Amended in Assembly June 17, 2014

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

(Coauthors: Assembly Members Allen, Maienschein, and Olsen)

(Coauthor: Senator Cannella)

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: Homeless and Foster Youth Opportunities Investment Act.

The Corporation Tax Law allows various credits against the taxes 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 taxes imposed under that law for 50% of monetary contributions to qualified begin insert K-College end insert education scholarship organizations, as defined, to fund qualified begin delete college or K-12 end delete begin insert K-College education end insert scholarships begin delete for specified pupils to attend private schools, as defined, or for transportation costs to attend private, public, or charter schools end delete begin insert , as defined end insert . The bill would provide that the credit would not exceed $200,000 per taxpayer, that the credit would be awarded on a first-come, begin delete first-serve end delete begin insert first-served end insert basis, and that the credit would have an aggregate cap of begin delete $50,000,000 end delete begin insert $10,000,000 end insert 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
Homeless and 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 begin delete California school
communities demand end delete begin insert California’s education system demand end insert
innovative ways to deliver vital education services to public and
private pupils in kindergarten and grades 1 to 12, inclusive, and
in college, 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 begin insert and college end insert
options in educating students, especially for those with the greatest
needs: our homeless and 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 made by a
taxpayer during the taxable year, not to exceed two hundred
thousand dollars ($200,000) to a qualified begin insert K-College end insert education
scholarship organization to fund qualified begin delete college or K-12 end delete
begin insert K-College end insert education scholarships begin delete 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 end delete .

(b) For purposes of this section:

(1) “Qualified begin insert K-College end insert education scholarship organization”
or “ESO” means an organization in this state that meets the
following requirements:

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

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

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

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

(D) Retains data on the progress of the specified pupils
participating in qualified begin delete college or K-12 end delete begin insert K-College end insert 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 delete college or K-12 end delete begin insert K-College end insert
education scholarship recipients and the schools that the recipients
attend.

(G) Applies to participate in this credit program with the State
Department of Education.

(H) 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.

(iii) 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.

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

begin insert

(2) “Qualified education-related expenses” means expenses
paid or incurred for the purchase of books, services, and other
materials that support academic success, including computers,
software, tutoring, and other academic support.

end insert begin delete

(2)

end delete

begin insert (3) end insert  “Qualified begin delete college or K-12 end delete begin insert K-College end insert education scholarship”
means any of the following:

begin delete

(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 college or K-12 education scholarship shall be
awarded to a specified pupil in kindergarten through grade 12 or
in college.

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

(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)

end delete

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

begin delete

(C)

end delete

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

begin delete

(D)

end delete

begin insert (C) end insert  Financial assistance for a specified pupil begin delete to purchase books
and other materials to support academic success, including, but
not limited to, computers and software, tutoring, and other
academic support. end delete begin insert attending a public, charter, or private school
for qualified education-related expenses, not provided by the
McKinney-Vento Homeless Assistance Act of 1987 (Public Law
100-77). end insert

begin delete

(3)

end delete

begin insert (4) end insert  “Specified pupil” means an individual who has applied for
a begin delete college or K-12 end delete begin insert K-College end insert education scholarship and who is
either within foster care begin delete or end delete begin insert , end insert has been placed in a foster care system
within the State of California begin insert , or has been placed with a relative
caretaker through child protective services end insert at any time prior to
graduating high 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 begin insert or the McKinney-Vento Homeless
Assistance Act of 1987 (Public Law 100-77) end insert . A specified pupil is
not required to be previously enrolled in a public school or charter
school to participate.

begin delete

(4)

end delete

begin insert (5) end insert  (A) “Private school” means a person, firm, association,
partnership, limited liability company, 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:

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

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

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

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

(v) 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.

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

(vii) 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.

(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.

(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.

(c) The taxpayer shall receive a certification by the State
Department of Education upon a determination that the contribution
meets the requirements of this section.

(d) 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.

(e) 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).

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

(g) (1) The aggregate amount of credits allowed under this
section shall not exceed begin delete fifty end delete begin insert ten end insert million dollars begin delete ($50,000,000) end delete
begin insert ($10,000,000) end insert for each calendar year.

(2) The allocation of credits shall be on a first-come, begin delete first-serve end delete
begin insert first-served end insert basis.

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

(h) 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) Adopt rules and regulations as necessary or appropriate to
implement this credit.

(B) Track credits claimed.

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

(D) Determine when the aggregate total of the credits reaches
begin delete fifty end delete begin insert ten end insert million dollars begin delete ($50,000,000) end delete begin insert ($10,000,000) end insert for a calender
year.

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

(A) Adopt rules and regulations 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.

(C) Establish application forms and procedures.

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

(i) 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.

(j) 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.