BILL ANALYSIS
SENATE COMMITTEE ON EDUCATION
Gloria Romero, Chair
2009-2010 Regular Session
BILL NO: SB 974
AUTHOR: Steinberg
AMENDED: April 5, 2010
FISCAL COMM: Yes HEARING DATE: April 21, 2010
URGENCY: No CONSULTANT:Kathleen Chavira
NOTE : This bill has been referred to the Committees on
Education and Revenue and Taxation. A "do pass" motion
should include referral to the Committee on Revenue and
Taxation.
SUBJECT : Career Pathways Investment Credit.
KEY POLICY ISSUE
Should career technical education program partnerships
between local educational agencies and private business
entities be encouraged through the use of tax credits?
SUMMARY
This bill establishes the Career Pathways Investment Credit
(applicable to taxable years beginning on or after January
1, 2011), to be administered by the California Tax Credit
Allocation Committee and to be allocated to local
educational agencies (LEAs) for distribution to business
entities that enter into contracts or memoranda of
understanding with LEAs to provide career technical
education through the creation of career pathway programs.
BACKGROUND
The California Tax Credit Allocation Committee (CTAC)
administers two low-income housing tax credit programs - a
federal program and a state program. Both programs were
authorized to encourage private investment in affordable
rental housing for households meeting certain income
requirements.
Responsibility for administering the federal program was
assigned to the TCAC, first by a February 1987
SB 974
Page 2
gubernatorial proclamation, and later by enactment of SB
113, Chapter 658, Statutes of 1987 (which also authorized
the state program).
The TCAC has seven members, including three voting members
and four advisors. The voting members include the State
Treasurer, the State Controller, and the Governor, who may
choose to designate the Director of the Department of
Finance as his representative. The non-voting members are
the Executive Director of the California Housing Finance
Agency, the Director of the Department of Housing and
Community Development, and two representatives of local
governments. One local representative must be associated
with a city and is appointed by the Speaker of the
Assembly. The other member is a county representative
appointed by the Senate Rules Committee.
ANALYSIS
This bill :
1) Requires, on or after an unspecified date, the
California Tax Credit Allocation Committee (CTAC) to
administer the Career Pathways Investment Credit,
applicable to taxable years on or after January 1,
2011. More specifically it requires the CTAC to:
a) Determine and allocate the
investment credit ceiling, as specified.
b) Establish application filing
deadlines, and give priority in allocating the
credits to LEAs meeting specified criteria
including, among other things, specified
unemployment and high school graduation rates, or
serving of socioeconomically diverse student
populations.
c) Allocate the credits to LEAs that
enter into enforceable contracts or memorandums
of understanding, as specified, with the CTAC and
meet any additional requirements the CTAC deems
necessary or appropriate.
d) Adopt allocation criteria that
award credits to LEAs that demonstrate specified
elements in their application.
e) Develop and provide forms to
inform LEAs and taxpayers of the purpose of the
SB 974
Page 3
credit and certify to an LEA (which must provide
a copy to the business entity receiving the
credits) the amount of the allocated tax credits.
f) Consult with the California
Department of Education to develop forms,
procedures for submission and review of
applications, and to require the application to
include, but not be limited to, specified
components.
2) Authorizes the CTAC to:
a) Contract with other entities to
process and review applications.
b) Charge fees of applicants, as
specified, and authorizes the borrowing of money
to cover administrative costs, to be repayable
solely from these fees.
3) Authorizes a business entity that partners with an LEA
to provide career technical education, as specified,
to claim a career pathways investment credit against
qualified state sales and use taxes, as specified, and
imposes a number of related administering duties on
the Franchise Tax Board and the State Board of
Equalization.
4) Changes a definition within enterprise zone tax credit
provisions within the Revenue and Taxation Code.
5) Defines various terms for purposes of the bill.
6) Makes a number of technical and clarifying changes to
Revenue and Taxation Code provisions.
7) Makes a number of related declarations and findings.
STAFF COMMENTS
1) Need for the bill . According to the author, new
research by the Public Policy Institute of California
raises serious questions about the effectiveness of
the enterprise zone tax credit in contributing to
economic and job development. At a time when
California's General Fund is shrinking, it is more
SB 974
Page 4
important than ever to prioritize investments and
ensure that tax credits are producing a beneficial
return on the state's investment. California suffers
from too many high school dropouts, too little
meaningful career pathway programs at the middle and
high school levels, and shortages of skilled workers
to fuel high-need sectors of our economy. Investments
in high quality career pathway programs at the
secondary school level would bring a greater return on
the state's tax expenditure investment.
2) Double-referral . According to information provided by
the author, it is the intent to redirect a portion of
the existing enterprise zone tax credits to businesses
that partner with public schools to build career
pathway programs. This bill authorizes a business
entity that partners with an LEA to provide career
technical education, as specified, to claim a career
pathways investment credit against qualified state
sales and use taxes. If passed by this committee, the
tax policy implications of this proposal will
appropriately be heard and considered by the Senate
Revenue and Taxation Committee.
3) What are career pathway programs ? This bill defines
"applicants" as LEAs that apply for an allocation of
the proposed tax credit to create career pathways
programs. According to the bill, these can include
high school pathway programs delivered through high
schools, regional occupation centers or programs,
California Partnership Academies, alternative
education programs, and adult education programs.
These programs are envisioned to include core academic
courses aligned with State Board of Education approved
career technical education standards and frameworks
that integrate academic concepts and skills,
work-based learning, and additional counseling or
supplementary instruction services. Most relevant to
the tax credit proposed, these programs must also
include active engagement by business and industry in
their design and implementation, work-based learning,
and assessment of student work.
4) Will it work ? This bill is premised on the belief that
better linkages between public school curriculum and
real world work experience will result in more engaged
SB 974
Page 5
and successful students, increased graduation rates,
and better prepared students for both college and
career. According to a 2006 study of California
Regional Occupational Centers and Programs (CROCP)
conducted by the School Improvement Research Group at
the University of California, Riverside and funded by
the CDE, ROCP students improve their high school grade
point averages at a greater rate than comparison
students, enroll in post-secondary education in large
numbers, earn higher wages than comparison group
peers, have more success in securing raises and
promotions on the job, prefer ROCP classes over other
subjects, and question the value and relevance of many
of their high school courses. A 2010 study conducted
by the Career Academy Support Network finds that,
after more than four decades of development and three
decades of evaluation, career academies (small
learning communities that provide a
college-preparatory curriculum with a career-related
theme) have been effective in improving outcomes for
students during and after high school and declares
them a proven strategy to prepare high school students
for college and careers.
SUPPORT
California Regional Occupational Centers and Programs
(CROCP)
OPPOSITION
None received.