BILL ANALYSIS �
SB 761
Page A
Date of Hearing: June 25, 2014
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Raul Bocanegra, Chair
SB 761 (DeSaulnier) - As Amended: June 10, 2014
Majority vote. Fiscal committee.
SENATE VOTE : 30-1
SUBJECT : Personal Income Tax Law: voluntary contributions:
School Supplies for Homeless Children Fund
SUMMARY : Modifies, in several respects, the statutory
provisions governing the allocation of moneys from the School
Supplies for Homeless Children Fund (Fund). Specifically, this
bill :
1)Transfers administrative responsibility for the Fund from the
State Department of Education (CDE) to the State Department of
Social Services (CDSS).
2)Provides that all money transferred to the Fund, upon
appropriation by the Legislature, shall first be allocated to
the Franchise Tax Board (FTB) and the State Controller for
reimbursement of all costs incurred by the FTB, the State
Controller, and the CDSS in connection with their duties
administering the Fund.
3)Provides that Fund moneys shall thereafter be allocated to the
CDSS for distribution to a nonprofit organization exempt from
federal income tax under Internal Revenue Code Section
501(c)(3) for the sole purpose of assisting California pupils
under the federal McKinney-Vento Homeless Assistance Act by
providing school supplies and health-related products to
partnering local education agencies for distribution to
homeless children, as defined.
4)Requires the nonprofit organization to provide a minimum 100%
match for all funds received from the Fund.
5)Requires the CDSS to enter into a subvention services
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agreement<1> with the nonprofit organization.
6)Provides that the CDSS' first designation of a nonprofit
organization shall be valid until January 1, 2017. On that
date, and every three calendar years thereafter, the CDSS
shall designate the same or a different nonprofit
organization.
7)Authorizes the CDSS to revoke the designation should the
nonprofit organization fail to comply with this bill's
provisions. If a designation is revoked, the CDSS shall
designate a new nonprofit organization within three calendar
months.
8)Provides that funds shall be distributed by the CDSS only
after evidence is presented to the CDSS demonstrating that the
local education agencies or domestic violence shelters have
received the materials.
9)Provides that Fund moneys shall be used to reimburse all costs
the CDSS incurs in verifying that the designated nonprofit
organization procured school supplies and health-related
products and provided matching funds or in-kind materials, as
specified.
10)Provides that funds distributed to the nonprofit organization
shall only be used for costs incurred to procure, assemble,
and ship school supplies and health-related products.
11)Provides that funds shall not be used:
a) For administrative purposes;
b) To reimburse costs associated with administering grants
of school supplies and health-related products to local
education agencies or domestic violence shelters; or,
c) For any purpose relating to the operation of the
nonprofit organization.
12)Authorizes the nonprofit organization to provide school
supplies and health-related products to children living in
domestic violence shelters.
---------------------------
<1> Committee staff is informed that this is the term used by
the CDSS to describe a contract.
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EXISTING LAW :
1)Allows taxpayers to contribute to one or more of 20 voluntary
contribution funds (VCFs) on the 2013 personal income tax
(PIT) return.
2)Authorizes the Fund as a VCF on the PIT return.
3)Provides that all money transferred to the Fund, upon
appropriation by the Legislature, shall be allocated to the:
a) FTB, the State Controller, and the CDE for reimbursement
of all costs incurred in administering the VCF; and,
b) CDE for the sole purpose of assisting pupils in
California under the federal McKinney-Vento Homeless
Assistance Act by providing school supplies and
health-related products to homeless children through a
competitive grant program developed and awarded by the
Superintendent of Public Instruction (Superintendent).
4)Requires the Superintendent to develop the competitive grant
program, including application forms and deadlines, while
considering the most effective, efficient, and widest
distribution of school supplies and health-related products to
homeless children.
FISCAL EFFECT : Unknown. The FTB has not provided a revenue
estimate for this bill.
COMMENTS :
1)The author has provided the following statement in support of
this bill:
SB 761 relocates the School Supplies for Homeless Children
Fund from the California Department of Education to the
Department of Social Services to avoid their costly budget
process, and allow a timely and efficient distribution
process that will ensure all awarded funds go directly to
the benefit of homeless children.
SB 761 allocates funding from the Department of Social
Services to a qualified nonprofit organization that will
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distribute materials to homeless children in California
through partnering learning education agencies. The
nonprofit must spend all funds on supplies, assembly of
materials, and shipping, in addition to providing a 100%
in-kind match.
2)This bill is sponsored by K to College, which notes the
following:
K to College is a nonprofit public benefit corporation that
operates the largest chartable school and dental supply
program in California. Our mission is to ensure that every
child attends school with the basic materials they need to
achieve. From 2010-2013, we have donated $14,500,000 of
materials to more than 230,000 low-income children
throughout California. Our organization's success stems
from our innovative business model, centered on market
power for the public benefit and collaboration at every
step of our process, resulting in an ability to provide a
grade-appropriate school supply kit at approximately
one-third of the regular cost.
We are excited by the prospect of contributing towards this
effort to provide our state's most vulnerable school
children with the materials for success and offer our
assistance towards this goal whenever possible.
3)Proponents of this bill note the following:
We are particularly pleased the language is being amended
to enable distributions to children living in domestic
violence shelters. Every day, thousands of children are
living in domestic violence shelters in California. In
just one day in 2013, 1,734 children were living in a
domestic violence shelter or transitional housing unit.
These children are included as homeless under the
McKinney-Vento definition, but it is often challenging for
school district homeless liaisons to identify them because
shelters are obligated to maintain the confidentiality of
all shelter residents.
We know that providing basic materials to these children
and youth will provide a tremendous boost to their
confidence and sense of belonging in school. Providing
these materials will also be greatly appreciated by
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domestic violence shelter staff, who work hard each year to
try to provide basic materials to child victims of domestic
violence residing in their shelters.
4)Committee Staff Comments
a) California's homeless children : According to the
author, California has the nation's largest population of
homeless children. As of 2012, more than 250,000 children
and youth were identified as homeless under the federal
definition. Additionally, thousands more children and
youth living in domestic violence shelters meet the federal
definition of homelessness, but are not identified for
safety reasons.
In addition to the many other challenges they face,
homeless children often lack basic school supplies such as
backpacks, binders, and pens and pencils. These children
also often lack basic toiletries and supplies essential to
good oral health.
b) The Fund : The Fund was originally authorized by SB 1571
(DeSaulnier), Chapter 459, Statutes of 2012, to help
provide essential school supplies to homeless children. To
date, the Fund has established a successful record of
generating taxpayer contributions. In 2013, the Fund
received $367,868 in valid contributions, and the Fund has
already received $276,891 in contributions this year.
As currently structured, Fund moneys are to be allocated to
the CDE for the sole purpose of assisting California pupils
by providing school supplies and health-related products to
homeless children through a competitive grant program.
Specifically, current law instructs the Superintendent to
develop this grant program while considering the most
effective and efficient distribution of supplies and
products.
According to the author, however, the Fund's current
statutory provisions require the CDE to follow a two-year
budget process that will cost $150,000 for first-year
administrative costs and several tens of thousands of
dollars more in each subsequent year. The author also
notes that, as currently structured, the Fund is not
expected to provide any material assistance to homeless
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children for an extended period of time.
The author argues that this bill simplifies the Fund
allocation process by avoiding the CDE's budget process and
moving the Fund to the CDSS. The author contends this will
allow a timely and efficient distribution process that will
ensure that funds go directly to the benefit of homeless
children.
c) What would this bill do ? As noted above, this bill
would transfer administrative responsibility for the Fund
from the CDE to the CDSS. The CDSS, in turn, would
distribute Fund moneys to a nonprofit organization (likely
"K to College", which is sponsoring this bill). The
designated nonprofit would then use these funds to provide
school supplies and health-related products to partnering
"local education agencies" for distribution to homeless
children. The designated nonprofit organization would also
be required to provide a minimum 100% match for all funds
received from the Fund.
d) Trust, but verify : The Legislature has different models
to choose from when designing the administration of a new
VCF. In some cases, moneys are distributed directly to a
private organization with a well-documented history of
advancing the VCF's purposes. In other cases, state
agencies establish competitive grant programs to direct
fund moneys to several entities supporting the VCF's
underlying cause.
e) K to College : K to College notes that it is a
nonprofit, public benefit corporation that operates the
largest charitable school and dental supply program in
California. K to College's mission is to ensure that every
child attends school with the basic materials required to
succeed. K to College's business model begins with raising
funds from government agencies, corporations, foundations,
and individuals. By purchasing bulk materials factory
direct, K to College is then able to drive down costs.
Pursuant to legislation K to College successfully
sponsored, inmates within the California prison system are
engaged, as part of their rehabilitation, to assemble
purchased supplies into kits. Finally, K to College
partners directly with school districts to ensure that
materials reach students in need. To this end, each
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district is required to verify its distribution process in
writing.
f) Reimbursements and technicalities : This bill provides
that all money transferred to the Fund, upon appropriation
by the Legislature, shall first be allocated to the FTB and
the State Controller for reimbursement of all costs
incurred by the FTB, the State Controller, and the CDSS in
connection with their duties administering the Fund. It is
not clear to Committee staff how reimbursing the FTB and
the State Controller would cover the CDSS' administrative
costs. The author may wish to take amendments clarifying
this issue.
g) Suggested technical amendment : On page 2, in line 25,
strike "a" and insert "the".
REGISTERED SUPPORT / OPPOSITION :
Support
K to College (Sponsor)
California Partnership to End Domestic Violence
Opposition
None on file
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098