Amended in Assembly April 1, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 2107

Introduced by Assembly Members Gorell and Olsen

February 20, 2014

An act begin insert to add and repeal Article 7.5 (commencing with Section 8239.5) of Chapter 2 of Part 6 of Division 1 of Title 1 of the Education Code, and to add and repeal Sections 17053.87 and 23687 of the Revenue and Taxation Code, end insert relating to preschool begin insert funding, and making an appropriation therefor end insert .

LEGISLATIVE COUNSEL’S DIGEST

AB 2107, as amended, Gorell. Preschool: privately funded pilot program: tax credits.

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Existing law, the Child Care and Development Services Act, administered by the State Department of Education, requires the Superintendent of Public Instruction to administer child care and development programs that offer a full range of services for eligible children from infancy to 13 years of age. The act requires the department to contract with local contracting agencies to provide for alternative payment programs, and authorizes alternative payment programs for services provided in licensed day care centers and family day care homes and for other types of programs that conform to applicable law.

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This bill would, until January 1, 2020, authorize the department, as part of a pilot program, to accept monetary contributions made to the California Preschool Investment Fund, which this bill would create, by a person for purposes of preschool education, as provided. The money in the fund would be continuously appropriated to the department, thereby making an appropriation. The bill would require the department to disburse the money to an alternative payment provider. The bill would require the money to be only used to support specified families who reside in, and use, a preschool located in, a county determined by the department to participate in the pilot program, as provided, in the form of a subsidy for preschool services. The bill would require participating counties to report to the department’s Early Education & Support Division regarding the county’s assessment of how the pilot program is performing and a list of preschools that were used by families who receive the subsidy. The bill would require any money remaining in the fund after January 1, 2020, to be transferred to any other state fund identified by the department that provides funding for increased access to preschool programs for low-income children.

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The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws.

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This bill, under both laws, for taxable years beginning on or after January 1, 2015, and before January 1, 2019, would allow a credit equal to 40% of the amount contributed by the taxpayer during the taxable year to the California Preschool Investment Fund. The bill would limit the aggregate amount of credit allowed under both laws to $____ or less and would require the State Department of Education to establish a procedure for a person to obtain from the department a receipt indicating specified information, including the amount of monetary contributions made, to be retained for purposes of the tax credits allowed under these provisions.

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Existing law, the Child Care and Development Services Act, administered by the State Department of Education, requires the Superintendent of Public Instruction to administer child care and development programs that offer a full range of services for eligible children from infancy to 13 years of age. Existing law requires school districts with early primary programs to provide educational continuity from preschool through kindergarten and grades 1 to 3, inclusive, by accomplishing certain goals, including establishing connections with public preschools programs, as provided.

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This bill would state that it is the intent of the Legislature to enact legislation that would do certain things, including establishing a pilot program for high-quality, investor funded preschool education in the County of Ventura in which private entities may invest, in exchange for state tax credits, in high-quality preschool programs aimed specifically at intergenerational low-income and English learner pupils.

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Vote: majority. Appropriation:  begin delete no end delete begin insert yes end insert . Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

end insert

begin insert Article 7.5 (commencing with Section 8239.5) is
added to Part 6 of Division 1 of Title 1 of the end insert begin insert Education Code end insert begin insert , to
read: end insert

begin insert

 

Article begin insert 7.5 end insert   California Preschool Investment Pilot Program

 

begin insert 8239.5. end insert   

The Legislature finds and declares that by providing
an additional source of funding, the state can expand the number
of preschool slots and the number of subsidies provided to help
reduce the waitlist for parents seeking prekindergarten child care
assistance.

begin insert 8239.6. end insert   

For purposes of this article, the following terms have
the following meanings:

(a) “Department” means the State Department of Education.

(b) “Fund” means the California Preschool Investment Fund.

(c) “Person” means an individual, partnership, corporation,
limited liability company, association, or other group, however
organized.

(d) “Program” means the five-county investor funded preschool
pilot program.

begin insert 8239.7. end insert   

(a) No later than June 1, 2015, a county may apply
to the department for consideration of inclusion in the program.

(b) No later than September 1, 2015, the department shall
determine, pursuant to subdivision (c), the five counties that shall
be included in the program. When making this determination, the
department shall ensure that urban, suburban, and rural counties
are represented in the program.

(c) The department shall make the determination of which five
counties shall be included in the program by giving priority to
counties that meet any of the following factors:

(1) The length of the county’s waitlist of individuals seeking
public child care assistance.

(2) The ability to increase the number of preschool slots
available to children in the county.

(3) Whether the county received federal Race to the Top funds,
authorized under the federal American Recovery and Reinvestment
Act of 2009 (Public Law 111-5), with favorable consideration
going to the counties that did not receive the funds.

begin insert 8239.8. end insert   

(a) (1) The department may accept monetary
contributions made by a person for funding the purposes of this
article. The California Preschool Investment Fund is hereby
created in the State Treasury to receive any monetary contributions
made.

(2) The department shall establish a procedure for a person to
make monetary contributions to the fund and for a person to obtain
from the department a receipt that indicates the amount of
monetary contributions made by that person. The receipt shall
also contain, at minimum, the date the monetary contribution was
made and the name of the person who made the contribution. The
receipt shall be retained by the person for purposes of an income
tax credit the person may be allowed pursuant to Sections 17053.87
and 23687 of the Revenue and Taxation Code.

(3) Notwithstanding Section 13340 of the Government Code,
the money in the fund are continuously appropriated, without
regard to fiscal year, to the department for the purposes of this
article.

(b) The department shall annually disburse the funds to an
alternative payment provider. The alternative payment provider
shall disburse the money pursuant to Article 3 (commencing with
Section 8220). The money shall be only used to support families
who reside in, and use a preschool located in, one of the five
counties participating in the program, in the form of a subsidy for
preschool services. Notwithstanding the eligibility criteria
established pursuant to Section 8263, priority shall be given to
families who meet all of the following conditions:

(1) The family has at least one child who is four years of age.

(2) The family has at least one working parent.

(3) The family’s adjusted monthly income is set at or below 70
percent of the state median income, adjusted for family size, and
adjusted annually.

begin insert 8239.9. end insert   

A county selected to participate in the program
pursuant to Section 8239.7 shall annually report to the
department’s Early Education & Support Division. The report
shall contain the county’s assessment of how the program is
performing and a list of preschools that were used by families who
receive the subsidy pursuant to Section 8239.8

begin insert 8239.10. end insert   

(a) This article shall remain in effect only until
January 1, 2020, and as of that date is repealed, unless a later
enacted statute, that is enacted before January 1, 2020, deletes or
extends that date.

(b) Any moneys remaining in the fund as of January 1, 2020,
shall be transferred to any other state fund identified by the
department that provides funding for increased access to preschool
programs for low-income children.

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begin insert SEC. 2. end insert   

end insert

begin insert Section 17053.87 is added to the end insert begin insert Revenue and Taxation
Code end insert begin insert , to read: end insert

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begin insert 17053.87. end insert   

(a) For taxable years beginning on or after January
1, 2015, and before January 1, 2019, there shall be allowed as a
credit against the “net tax,” as defined in Section 17039, an
amount equal to 40 percent of the amount contributed by the
taxpayer during the taxable year to the California Preschool
Investment Fund, created by Section 8239.8 of the Education Code.

(b) A credit shall only be allowed if the taxpayer has received
a receipt from the State Department of Education pursuant to
Section 8239.8 of the Education Code that indicates that the
taxpayer has made a contribution to the California Preschool
Investment Fund. The taxpayer shall provide the receipt upon
request to the Franchise Tax Board.

(c) (1) In the case where the credit allowed by this section
exceeds the “net tax,” the excess may be carried over to reduce
the “net tax” in the following year, and succeeding four years if
necessary, until the credit is exhausted.

(2) A deduction otherwise allowed under this part for any
amount contributed by the taxpayer upon which the credit is based
shall be reduced by the amount of the credit allowed in subdivision
(a).

(d) Credit under this section shall be allowed only for credits
claimed on a timely filed original return of the taxpayer.

(e) (1) The Franchise Tax Board may prescribe rules,
guidelines, or procedures necessary or appropriate to carry out
the purposes of this section.

(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code does not apply to
any standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board
pursuant to this section.

(f) The aggregate amount of credit that may be allowed pursuant
to this section and Section 23687 shall not exceed ____ dollars
($____).

(g)  This section shall be repealed on December 1, 2019.

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begin insert SEC. 3. end insert   

end insert

begin insert Section 23687 is added to the end insert begin insert Revenue and Taxation
Code end insert begin insert , to read: end insert

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begin insert 23687. end insert   

(a) For taxable years beginning on or after January
1, 2015, and before January 1, 2019, there shall be allowed as a
credit against the “tax,” as defined in Section 23036, an amount
equal to 40 percent of the amount contributed by the taxpayer
during the taxable year to the California Preschool Investment
Fund, created by Section 8239.8 of the Education Code.

(b) A credit shall only be allowed if the taxpayer has received
a receipt from the State Department of Education pursuant to
Section 8239.8 of the Education Code that indicates that the
taxpayer has made a contribution to the California Preschool
Investment Fund. The taxpayer shall provide the receipt upon
request to the Franchise Tax Board.

(c) (1) In the case where the credit allowed by this section
exceeds the “tax,” the excess may be carried over to reduce the
“tax” in the following year, and succeeding four years if necessary,
until the credit is exhausted.

(2) A deduction otherwise allowed under this part for any
amount contributed by the taxpayer upon which the credit is based
shall be reduced by the amount of the credit allowed in subdivision
(a).

(d) Credit under this section shall be allowed only for credits
claimed on a timely filed original return of the taxpayer.

(e) (1) The Franchise Tax Board may prescribe rules,
guidelines, or procedures necessary or appropriate to carry out
the purposes of this section.

(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code does not apply to
any standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board
pursuant to this section.

(f) The aggregate amount of credit that may be allowed pursuant
to this section and Section 17053.87 shall not exceed ____ dollars
($____).

(g) This section shall be repealed on December 1, 2019.

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SECTION 1.  

It is the intent of the Legislature to enact
legislation that would do all of the following:

(a) Establish a pilot program for high-quality, investor funded
preschool education in the County of Ventura in which private
entities, either business or individuals, may invest in high-quality
preschool programs aimed specifically at intergenerational
low-income and English learner pupils, to run for a designated
period of time.

(b) Require the County of Ventura to be responsible for
compiling and studying data to determine the program’s
effectiveness.

(c) Provide state tax credits to the investors of the preschool
programs.

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