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 Page B 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 Page E 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 FN: 0004866