Amended in Assembly April 30, 2014

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 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, relating to preschool begin delete funding, and making an appropriation therefor end delete begin insert funding end insert .

LEGISLATIVE COUNSEL’S DIGEST

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

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. begin delete 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. end delete begin insert Existing law requires the Superintendent to administer all California state preschool programs, including, but not limited to, part-day and full-day age and developmentally appropriate programs for 3- and 4-year-old children. end insert

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. begin delete The money in the fund would be continuously appropriated to the department, thereby making an appropriation. end delete The bill would require the begin delete 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. end delete begin insert money in the fund to be used, among other things, to fund state preschools part of the California state preschool program located in one of the 5 participating counties, as provided. end insert 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 begin delete and a list of preschools that were used by families who receive the subsidy end delete . The bill would require any begin delete money end delete begin insert moneys end insert 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.

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

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 begin insert , as provided end insert . The bill would limit the aggregate amount of credit allowed under both laws to begin delete $____ or less end delete begin insert not exceed $250,000,000 end insert 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, begin delete to be retained end delete for purposes of the tax credits allowed under these provisions.

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

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

SECTION 1.  

Article 7.5 (commencing with Section 8239.5)
is added to begin insert Chapter 2 end insert begin insert of end insert Part 6 of Division 1 of Title 1 of the Education Code, to read:

 

Article 7.5  California Preschool Investment Pilot Program

 

8239.5.  

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.

8239.6.  

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.

8239.7.  

(a) No later than June 1, 2015, a county may apply to
the department for consideration of inclusion in the program. begin insert For
purposes of this section, a county’s local child care and
development planning council, established pursuant to Chapter
2.3 (commencing with Section 8499), shall be responsible for
making the application authorized pursuant to this section. end insert

(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 begin delete did not receive end delete begin insert received end insert the funds.

8239.8.  

(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
begin insert pursuant to this article end insert .

(2)  begin insert (A) end insert begin insert   end insert 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
begin delete and end delete begin insert , end insert the name of the person who made the begin delete contribution. The receipt
shall be retained by the person for purposes of an income end delete
begin insert contribution, the amount of the monetary contribution, and whether
the person has or has not been allocated a end insert tax credit begin delete the person
may be allowed end delete pursuant to begin delete Sections end delete begin insert Section end insert 17053.87 begin delete and end delete begin insert or end insert
23687 of the Revenue and Taxation Code.

begin insert

(B) Subject to the annual cap as provided in subdivision (f) of
Sections 17053.87 and 23687 of the Revenue and Taxation Code,
the department shall allocate credits to contributors on a first
come, first served basis.

end insert begin insert

(C) The department shall notify the Franchise Tax Board of the
credits allocated on at least a monthly basis, and the Franchise
Tax Board and the department shall place this information on
their respective Internet Web sites together with information as to
the amount of remaining credits, at least every calendar quarter,
including information as to whether the cap described in
subdivision (f) of Sections 17053.87 and 23687 of the Revenue and
Taxation Code may be reached by the end of the calendar quarter.

end insert begin delete

(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.

end delete begin insert

(3) Moneys in the fund shall be allocated as follows:

end insert

begin insert (A) end insert begin insert   end insert begin insert First, moneys in the fund shall be transferred to the General
Fund in an amount equal to the aggregate amount of certified
credits allowed pursuant to Sections 17053.87 and 23687 of the
Revenue and Taxation Code for the taxable year. end insert

begin insert

(B) Second, upon appropriation:

end insert begin insert

(i) To the Franchise Tax Board and the department for
reimbursement of all administrative costs incurred by those
agencies in connection with their duties under this article.

end insert begin insert

(ii) To the department for the purposes of this article, as
provided in subdivision (b).

end insert begin delete

(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).

end delete

begin insert (b) end insert begin insert   end insert begin insert The money appropriated to the department pursuant to
clause (ii) of subparagraph (B) of paragraph (3) of subdivision
(a) shall be used to fund the California state preschool programs,
pursuant to Article 7 (commencing with 8235). end insert The money shall
begin delete be only end delete begin insert only be end insert used to support begin delete families who reside in, and use a
preschool end delete begin insert state preschools end insert located begin delete in, end delete begin insert in end insert one of the five counties
participating in the begin delete 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: end delete begin insert program. end insert

begin delete

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

end delete begin delete

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

end delete begin delete

(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.

end delete

8239.9.  

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 begin delete and a list
of preschools that were used by families who receive the subsidy
pursuant to Section 8239.8 end delete begin insert . end insert

8239.10.  

(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.

SEC. 2.  

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

17053.87.  

(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 begin insert and that a credit would be allowed under this
section end insert . 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 begin delete ____ end delete begin insert two
hundred fifty million end insert dollars begin delete ($____) end delete begin insert ($250,000,000) for each
calendar year end insert .

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

SEC. 3.  

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

23687.  

(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 begin insert and that a credit would be allowed under this
section end insert . 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 begin delete ____ end delete begin insert two
hundred fifty million end insert dollars begin delete ($____) end delete begin insert ($250,000,000) for each
calendar year end insert .

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