Amended in Assembly April 22, 2014

Amended in Assembly April 1, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 2421

Introduced by Assembly Member Nestande

( begin delete Coauthor: end delete begin insert Coauthors: end insert Assembly begin delete Member end delete begin insert Members end insert Allen begin insert , Maienschein, and Olsen end insert )

begin insert

(Coauthor: Senator Cannella)

end insert

February 21, 2014

An act to add and repeal Section 23692 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

AB 2421, as amended, Nestande. Corporation Tax Law: credits: begin insert Homeless and end insert Foster Youth Opportunities Investment Act.

The Corporation Tax Law allows various credits against the begin delete tax end delete begin insert taxes end insert imposed by that law.

This bill, for taxable years beginning on or after January 1, 2015, and before January 1, 2020, would allow a credit against the begin delete tax end delete begin insert taxes end insert imposed under that law for 50% of monetary contributions to begin delete nonprofit end delete begin insert qualified end insert education scholarship organizations, as defined, to fund qualified begin insert college or K-12 end insert scholarships for specified pupils to attend private schools, as defined, or for transportation costs to attend private, public, or charter schools. The bill would provide that the credit would not exceed $200,000 per taxpayer, that the credit would be awarded on a first-come, first-serve basis, and that the credit would have an aggregate cap of $50,000,000 for each calendar year. The bill would require the Franchise Tax Board and the State Department of Education to administer the credit, as specified.

This bill would take effect immediately as a tax levy.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

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

SECTION 1.  

This act shall be known and may be cited as the
begin insert Homeless and end insert Foster Youth Opportunities Investment Act.

SEC. 2.  

The Legislature finds and declares the following:

(a) Providing tax incentives to encourage private investments
for the common good is sound public policy.

(b) Expanding educational opportunities and improving the
quality of, and access to, educational services within the state are
valid public purposes that the Legislature may promote using its
sovereign power to determine tax policy.

(c) Creative tax policy can inspire greater charitable
contributions and public-private partnerships that ensure additional
resources for the education of all children in California.

(d) Encouraging voluntary support for education, without
prejudice for or against any state-sanctioned educational enterprise
promotes the state’s interest and common good in providing the
highest quality education to all children in the state.

(e) At a time when fiscal realities challenging California school
communities demand innovative ways to deliver vital education
services to public and private pupils in kindergarten and grades 1
to 12, inclusive, begin insert and in college, end insert charitable giving for educational
purposes should be stimulated.

(f) California benefits from ensuring the accessibility and
viability of strong public, as well as, private school options in
educating students, especially for those with the greatest needs:
our begin insert homeless and end insert foster youth.

SEC. 3.  

Section 23692 is added to the Revenue and Taxation
Code, to read:

23692.  

(a) For each taxable year beginning on or after January
1, 2015, and before January 1, 2020, there shall be allowed as a
credit against the “tax,” as defined in Section 23036, an amount
equal to 50 percent of the monetary contribution begin delete provided end delete begin insert made end insert
by a taxpayer begin insert during the taxable year, not to exceed two hundred
thousand dollars ($200,000) end insert to a begin delete nonprofit end delete begin insert qualified end insert education
scholarship organization to fund qualified begin insert college or end insert K-12
education scholarships for a specified pupil to attend private school
or to fund partial or full payments of fees associated with the
general costs of transportation to attend a private, public, or charter
school.

(b) For purposes of this section:

(1)  begin delete “Education end delete begin insert “Qualified education end insert scholarship begin delete organization
(ESO)” end delete begin insert organization” or end insert begin insert “ESO end insert begin insert ” end insert means begin delete a charitable institution end delete
begin insert an organization end insert in this state that meets the following begin insert requirements end insert :

(A) Is organized and operated with begin delete the primary end delete begin insert a end insert purpose of
providing qualified begin insert college or end insert K-12 education scholarships to
pupils attending a begin insert public or end insert private school in California.

(B) (i)  begin delete Allocates end delete begin insert If the organization has three or more years
of audited financial statements, distributes to specified pupils end insert at
least 80 percent of contributions for which a credit is claimed for
qualified begin insert college or end insert K-12 education scholarships begin delete for ESOs with
three or more years of audits end delete .

(ii)  begin delete Allocates end delete begin insert If the organization has fewer than three years of
audited financial statements, distributes end insert at least 90 percent of
contributions for which a credit is claimed for qualified begin insert college or end insert
K-12 education scholarships begin delete for ESOs with less than three years
of audits end delete .

(C) Makes qualified begin insert college or end insert K-12 education scholarships
available for begin insert specified end insert pupils from more than one school.

(D) Retains data on the progress of the begin insert specified end insert pupils
participating in qualified begin insert college or end insert K-12 education scholarships
on nationally available norm-referenced tests to evaluate the
program’s efficacy.

(E) Submits to the Franchise Tax Board financial and
compliance audit reports performed by a certified public
accountant.

(F) Submits to the State Department of Education quarterly
reports on the number of qualified begin insert college or end insert K-12 education
scholarship recipients and the schools that the recipients attend.

(G) Applies to participate in this credit program with the
begin delete Franchise Tax Board end delete begin insert State Department of Education end insert .

begin delete

(2) “Nonprofit” means an organization that meets all of the
following requirements:

end delete begin delete

(A)

end delete

begin insert (H) end insert  Is formed as any of the following:

(i) A nonprofit public benefit corporation described in Part 2
(commencing with Section 5110) of Division 2 of Title 1 of the
Corporations Code.

(ii) A nonprofit religious corporation described in Part 4
(commencing with Section 9110) of Division 2 of Title 1 of the
Corporations Code.

begin delete

(iii) Any other charitable corporation, as defined by Section
12582.1 of the Government Code.

end delete begin delete

(iv)

end delete

begin insert (iii) end insert  A duly authorized foreign nonprofit corporation that has
complied with the registration requirements under Section 6910
of, and Chapter 21 (commencing with Section 2100) of Division
1 of Title 1 of, the Corporations Code.

begin delete

(B) An organization

end delete

begin insert (I) end insert begin insert   end insert begin insert Is end insert exempt from federal income tax as an organization
described in Section 501(c)(3) of the Internal Revenue Code.

begin delete

(3)

end delete

begin insert (2) end insert  “Qualified begin insert college or end insert K-12 education scholarship” means
begin delete either end delete begin insert any end insert of the following:

(A) An award of tuition assistance amounting to at least 65
percent of the basic state per-pupil funding, or a private school’s
actual tuition and fees, whichever is less, that meets all of the
following requirements:

(i) An initial begin insert college or end insert K-12 education scholarship shall be
awarded to a specified pupil in kindergarten through grade 12 begin insert or
in college end insert .

(ii) May be renewed at the request of the specified pupil for
each school year until graduation from high school begin insert or college end insert .

(iii) Shall be portable and follow the specified pupil from one
school to another.

(iv) Shall be provided to a private school of the specified pupil’s
choosing under the following conditions:

(I) Each ESO shall establish criteria for granting scholarships
that meet the requirements of this section.

(II) The pupil receiving the assistance shall remain a specified
pupil.

(III) The specified pupil shall attend a private school.

(IV) The specified pupil shall remain enrolled and in attendance
at the private school throughout the school year unless excused by
the applicable program for illness or other good cause.

(V) The specified pupil and a parent or legal guardian of the
specified pupil shall comply with all applicable policies of the
private school.

(VI) A parent or legal guardian of the specified pupil shall
ensure that the pupil has reliable transportation to and from the
applicable program.

(B) Financial assistance for a specified pupil to partially or fully
pay for the fees associated with the general costs of transportation
to attend a private, public, or charter school begin insert or to attend
school-related activities and other educationally beneficial
programs end insert .

(C) Financial assistance for a specified pupil to attend college
courses after graduation from high school provided by any public
or independent college where the specified pupil has been admitted
to attend.

begin insert

(D) Financial assistance for a specified pupil to purchase books
and other materials to support academic success, including, but
not limited to, computers and software, tutoring, and other
academic support.

end insert begin delete

(4)

end delete

begin insert (3) end insert  “Specified pupil” means begin delete a minor end delete begin insert an individual end insert who has
applied for a begin insert college or end insert K-12 education scholarship and begin insert who end insert is begin delete a
pupil end delete begin insert either end insert within foster care begin delete who end delete begin insert or end insert has been placed in a foster
care system within the State of California at any time prior to
graduating high begin delete school. end delete

begin delete (A) end delete begin delete   end delete begin delete A end delete begin insert school, or who was at any time prior to graduating high
school, or is currently a homeless youth as defined in Section
11139.3 of the Government Code. A end insert specified pupil is not required
to be previously enrolled in a public school or charter school to
participate.

begin delete

(B) A specified pupil remains eligible for a scholarship until he
or she graduates from high school or leaves the foster care program.

(5)

end delete

begin insert (4) end insert begin insert   end insert begin insert (A) end insert  “Private school” means a person, firm, association,
partnership, begin insert limited liability company, end insert or corporation offering or
conducting private school instruction in the State of California on
the elementary or high school level, that meets all of the following
requirements:

begin delete

(A)

end delete

begin insert (i) end insert  Is accredited by the Western Association of Schools and
Colleges or an affiliated organization.

begin delete

(B)

end delete

begin insert (ii) end insert  Has filed a current private school affidavit with the State
Department of Education in accordance with Section 33190 of the
Education Code.

begin delete

(C)

end delete

begin insert (iii) end insert  Complies with applicable provisions of the Health and
Safety Code.

begin delete

(D)

end delete

begin insert (iv) end insert  Complies with applicable provisions of the begin insert California end insert Fair
Employment and Housing Act (Part 2.8 (commencing with Section
12900) of Division 3 of Title 2 of the Government Code).

begin delete

(E)

end delete

begin insert (v) end insert  Utilizes background checks in connection with hiring all
school employees, consistent with the standards set forth in
subdivision (a) of Section 44237 of the Education Code.

begin delete

(F)

end delete

begin insert (vi) end insert  Requires a specified pupil to take a nationally available
norm-referenced test.

begin delete

(G)

end delete

begin insert (vii) end insert  Has obtained, if it has been in operation for less than three
years, a surety bond or letter of credit in an amount equal to the
value of the education scholarship payments for one quarter.

begin delete

(c) The amount of the credit shall not exceed two hundred
thousand dollars ($200,000) per taxpayer, per taxable year.

end delete begin insert

(B) “Private school” also means an institution that meets the
definition of a “qualifying institution” in paragraph (1) of
subdivision (l) of Section 69432.7 of the Education Code.

end insert begin insert

(C) “Private school” does not include a program of instruction
offered by a tutor or a nonaccredited private school to a pupil who
is exempt from compulsory full-time education under Article 3
(commencing with Section 48220) of Chapter 2 of Part 27 of
Division 4 of Title 2 of the Education Code.

end insert begin delete

(d)

end delete

begin insert (c) end insert  The taxpayer shall receive a certification by the begin delete Franchise
Tax Board end delete begin insert State Department of Education end insert upon a determination
that the contribution meets the requirements of this begin delete section and
shall apply with the Franchise Tax Board to receive a credit. end delete
begin insert section. end insert

begin delete

(e)

end delete

begin insert (d) end insert  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 five years if necessary, until
the credit is exhausted.

begin delete

(f)

end delete

begin insert (e) end insert  This credit shall be in lieu of any other credit or deduction
that the taxpayer may otherwise claim pursuant to this part with
respect to a monetary contribution described in subdivision (a).

begin delete

(g)

end delete

begin insert (f) end insert  This credit shall be claimed on a timely filed original return.

begin delete

(h)

end delete

begin insert (g) end insert  (1) The aggregate amount of credits allowed under this
section shall not exceed fifty million dollars ($50,000,000) for
each calendar year.

(2) The allocation of credits shall be on a first-come, first-serve
basis.

(3) The Legislature may increase the amount in paragraph (1).

begin delete

(i)

end delete

begin insert (h) end insert  The Franchise Tax Board and the State Department of
Education shall administer this credit.

(1) The Franchise Tax Board shall perform all of the following:

(A)  begin delete Promulgate end delete begin insert Adopt end insert rules and regulations as necessary or
appropriate to implement this credit.

begin delete

(B) Establish application forms and procedures.

(C)

end delete

begin insert (B) end insert  Track credits claimed.

begin delete

(D)

end delete

begin insert (C) end insert  Post aggregate totals of the credits claimed on the Internet
Web site of the Franchise Tax Board.

begin delete

(E)

end delete

begin insert (D) end insert  Determine when the aggregate total of the credits reaches
fifty million dollars ($50,000,000) for a calender year.

begin delete

(F) Certify that the contributions meet the requirements of this
section needed to receive a credit.

end delete

(2) The State Department of Education shall do the following:

(A) Adopt rules begin insert and regulations end insert necessary to determine whether
the following meet the requirements of this section:

(i) An ESO.

(ii) A contribution.

(B) Submit a list of eligible ESOs that comply with the
requirements of this section to the Franchise Tax Board annually
by March 15.

begin insert

(C) Establish application forms and procedures.

end insert begin insert

(D) Certify that the contributions meet the requirements of this
section.

end insert begin delete

(j)

end delete

begin insert (i) end insert  Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code does not apply to
the guidelines or regulations adopted pursuant to this section.

begin delete

(k)

end delete

begin insert (j) end insert  This section shall remain in effect only until December 1,
2020, and as of that date is repealed.

SEC. 4.  

This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.