Existing law authorizes an individual to contribute amounts in excess of his or her personal income tax liability for the support of specified funds, including the School Supplies for Homeless Children Fund. Existing law requires the moneys deposited in the School Supplies for Homeless Children Fund, upon appropriation by the Legislature, to be allocated to the State Department of Social Services for distribution to a designated nonprofit organization for the sole purpose of assisting pupils in California pursuant to the federal McKinney-Vento Homeless Assistance Act, as provided. Existing law provides that this voluntary contribution remain in effect only until January 1 of the 5th taxable year in which the fund appears on the tax return or when the amount of contributions by taxpayers does not meet the minimum contribution amount, whichever occurs first.

This bill would authorize the designated nonprofit organization to provide school supplies and health-related products to homeless children and homeless youth residing in or receiving services from specified living centers and would extend the time period for the School Supplies for Homeless Children Fund to appear on the tax return to January 1, 2022, or when the amount of contributions by taxpayers does not meet the minimum contribution amount, whichever occurs first.

Existing law authorizes an individual to contribute amounts in excess of his or her personal income tax liability for the support of specified funds, including the School Supplies for Homeless Children Fund. Existing law requires the moneys deposited in the School Supplies for Homeless Children Fund, upon appropriation by the Legislature, to be allocated to the State Department of Social Services for distribution to a designated nonprofit organization for the sole purpose of assisting pupils in California pursuant to the federal McKinney-Vento Homeless Assistance Act, as provided. Existing law provides that this voluntary contribution remain in effect only until January 1 of the 5th taxable year in which the fund appears on the tax return or when the amount of contributions by taxpayers does not meet the minimum contribution amount, whichever occurs first.

This bill would authorize the designated nonprofit organization to provide school supplies and health-related products to homeless children and homeless youth residing in or receiving services from specified living centers and would extend the time period for the School Supplies for Homeless Children Fund to appear on the tax return to January 1, 2022, or when the amount of contributions by taxpayers does not meet the minimum contribution amount, whichever occurs first.

Existing law authorizes an individual to contribute amounts in excess of his or her personal income tax liability for the support of specified funds, including the School Supplies for Homeless Children Fund. Existing law requires the moneys deposited in the School Supplies for Homeless Children Fund, upon appropriation by the Legislature, to be allocated to the State Department of Social Services for distribution to a designated nonprofit organization for the sole purpose of assisting pupils in California pursuant to the federal McKinney-Vento Homeless Assistance Act, as provided. Existing law provides that this voluntary contribution remain in effect only until January 1 of the 5th taxable year in which the fund appears on the tax return or when the amount of contributions by taxpayers does not meet the minimum contribution amount, whichever occurs first.

This bill would authorize the designated nonprofit organization to provide school supplies and health-related products to homeless children and homeless youth residing in or receiving services from specified living centers and would extend the time period for the School Supplies for Homeless Children Fund to appear on the tax return to January 1, 2022, or when the amount of contributions by taxpayers does not meet the minimum contribution amount, whichever occurs first.

Existing law authorizes an individual to contribute amounts in excess of his or her personal income tax liability for the support of specified funds, including the School Supplies for Homeless Children Fund. Existing law requires the moneys deposited in the School Supplies for Homeless Children Fund, upon appropriation by the Legislature, to be allocated to the State Department of Social Services for distribution to a designated nonprofit organization for the sole purpose of assisting pupils in California pursuant to the federal McKinney-Vento Homeless Assistance Act, as provided. Existing law provides that this voluntary contribution remain in effect only until January 1 of the 5th taxable year in which the fund appears on the tax return or when the amount of contributions by taxpayers does not meet the minimum contribution amount, whichever occurs first.

This bill would authorize the designated nonprofit organization to provide school supplies and health-related products to homeless children and homeless youth residing in or receiving services from specified living centers and would extend the time period for the School Supplies for Homeless Children Fund to appear on the tax return to January 1, 2022, or when the amount of contributions by taxpayers does not meet the minimum contribution amount, whichever occurs first.

Existing law authorizes an individual to contribute amounts in excess of his or her personal income tax liability for the support of specified funds, including the School Supplies for Homeless Children Fund. Existing law requires the moneys deposited in the School Supplies for Homeless Children Fund, upon appropriation by the Legislature, to be allocated to the State Department of Social Services for distribution to a designated nonprofit organization, whose designation is valid until January 1, 2017, organization for the sole purpose of assisting pupils in California pursuant to the federal McKinney-Vento Homeless Assistance Act, as provided. Existing law provides that this voluntary contribution remain in effect only until January 1 of the 5th taxable year in which the fund appears on the tax return or when the amount of contributions by taxpayers does not meet the minimum contribution amount, whichever occurs first.

This bill would extend the time period for the validity of a nonprofits designation until January 1, 2021, and would remove the provision that would automatically remove the School Supplies for Homeless Children Fund from the tax return after 5 taxable years, thus allowing the fund to remain on the personal income tax return until contributions do not meet the minimum contribution amount. School Supplies for Homeless Children Fund to appear on the tax return to January 1, 2022, or when the amount of contributions by taxpayers does not meet the minimum contribution amount, whichever occurs first.

Existing law authorizes an individual to contribute amounts in excess of his or her personal income tax liability for the support of specified funds, including the School Supplies for Homeless Children Fund. Existing law requires the moneys deposited in the School Supplies for Homeless Children Fund, upon appropriation by the Legislature, to be allocated to the State Department of Social Services for distribution to a designated nonprofit organization, whose designation is valid until January 1, 2017, for the sole purpose of assisting pupils in California pursuant to the federal McKinney-Vento Homeless Assistance Act, as provided. Existing law provides that this voluntary contribution remain in effect only until January 1 of the 5th taxable year in which the fund appears on the tax return or when the amount of contributions by taxpayers does not meet the minimum contribution amount, whichever occurs first.

This bill would extend the time period for the validity of a nonprofits designation until January 1, 2021, and would remove the provision that would automatically remove the School Supplies for Homeless Children Fund from the tax return after 5 taxable years, thus allowing the fund to remain on the personal income tax return until contributions do not meet the minimum contribution amount.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 1789

Author:(Santiago)

As Amended Ver:August 9, 2016

Majority vote

Original Committee Reference: REV. & TAX.

SUMMARY: Extends the sunset date for the School Supplies for Homeless Children Fund (Fund).

The Senate amendments:

1. Add coauthors.
2. Authorize the designated nonprofit organization receiving Fund moneys to provide school supplies and health-related products to homeless children and homeless youth, as defined in Government Code Section 11139.3, residing in or receiving services from eligible basic living centers and transitional living centers eligible for assistance as specified in the Runaway and Homeless Youth Act (42 U.S.C. 5701 et seq.), as that act read on January 1, 2015.
3. Make conforming changes to the provisions requiring the submission of evidence to the California Department of Social Services (CDSS) prior to the distribution of Fund moneys.

EXISTING LAW:

1. Allows taxpayers to contribute to one or more of 19 voluntary contribution funds (VCFs) on the 2015 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 as follows:
   1. To the Franchise Tax Board (FTB), the CDSS, and the State Controller for reimbursement of all Fund-related administrative costs; and,
   2. To the CDSS. Funds transferred may be used for state operations or local assistance expenditures and 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 on a statewide basis 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. If the nonprofit organization provides in-kind materials towards the 100% match, then the value of the in-kind materials shall be verified by the donor donating the in-kind materials and cannot exceed the market value of the materials if sold at retail.
5. Requires the CDSS to enter into a subvention services 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 its specified responsibilities. If a designation is revoked, the CDSS shall designate a new nonprofit organization within three calendar months or as soon as administratively feasible.
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. Requires the CDSS to verify 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:
    1. For administrative purposes;
    2. To reimburse costs associated with administering grants of school supplies and health-related products to local education agencies or domestic violence shelters; or,
    3. 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.
13. Provides that the Fund's statutory authorization shall remain in effect only until January 1 of the fifth taxable year following the Fund's first appearance on the PIT return.

AS PASSED BY THE ASSEMBLY, this bill:

1. Provided that the Fund's statutory provisions shall remain in effect until January 1, 2022, and shall be repealed on December 1 of that year.
2. Allowed the Fund to remain on the PIT return through the 2021 taxable year, provided the Fund continues to meet its annual minimum contribution amount.

FISCAL EFFECT: According to the Senate Appropriations Committee, the FTB estimates that this bill would result in annual revenue losses of $10,000 in fiscal year 2017-18, and $15,000 thereafter (General Fund).

The State Controller's Office, CDSS, and the FTB would be reimbursed for related administrative costs.

COMMENTS:

1. The author has provided the following statement in support of this bill:

Homelessness is prevalent in urban and rural areas of California. The Los Angeles School District has the highest number of homeless students (14,323) and Sacramento ranks among the top six districts in overall number of homeless students and as a county has more homeless students than any other in Northern California.

A significant barrier to success homeless students face is access to basic materials such as school supplies, hygienic and dental products and other basic necessities. Lack of basic material needs accompanied with low self-esteem lead to absenteeism and truancy, which prevents homeless students from obtaining the education that is their best opportunity to escape poverty.

1. 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 charitable school and dental supply program in California. Our mission is to ensure that every child identified as homeless or low-income in public schools, and adults working towards self-sufficiency have the basic materials they need to achieve. From the fall of 2010-2015, we have donated $20,500,000 of materials to more than 350,000 low-income children throughout California. Our organization's success stems from our innovative business model, which mirrors the systems food banks use to centralize resources, leverage the dollar and distribute through partnering organizations. In this instance this includes more than 300 county offices of education, school districts and domestic violence shelters throughout California. This enables us to distribute materials at approximately one-third of their regular cost.

1. Revenue and Taxation Committee comments:
   1. California's homeless children: According to the author, during the 2013-14 academic year, 297,617 children enrolled in local education agencies in California were identified as homeless under the federal definition. The author's office notes, "Currently, this population is greater in California than in any other state in the nation and averages out to one homeless student in every classroom."

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.

• 1. 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. Specifically, the Fund received $337,949 in valid contributions in 2014, and $398,900 in 2015.
  2. 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.

Analysis Prepared by: M. David Ruff / REV. & TAX. / (916) 319-2098 FN: 0004086

1. Committee staff is informed that this is the term used by the CDSS to describe a contract. ↑

 THIRD READING  

Bill No: AB 1789

Author:

:

Vote:

SENATE GOVERNANCE & FIN. COMMITTEE: 6-0, 6/15/16

AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach

NO VOTE RECORDED: Pavley

SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/1/16

AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen

ASSEMBLY FLOOR: 76-0, 5/19/16 (Consent) - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST: This bill extends the sunset date for the School Supplies for Homeless Children Fund tax check-off on the personal income tax return.

Senate Floor Amendments of 8/9/16 add additional types of shelters homeless youth may live in and qualify for school supplies and health-related products. The amendments also make technical changes and add coauthors.

ANALYSIS:

Existing law:

1. Allows taxpayers to contribute money to voluntary contribution funds (VCFs) by checking a box on their state income tax returns. California law requires contributions made through so-called “check-offs” to be made from taxpayers’ own resources and not from their tax liability, as is possible on federal tax returns.
2. Allows contribution amounts to be claimed as charitable contributions on taxpayers’ tax returns in the subsequent year.
3. Requires that each VCF is individually added to the tax return by legislation. With a few exceptions, VCFs remain on the return until they are repealed by a sunset date or fail to generate a minimum contribution amount. In general, the minimum contribution amounts are adjusted annually for inflation. For most VCFs, the minimum contribution amount is $250,000, beginning in the fund’s second year. The following check-offs do not have a minimum contribution requirement:
   1. California Firefighters’ Memorial Foundation Fund,
   2. California Peace Officer Memorial Foundation Fund, and
   3. California Seniors Special Fund.

This bill:

1. Extends the sunset for the School Supplies for Homeless Children Fund to January 1, 2022.
2. Expands eligible individuals who may receive school supplies and health-related products.

Background

The School Supplies for Homeless Children Fund was originally authorized by SB 1571 (DeSaulnier, Chapter 459, Statutes of 2012) in 2012 to help provide essential school supplies to homeless children. To date, the Fund has established a successful record of generating taxpayer contributions. Specifically, the Fund received $337,949 in valid contributions in 2014, and $398,900 in 2015.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

•The Franchise Tax Board (FTB) estimates that the bill would result in annual revenue losses of $10,000 in 2017-18, and $15,000 thereafter (General Fund).

•The State Controller’s Office, the Department of Social Services, and FTB and would be reimbursed for related administrative costs.

SUPPORT: (Verified 8/3/16)

California Catholic Conference, Inc.

California State PTA

California Teachers Association

Common Sense Kids Action

Give Something Back Office Supplies

K to College

League of California Cities

OPPOSITION: (Verified 8/3/16)

California Department of Finance

ARGUMENTS IN SUPPORT: According to the author, “Homelessness is prevalent in urban and rural areas of California. The Los Angeles School District has the highest number of homeless students (14,323) and Sacramento ranks among the top six districts in overall number of homeless students and as a county has more homeless students than any other in Northern California. A significant barrier to success homeless students face is access to basic materials such as school supplies, hygienic and dental products and other basic necessities. Lack of basic material needs accompanied with low self-esteem lead to absenteeism and truancy, which prevents homeless students from obtaining the education that is their best opportunity to escape poverty. The School Supplies for Homeless Children Fund addresses the basic necessities these children need to succeed.”

ARGUMENTS IN OPPOSITION: Opponent argues that the bill is of limited value and results in a loss to the General Fund. Additionally, it is unclear why special preference should be given to one organization over the countless others that are not on the tax form.

ASSEMBLY FLOOR: 76-0, 5/19/16

AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mayes, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Wood, Rendon

NO VOTE RECORDED: Chang, Mathis, McCarty, Williams

Prepared by:

8/10/16 15:53:15

**** END ****

 THIRD READING  

Bill No: AB 1789

Author:

:

Vote:

SENATE GOVERNANCE & FIN. COMMITTEE: 6-0, 6/15/16

AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach

NO VOTE RECORDED: Pavley

SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/1/16

AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen

ASSEMBLY FLOOR: 76-0, 5/19/16 (Consent) - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST: This bill extends the sunset date for the School Supplies for Homeless Children Fund tax check-off on the personal income tax return.

ANALYSIS:

Existing law:

1. Allows taxpayers to contribute money to voluntary contribution funds (VCFs) by checking a box on their state income tax returns. California law requires contributions made through so-called “check-offs” to be made from taxpayers’ own resources and not from their tax liability, as is possible on federal tax returns.
2. Allows contribution amounts to be claimed as charitable contributions on taxpayers’ tax returns in the subsequent year.
3. Requires that each VCF is individually added to the tax return by legislation. With a few exceptions, VCFs remain on the return until they are repealed by a sunset date or fail to generate a minimum contribution amount. In general, the minimum contribution amounts are adjusted annually for inflation. For most VCFs, the minimum contribution amount is $250,000, beginning in the fund’s second year. The following check-offs do not have a minimum contribution requirement:
   1. California Firefighters’ Memorial Foundation Fund,
   2. California Peace Officer Memorial Foundation Fund, and
   3. California Seniors Special Fund.

This bill:

1. Extends the sunset for the School Supplies for Homeless Children Fund to January 1, 2022.
2. Expands eligible individuals who may receive school supplies.

Background

The School Supplies for Homeless Children Fund was originally authorized by SB 1571 (DeSaulnier, Chapter 459, Statutes of 2012) in 2012 to help provide essential school supplies to homeless children. To date, the Fund has established a successful record of generating taxpayer contributions. Specifically, the Fund received $337,949 in valid contributions in 2014, and $398,900 in 2015.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

•The Franchise Tax Board (FTB) estimates that the bill would result in annual revenue losses of $10,000 in 2017-18, and $15,000 thereafter (General Fund).

•The State Controller’s Office, the Department of Social Services, and FTB and would be reimbursed for related administrative costs.

SUPPORT: (Verified 8/3/16)

California Catholic Conference, Inc.

California State PTA

California Teachers Association

Common Sense Kids Action

Give Something Back Office Supplies

K to College

League of California Cities

OPPOSITION: (Verified 8/3/16)

California Department of Finance

ARGUMENTS IN SUPPORT: According to the author, “Homelessness is prevalent in urban and rural areas of California. The Los Angeles School District has the highest number of homeless students (14,323) and Sacramento ranks among the top six districts in overall number of homeless students and as a county has more homeless students than any other in Northern California. A significant barrier to success homeless students face is access to basic materials such as school supplies, hygienic and dental products and other basic necessities. Lack of basic material needs accompanied with low self-esteem lead to absenteeism and truancy, which prevents homeless students from obtaining the education that is their best opportunity to escape poverty. The School Supplies for Homeless Children Fund addresses the basic necessities these children need to succeed.”

ARGUMENTS IN OPPOSITION: Opponent argues that the bill is of limited value and results in a loss to the General Fund. Additionally, it is unclear why special preference should be given to one organization over the countless others that are not on the tax form.

ASSEMBLY FLOOR: 76-0, 5/19/16

AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mayes, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Wood, Rendon

NO VOTE RECORDED: Chang, Mathis, McCarty, Williams

Prepared by:

8/3/16 18:13:29

**** END ****

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

AB 1789 (Santiago) - Personal income taxes: voluntary contributions: School Supplies for Homeless Children Fund

This bill does not meet the criteria for referral to the Suspense File.

Bill Summary:

AB 1789 would extend the sunset date for the School Supplies for Homeless Children Fund tax check-off on the personal income tax return.

Fiscal Impact:

• The Franchise Tax Board (FTB) estimates that the bill would result in annual revenue losses of $10,000 in 2017-18, and $15,000 thereafter (General Fund).
• The State Controller’s Office (SCO), the Department of Social Services (DSS), and FTB and would be reimbursed for related administrative costs.

Background:

Current law allows taxpayers to contribute money to one or more of 19 voluntary contribution funds during the process of filing their state income tax return (VCF). These contributions are made from taxpayers' own resources, not from their tax liability, as is the case with federal tax returns. Check-off amounts are deductible as charitable contributions on taxpayers' returns during the subsequent tax year. With some exceptions, each voluntary contribution fund has a sunset date and is required to meet a minimum contribution amount of $250,000, adjusted annually for inflation.

The School Supplies for Homeless Children Fund first appeared on the 2012 return. It was originally authorized by SB 1571 (DeSaulnier) in 2012 to help provide school supplies to homeless children. The indexed minimum contribution amount the Fund must receive to remain on the 2016 return is $258,822, which was easily cleared, as it received $398,900 in contributions during taxable year 2015.

Proposed Law:

This bill would extend the sunset for the School Supplies for Homeless Children Fund to January 1, 2022.

Related Legislation:

SB 1476 (Committee on Governance and Finance) would establish general provisions for voluntary contribution funds. Specifically, the bill would (1) establish a seven-year sunset, (2) require a minimum contribution amount of $250,000 beginning in the fund’s second year, and each year thereafter, requires funds to be continuously appropriated, and (3) require administering agencies to post information online about the use of the funds. SB 1476 is currently awaiting action by the full Assembly.

Staff Comments:

FTB data indicate that in 2012, 89,335 out of 15 million taxpayers contributed a total of $4.8 million via tax check-offs. The tax check-off program typically collects $4-5 million in annual contributions for all VCFs.

-- END --

SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Robert M. Hertzberg, Chair

2015 - 2016 Regular

Personal income taxes: voluntary contributions: School Supplies for Homeless Children Fund

Extends the sunset date for the School Supplies for Homeless Children Fund tax check-off on the personal income tax return.

Background

Existing state law allows taxpayers to contribute money to voluntary contribution funds (VCFs), by checking a box on their state income tax returns. California law requires contributions made through so-called “check-offs” to be made from taxpayers’ own resources and not from their tax liability, as is possible on federal tax returns. Check-off amounts may be claimed as charitable contributions on taxpayers’ tax returns in the subsequent year.

Each VCF is individually added to the tax return by legislation. With a few exceptions, VCFs remain on the return until they are repealed by a sunset date or fail to generate a minimum contribution amount. In general, the minimum contribution amount is $250,000, beginning in the fund’s second year, and is adjusted yearly for inflation thereafter. The following check-offs do not have a minimum contribution requirement:

• California Firefighters’ Memorial Foundation Fund,
• California Peace Officer Memorial Foundation Fund, and
• California Seniors Special Fund.

When a taxpayer contributes to VCFs, the Franchise Tax Board (FTB) deposits the total of all contributions, less an administrative fee, into the fund created as part of the VCF’s legislative authorization. For some VCFs, such as the Protect Our Coast and Ocean Fund, taxpayers’ contributions are allocated to a state agency for use in a state administered grant program. Other VCFs’ authorizing statutes direct administrative agencies to allocate donations to a private organization. For example, the Office of Emergency Services passes VCF funds to the American Red Cross. Other funds require the State Controller to send the funds directly to private organizations without passing through an administrative agency, such as the California Fire Foundation. The Controller and administrative agencies may deduct administrations fees from the amount of donations each VCF receives.

There are currently 19 check-offs listed on the tax return form. The tax check-off program typically collects $4-5 million in annual contributions for all VCFs.

Proposed Law

Assembly Bill 1789 extends the sunset for the School Supplies for Homeless Children Fund to January 1, 2022.

State Revenue Impact

FTB estimates that this bill would reduce General Fund revenues by $10,000 in fiscal year (FY) 2017-18 and $15,000 in FY 2018-19.

Comments

1. Purpose of the bill. According to the author, “Homelessness is prevalent in urban and rural areas of California. The Los Angeles School District has the highest number of homeless students (14,323) and Sacramento ranks among the top six districts in overall number of homeless students and as a county has more homeless students than any other in Northern California. A significant barrier to success homeless students face is access to basic materials such as school supplies, hygienic and dental products and other basic necessities. Lack of basic material needs accompanied with low self-esteem lead to absenteeism and truancy, which prevents homeless students from obtaining the education that is their best opportunity to escape poverty. The School Supplies for Homeless Children Fund addresses the basic necessities these children need to succeed.”

2. Is there a better way? The current tax check-off program generates a relatively small share of statewide contributions to charitable causes. In 2008, Californians donated more than $17 billion to charities. However, less than 1% of Californians use the tax check-off program to make donations to charitable organizations. FTB reports that in 2012, 89,335 out of 15 million taxpayers contributed a total of $4.8 million. In 2014, SB 1207 (Wolk) attempted to address this issue and help grow charitable giving by establishing the California Voluntary Contribution Program to promote charitable giving and collect donations. This would have allowed many more charities to participate in the program, would have screened potential participants before adding them onto the form, and eliminated the need for each organization to go through the Legislative process. Under SB 1207, charities would instead apply to the office of California Volunteers for placement on the income tax form. However, SB 1207 (Wolk) was held on suspense in Assembly Appropriations.

3. Bills, bills, bills. Currently, tax check-offs must be added by the Legislature. In 2008, 11 VCFs appeared on the personal income tax return. Today, the return contains 19. With legislation introduced every year to add new VCFs, there is little reason to expect this number to stop growing. It is estimated that FTB can only handle 8 or 9 more check-offs before FTB has to create a separate tax schedule.

4. School Supplies for Homeless Children Fund. The School Supplies for Homeless Children Fund was originally authorized by SB 1571 (DeSaulnier) in 2012 to help provide essential school supplies to homeless children. To date, the Fund has established a successful record of generating taxpayer contributions. Specifically, the Fund received $337,949 in valid contributions in 2014, and $398,900 in 2015.

5. Similar Legislation. SB 1476 (Governance and Finance) establishes general provisions for voluntary contribution funds. Specifically, the bill establishes a seven year sunset, requires a minimum contribution amount of $250,000 beginning in the fund’s second year, and each year thereafter, requires funds to be continuously appropriated, and requires administering agencies to post information online about the use of the funds. SB 1476 is set to be heard in the Assembly Committee on Revenue and Taxation on June 13, 2016.

Assembly Actions

Assembly Revenue and Taxation 9-0

Assembly Appropriations 20-0

Assembly Floor 78-0

Support and Opposition

(6/8/16)

Support: California Catholic Conference, Inc.; California State PTA; California Teachers Association; Common Sense Kids Action; Give Something Back Office Supplies; K to College.

Opposition: California Department of Finance.

-- END --

Date of Hearing: May 11, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 1789

Author:(Santiago) – As Amended Ver:March 17, 2016

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill extends the sunset date for the School Supplies for Homeless Children Fund (Fund) voluntary contribution fund (VCF) to January 1, 2022.

FISCAL EFFECT:

1. Minor ongoing GF revenue losses of up to $15,000 per year resulting from itemized taxpayer deductions.
2. Minor and absorbable administrative costs for the FTB or the Department of Social Services (DSS), the administering agency responsible for the Fund.

COMMENTS:

1. Purpose. This bill aims to assist homeless children by extending the sunset date of the Fund. According to the author, a significant barrier to success homeless students face is access to basic materials such as school supplies, hygienic and dental products, and other basic necessities.
2. Background. Current state tax law allows taxpayers to make contributions on their tax returns to a number of VCFs. The Fund helps provide homeless children with necessary school and health supplies. The Fund received $398,900 in 2015. Like many VCFs, it must meet a current minimum contribution amount to remain on state tax returns ($250,000, indexed for inflation since 2015). Moreover, the Fund has an administrating agency: The money deposited into the Fund is allocated to DSS for distribution to a designated nonprofit organization, which has traditionally been K to College.
3. Funding history. This fund saw its highest contributions yet in 2015. The fund is easily meeting the $250,000 threshold. Since 2013, the School Supplies for Homeless Children Fund has generated the following revenues:
   1. 2013: $367,868
   2. 2014: $337.949
   3. 2015: $399,673
4. K to College. K to College provides the following statement on the importance of the organization:

“K to College is a nonprofit public benefit corporation that operates the largest charitable school and dental supply program in California. Our mission is to ensure that every child identified as homeless or low-income in public schools, and adults working towards self-sufficiency have the basic materials they need to achieve. From the fall of 2010-2015, we have donated $20,500,000 of materials to more than 350,000 low-income children throughout California. Our organization's success stems from our innovative business model, which mirrors the systems food banks use to centralize resources, leverage the dollar and distribute through partnering organizations. In this instance this includes more than 300 county offices of education, school districts and domestic violence shelters throughout California. This enables us to distribute materials at approximately one-third of their regular cost.”

1. Prior Legislation. SB 761 (DeSaulnier) of 2014 designated DSS as the administering agency responsible for the Fund. The purpose of this bill was to create a more timely process of distributing funds for homeless children.
2. New VCF Bills in 2016. Four Assembly bills were introduced in 2016 that would either extend existing VCFs or create new ones. In addition to AB 1789, those bills are:
3. AB 2371 (Frazier), also on today’s Committee agenda, adds a voluntary contribution for the Special Olympics Fund
4. AB 2430 (Beth Gaines), also on today’s Committee agenda, adds, a voluntary contribution for the Type 1 Diabetes Research Fund.
5. AB 2497 (Wagner), also on today’s Committee agenda, repeals the voluntary contribution for the California Senior Legislature Fund and replace it with a voluntary contribution for the California Senior Citizen Advocacy Fund.

Analysis Prepared by: Luke Reidenbach / APPR. / (916) 319-2081

Date of Hearing: April 11, 2016

ASSEMBLY COMMITTEE ON REVENUE AND TAXATION

Sebastian Ridley-Thomas, Chair

ABPCA Bill Id:AB 1789 (

Author:Santiago) – As Amended Ver:March 17, 2016

Majority vote. Fiscal committee.

SUBJECT: Personal income taxes: voluntary contributions: School Supplies for Homeless Children Fund

SUMMARY: Extends the sunset date for the School Supplies for Homeless Children Fund (Fund). Specifically, this bill:

1. Provides that the Fund's statutory provisions shall remain in effect until January 1, 2022, and shall be repealed on December 1 of that year.
2. Allows the Fund to remain on the personal income tax (PIT) return through the 2021 taxable year, provided the Fund continues to meet its annual minimum contribution amount.

EXISTING LAW:

1. Allows taxpayers to contribute to one or more of 19 voluntary contribution funds (VCFs) on the 2015 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 as follows:
   
   1. To the Franchise Tax Board (FTB), the California Department of Social Services (CDSS), and the State Controller for reimbursement of all Fund-related administrative costs; and,
      
   2. To the CDSS. Funds transferred may be used for state operations or local assistance expenditures and 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 on a statewide basis 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. If the nonprofit organization provides in-kind materials towards the 100% match, then the value of the in-kind materials shall be verified by the donor donating the in-kind materials and cannot exceed the market value of the materials if sold at retail.
   
5. Requires the CDSS to enter into a subvention services 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 its specified responsibilities. If a designation is revoked, the CDSS shall designate a new nonprofit organization within three calendar months or as soon as administratively feasible.
   
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. Requires the CDSS to verify 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:
    
    1. For administrative purposes;
       
    2. To reimburse costs associated with administering grants of school supplies and health-related products to local education agencies or domestic violence shelters; or,
       
    3. 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.
    
13. Provides that the Fund's statutory authorization shall remain in effect only until January 1 of the fifth taxable year following the Fund's first appearance on the PIT return.

FISCAL EFFECT: The FTB estimates that this bill would reduce General Fund revenues by $10,000 in fiscal year (FY) 2017-18 and by $15,000 in FY 2018-19.

COMMENTS:

1. The author has provided the following statement in support of this bill:

Homelessness is prevalent in urban and rural areas of California. The Los Angeles School District has the highest number of homeless students (14,323) and Sacramento ranks among the top six districts in overall number of homeless students and as a county has more homeless students than any other in Northern California.

A significant barrier to success homeless students face is access to basic materials such as school supplies, hygienic and dental products and other basic necessities. Lack of basic material needs accompanied with low self-esteem lead to absenteeism and truancy, which prevents homeless students from obtaining the education that is their best opportunity to escape poverty.

1. 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 charitable school and dental supply program in California. Our mission is to ensure that every child identified as homeless or low-income in public schools, and adults working towards self-sufficiency have the basic materials they need to achieve. From the fall of 2010-2015, we have donated $20,500,000 of materials to more than 350,000 low-income children throughout California. Our organization's success stems from our innovative business model, which mirrors the systems food banks use to centralize resources, leverage the dollar and distribute through partnering organizations. In this instance this includes more than 300 county offices of education, school districts and domestic violence shelters throughout California. This enables us to distribute materials at approximately one-third of their regular cost.

1. This bill is supported by California State PTA, which notes the following:

California State PTA has always supported the needs of vulnerable children. Certainly, homeless children are some of our most vulnerable youth. Many of them lack the basic necessities, leading to absence and truancy which impacts their ability to be successful in school.

The School Supplies for Homeless Children Fund receives upwards of $400,000 in contributions annually and has allowed for the distribution of $1.49 Million worth of school supplies, dental hygiene kits and backpacks to homeless school children due to the required 100% match of funds and in-kind materials from the designated nonprofit organization.

1. Committee staff comments:
   1. California's homeless children: According to the author, during the 2013-14 academic year, 297,617 children enrolled in local education agencies in California were identified as homeless under the federal definition. The author's office notes, "Currently, this population is greater in California than in any other state in the nation and averages out to one homeless student in every classroom."

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.

• 1. 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. Specifically, the Fund received $337,949 in valid contributions in 2014, and $398,900 in 2015.
  2. 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.

REGISTERED SUPPORT / OPPOSITION:

Support

K to College (Sponsor)

California Catholic Conference

California State PTA

California Teachers Association

Common Sense Kids Action

League of California Cities

Opposition

None on file

Analysis Prepared by: M. David Ruff / REV. & TAX. / (916) 319-2098

1. Committee staff is informed that this is the term used by the CDSS to describe a contract. ↑