies or domestic violence shelters have  
            received the materials.  

          9)Requires the CDSS to verify that the designated nonprofit  
            organization procured school supplies and health-related  
            products and provided matching funds or in-kind materials, as  
            specified.  

          10)Provides that funds distributed to the nonprofit organization  
            shall only be used for costs incurred to procure, assemble,  
            and ship school supplies and health-related products.  

          11)Provides that funds shall not be used:



          ---------------------------
          <1> Committee staff is informed that this is the term used by  
          the CDSS to describe a contract.  








                                                                  SB 761
                                                                  Page C
             a)   For administrative purposes;

             b)   To reimburse costs associated with administering grants  
               of school supplies and health-related products to local  
               education agencies or domestic violence shelters; or, 

             c)   For any purpose relating to the operation of the  
               nonprofit organization.  

          12)Authorizes the nonprofit organization to provide school  
            supplies and health-related products to children living in  
            domestic violence shelters.

          13)Takes immediate effect as an urgency measure.    

           EXISTING LAW  :

          1)Allows taxpayers to contribute to one or more of 20 voluntary  
            contribution funds (VCFs) on the 2013 personal income tax  
            (PIT) return.

          2)Authorizes the Fund as a VCF on the PIT return.  

          3)Provides that all money transferred to the Fund, upon  
            appropriation by the Legislature, shall be allocated to the:

             a)   FTB, the State Controller, and the CDE for reimbursement  
               of all costs incurred in administering the VCF; and, 

             b)   CDE for the sole purpose of assisting pupils in  
               California under the federal McKinney-Vento Homeless  
               Assistance Act by providing school supplies and  
               health-related products to homeless children through a  
               competitive grant program developed and awarded by the  
               Superintendent of Public Instruction (Superintendent).  

          4)Requires the Superintendent to develop the competitive grant  
            program, including application forms and deadlines, while  
            considering the most effective, efficient, and widest  
            distribution of school supplies and health-related products to  
            homeless children.  

           FISCAL EFFECT  :  According to the Assembly Appropriations  
          Committee, this bill is estimated to have an insignificant  
          impact on state income tax revenues.    









                                                                  SB 761
                                                                  Page D

           COMMENTS  :  The author has provided the following statement in  
          support of this bill:

               SB 761 relocates the School Supplies for Homeless  
               Children Fund from the California Department of  
               Education to the Department of Social Services to  
               avoid their costly budget process, and allow a timely  
               and efficient distribution process that will ensure  
               all awarded funds go directly to the benefit of  
               homeless children.  

               SB 761 allocates funding from the Department of Social  
               Services to a qualified nonprofit organization that  
               will distribute materials to homeless children in  
               California through partnering learning education  
               agencies.  The nonprofit must spend all funds on  
               supplies, assembly of materials, and shipping, in  
               addition to providing a 100% in-kind match.  

          Assembly Revenue and Taxation Committee comments: 

          California's homeless children:  According to the author,  
          California has the nation's largest population of homeless  
          children.  As of 2012, more than 250,000 children and youth were  
          identified as homeless under the federal definition.   
          Additionally, thousands more children and youth living in  
          domestic violence shelters meet the federal definition of  
          homelessness, but are not identified for safety reasons.  

          In addition to the many other challenges they face, homeless  
          children often lack basic school supplies such as backpacks,  
          binders, and pens and pencils.  These children also often lack  
          basic toiletries and supplies essential to good oral health.  
           
          The Fund:  The Fund was originally authorized by SB 1571  
          (DeSaulnier), Chapter 459, Statutes of 2012, to help provide  
          essential school supplies to homeless children.  To date, the  
          Fund has established a successful record of generating taxpayer  
          contributions.  In 2013, the Fund received $367,868 in valid  
          contributions, and the Fund has already received $315,255 in  
          contributions this year.  

          As currently structured, Fund moneys are to be allocated to the  
          CDE for the sole purpose of assisting California pupils by  









                                                                  SB 761
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          providing school supplies and health-related products to  
          homeless children through a competitive grant program.   
          Specifically, current law instructs the Superintendent to  
          develop this grant program while considering the most effective  
          and efficient distribution of supplies and products.  

          According to the author, however, the Fund's current statutory  
          provisions require the CDE to follow a two-year budget process  
          that will cost $150,000 for first-year administrative costs and  
          several tens of thousands of dollars more in each subsequent  
          year.  The author also notes that, as currently structured, the  
          Fund is not expected to provide any material assistance to  
          homeless children for an extended period of time.  

          The author argues that this bill simplifies the Fund allocation  
          process by avoiding the CDE's budget process and moving the Fund  
          to the CDSS.  The author contends this will allow a timely and  
          efficient distribution process that will ensure that funds go  
          directly to the benefit of homeless children.   
           
          What would this bill do?  As noted above, this bill would  
          transfer administrative responsibility for the Fund from the CDE  
          to the CDSS.  The CDSS, in turn, would distribute Fund moneys to  
          a nonprofit organization (likely "K to College", which is  
          sponsoring this bill).  The designated nonprofit would then use  
          these funds to provide school supplies and health-related  
          products to partnering "local education agencies" for  
          distribution to homeless children.  The designated nonprofit  
          organization would also be required to provide a minimum 100%  
          match for all funds received from the Fund.         
           
          Trust, but verify:  The Legislature has different models to  
          choose from when designing the administration of a new VCF.  In  
          some cases, moneys are distributed directly to a private  
          organization with a well-documented history of advancing the  
          VCF's purposes.  In other cases, state agencies establish  
          competitive grant programs to direct fund moneys to several  
          entities supporting the VCF's underlying cause.   
           
          K to College:  K to College notes that it is a nonprofit, public  
          benefit corporation that operates the largest charitable school  
          and dental supply program in California.  K to College's mission  
          is to ensure that every child attends school with the basic  
          materials required to succeed.  K to College's business model  
          begins with raising funds from government agencies,  









                                                                  SB 761
                                                                  Page F
          corporations, foundations, and individuals.  By purchasing bulk  
          materials factory direct, K to College is then able to drive  
          down costs.  Pursuant to legislation K to College successfully  
          sponsored, inmates within the California prison system are  
          engaged, as part of their rehabilitation, to assemble purchased  
          supplies into kits.  Finally, K to College partners directly  
          with school districts to ensure that materials reach students in  
          need.  To this end, each district is required to verify its  
          distribution process in writing.      


           Analysis Prepared by  :    M. David Ruff / REV. & TAX. / (916)  
          319-2098  


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