BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 1571 (DeSaulnier) - Income tax checkoff: School Supplies for
Homeless Children Fund.
Amended: May 1, 2012 Policy Vote: G&F 5-1
Urgency: No Mandate: No
Hearing Date: May 14, 2012 Consultant: Mark McKenzie
This bill does not meet the criteria for referral to the
Suspense File.
Bill Summary: SB 1571 would establish the School Supplies for
Homeless Children Fund as a voluntary contribution fund (VCF) on
the personal income tax form when another VCF is removed.
Fiscal Impact:
Annual estimated tax revenue loss of approximately $15,000
to $20,000 (General Fund) for up to five years beginning in
2013-14. (see staff comments)
Estimated Department of Education (CDE) staffing costs of
approximately $100,000 in 2013-14 to establish the grant
program. Ongoing CDE administrative costs of approximately
$50,000 annually for up to four additional years. All costs
to CDE are covered by taxpayer contributions deposited into
the School Supplies for Homeless Children Fund.
Background: Existing law allows taxpayers to make voluntary
contributions of their own funds to one or more of the 18 VCFs
currently on the personal income tax return. As charitable
contributions, the taxpayer may deduct the amount donated to VCF
"checkoff" programs on the subsequent year's tax return. All
but one of the existing VCFs has a sunset date and most require
a minimum annual contribution amount of $250,000, adjusted
annually for inflation, to ensure that a program has sufficient
public support to warrant continued placement on the tax return.
Proposed Law: SB 1571 would establish the School Supplies for
Homeless Children Fund when another VCF is removed from the
income tax return. The fund would stay on the tax return for
five years, but would be repealed earlier if the checkoff does
not maintain the minimum contribution amount of $250,000,
SB 1571 (DeSaulnier)
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adjusted for inflation, for each year after the second year that
the checkoff appears on the tax return. Revenues generated by
the checkoff would be allocated, upon appropriation by the
Legislature, to FTB, the Controller, and CDE to cover
administrative costs, and to CDE for allocation to tax-exempt
nonprofit organizations that provide school supplies and
health-related products to homeless children, as specified.
The bill would authorize CDE to develop a grant process to
administer the distribution of available funds, and would
require grant applicants to: (1) match grant funds with 100
percent in-kind corporate donations; (2) distribute the school
supplies and health-related products on a statewide basis; and
(3) spend less than two percent of the grant funds for
administrative purposes.
Staff Comments: Using an average marginal tax rate of 6
percent, the revenue loss associated with taxpayer deductions of
$250,000 would be approximately $15,000. FTB estimates a
revenue loss of approximately $20,000, which is based upon the
average contribution level of $330,000 for all VCFs for the 2009
taxable year. Actual losses would depend upon the total amount
contributed to the School Supplies for Homeless Children Fund,
and whether taxpayers claim the contributions as deductions.
CDE indicates that it could incur annual costs in the range of
$100,000 to $150,000 to establish and administer the grant
program. Staff estimates, however, that although initial costs
to establish the program could be in the range of $100,000,
ongoing administrative costs are likely to be relatively minor,
perhaps in the range of $50,000 annually. Staff notes that all
CDE costs are covered by the voluntary contributions to the
School Supplies for Homeless Children Fund.