BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 803 (DeSaulnier)
Hearing Date: 05/09/2011 Amended: 05/04/2011
Consultant: Mark McKenzie Policy Vote: G&F 7-2
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BILL SUMMARY: SB 803 would establish the California Youth
Leadership Project under the State Department of Education and
create a new scholarship program to support youth who
participate in civic engagement programs that meet specified
criteria. This bill would also establish the California Youth
Leadership Project Fund tax-checkoff program for up to five
years to allow taxpayers to designate contributions to the fund
on their income tax returns to support the scholarship program
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
CDE: program administration $50
$50General
$25 $25 Special*
Taxpayer donations (revenue) ($250)
($250)Special*
Tax revenue loss $16 $16 General
FTB administration minor annual administrative costs,
General
reimbursed from donations
Scholarship program future cost pressures of $250-$300
afterGeneral
the repeal of the tax checkoff
provisions
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* California Youth Leadership Project Fund
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
Tax check-off program
Currently, there are 15 "check-off" programs on the personal
income tax return which allow taxpayers to donate their own
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funds for various purposes. Generally, each tax check-off
program has a specific sunset date and an initial contribution
limit of $250,000, adjusted annually for inflation, with
specified exceptions. Donations to check-off programs are
deductable as charitable contributions on taxpayers' tax returns
during the subsequent tax year.
SB 803 would establish the California Youth Leadership Fund
check-off program that would be added to income tax forms when
the Franchise Tax Board (FTB) removes an existing voluntary
contribution program or determines space is available on the
form. The designation would appear on tax forms for five years
unless contributions do not meet the minimum threshold of
$250,000 per year, adjusted for inflation, in which case the
check-off program would be repealed. Donated funds would be
allocated, upon appropriation by the Legislature, to the State
Controller and FTB for administering these provisions, and to
the State Department of Education (CDE) to provide for the
California Youth Leadership Project.
Assuming the check-off appears on the 2011 tax return and the
minimum donation amount of $250,000 is achieved, the estimated
tax revenue loss would be about $15,625 annually (applying the
average marginal tax rate of 6.25%), beginning in 2012-13,
because contributions would be claimed as an itemized deduction
in the following tax year. Costs for FTB to administer the
program are minor and reimbursed from donated amounts.
California Youth Leadership Project
SB 803 would establish the California Youth Leadership Project
(CYLP) under the CDE to award scholarships to youth who
participate in civic engagement programs that meet specified
criteria. The CYLP would be overseen by a CYLP Committee, which
is chaired by the Superintendent of Public Instruction (SPI) and
comprised of no more than six members, as specified. The
Committee would, either on its own or through an interagency
agreement with CDE, carry out the following administrative
duties: develop and provide scholarship applications, promote
the program, establish selection criteria, establish a meeting
schedule, and submit an annual report to CDE. SB 803 authorizes
the CYLP to accept gifts and grants from any source, public or
private, to help perform its functions. However, the bill also
prohibits the use of state funds to support the CYLP, except for
those provided under the tax checkoff program. If the CYLP
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Committee determines that there are insufficient funds to cover
all costs of the program, all CYLP activities would cease.
SB 803 specifies that up to 10 percent of all funds available to
the CYLP Committee may be used for administrative purposes, but
it is unlikely that $25,000 would be sufficient to fully support
the program's administration (assuming the minimum taxpayer
donation amount of $250,000 is achieved). It is unclear whether
the administrative duties would fall to the Committee or to CDE,
pursuant to a future interagency agreement. Staff estimates
that total costs to administer the scholarship program would
likely exceed $50,000 annually. To the extent that insufficient
funds are generated to cover the full administrative costs of
the program, the bill would create cost pressures. Furthermore,
the bill would create additional cost pressures of $250,000 to
$300,000 annually to fund the scholarship program after the tax
checkoff program is repealed (either for failure to meet minimum
donation thresholds or expiration of the five-year checkoff
program) since the provisions related to the CYLP would remain
in statute following the repeal of the funding source. Staff
recommends that the bill be amended to sunset the CYLP
provisions (Section 2 of the bill) on January 1, 2018.