Existing law allows individual taxpayers to contribute amounts in excess of their personal tax liability for the support of specified funds or accounts and previously allowed contributions to the State Childrens Trust Fund, which provides funding for child abuse and neglect prevention and intervention programs.

This bill, for taxable years beginning on or after January 1, 2015, would allow individual taxpayers to contribute amounts in excess of their tax liability to the State Childrens Trust Fund. The bill would prohibit a voluntary contribution designation for this fund from being added on the form of the tax return until another designation is removed or space is available, whichever occurs first.

This bill would require moneys in the State Childrens Trust Fund from the voluntary contributions, upon appropriation by the Legislature, to be allocated to the Franchise Tax Board and the Controller for reimbursement of costs, as provided, and the balance to the State Department of Social Services for specified uses related to the prevention of child abuse and neglect, as provided.

This bill would provide that these voluntary contribution provisions are inoperative and repealed on the earlier of the following: inoperative on January 1 of the 5th taxable year following the first appearance of the fund on the tax return and repealed on December 1 of that year or inoperative for taxable years beginning on or after January 1 of a specified calendar year in which the Franchise Tax Board estimates by September 1 that the contributions made on returns filed in that calendar year will be less than $250,000, or an adjusted amount for subsequent taxable years, and repealed on December 1 of that calendar year.

Existing law allows individual taxpayers to contribute amounts in excess of their personal tax liability for the support of specified funds or accounts and previously allowed contributions to the State Childrens Trust Fund, which provides funding for child abuse and neglect prevention and intervention programs.

This bill, for taxable years beginning on or after January 1, 2015, would allow individual taxpayers to contribute amounts in excess of their tax liability to the State Childrens Trust Fund. The bill would prohibit a voluntary contribution designation for this fund from being added on the form of the tax return until another designation is removed or space is available, whichever occurs first.

This bill would require moneys in the State Childrens Trust Fund from the voluntary contributions, upon appropriation by the Legislature, to be allocated to the Franchise Tax Board and the Controller for reimbursement of costs, as provided, and the balance to the State Department of Social Services for specified uses related to the prevention of child abuse and neglect, as provided.

This bill would provide that these voluntary contribution provisions are inoperative and repealed on the earlier of the following: inoperative on January 1 of the 5th taxable year following the first appearance of the fund on the tax return and repealed on December 1 of that year or inoperative for taxable years beginning on or after January 1 of a specified calendar year in which the Franchise Tax Board estimates by September 1 that the contributions made on returns filed in that calendar year will be less than $250,000, or an adjusted amount for subsequent taxable years, and repealed on December 1 of that calendar year.

Existing law allows individual taxpayers to contribute amounts in excess of their personal tax liability for the support of specified funds or accounts and previously allowed contributions to the State Childrens Trust Fund, which provided provides funding for child abuse and neglect prevention and intervention programs.

This bill, for taxable years beginning on or after January 1, 2015, would allow individual taxpayers to contribute amounts in excess of their tax liability to the State Childrens Trust Fund. The bill would prohibit a voluntary contribution designation for this fund from being added on the form of the tax return until another designation is removed or space is available, whichever occurs first.

This bill would require moneys in the State Childrens Trust Fund, Fund from the voluntary contributions, upon appropriation by the Legislature, to be allocated to the Franchise Tax Board and the Controller for reimbursement of costs, as provided, and the balance to the State Department of Social Services for specified uses related to the prevention of child abuse and neglect, as provided.

This bill would provide that these voluntary contribution provisions are inoperative and repealed on the earlier of the following: inoperative on January 1 of the 5th taxable year following the first appearance of the fund on the tax return and repealed on December 1 of that year or inoperative for taxable years beginning on or after January 1 of a specified calendar year in which the Franchise Tax Board estimates by September 1 that the contributions made on returns filed in that calendar year will be less than $250,000, or an adjusted amount for subsequent taxable years, and repealed on December 1 of that calendar year.

Existing law allows individual taxpayers to contribute amounts in excess of their personal tax liability for the support of specified funds or accounts and previously allowed contributions to the State Childrens Trust Fund, which provided funding for child abuse and neglect prevention and intervention programs.

This bill would, for taxable years beginning on or after January 1, 2015, would allow individual taxpayers to contribute amounts in excess of their tax liability to the State Childrens Trust Fund, and would require the Franchise Tax Board to designate the fund as the first voluntary contribution option on the personal income tax return. This bill would, upon appropriation by the Legislature, provide for the specified allocation from the State Childrens Trust Fund of the contribution amounts obtained pursuant to this bill Fund. The bill would prohibit a voluntary contribution designation for this fund from being added until another designation is removed or space is available, whichever occurs first.

The Personal Income Tax Law Existing law allows for various credits against the tax imposed by that law. individual taxpayers to contribute amounts in excess of their personal tax liability for the support of specified funds or accounts and previously allowed contributions to the State Childrens Trust Fund, which provided funding for child abuse and neglect prevention and intervention programs.

This bill would state the intent of the Legislature to enact legislation to provide a tax credit for the purchase of high-speed Internet access for deaf or hard-of-hearing taxpayers. would, for taxable years beginning on or after January 1, 2015, allow individual taxpayers to contribute amounts in excess of their tax liability to the State Childrens Trust Fund, and would require the Franchise Tax Board to designate the fund as the first voluntary contribution option on the personal income tax return. This bill would, upon appropriation by the Legislature, provide for the specified allocation from the State Childrens Trust Fund of the contribution amounts obtained pursuant to this bill.

The Personal Income Tax Law allows for various credits against the tax imposed by that law.

This bill would state the intent of the Legislature to enact legislation to provide a tax credit for the purchase of high-speed Internet access for deaf or hard-of-hearing taxpayers.

 THIRD READING  

Bill No: AB 924

Author: Cooley (D)

Amended: 4/29/15 in Assembly

Vote: 21

SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 6/17/15

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

SENATE APPROPRIATIONS COMMITTEE: 6-0, 6/29/15

AYES: Lara, Beall, Hill, Leyva, Mendoza, Nielsen

NO VOTE RECORDED: Bates

ASSEMBLY FLOOR: 74-0, 5/22/15 - See last page for vote

SUBJECT: Personal income tax: voluntary contributions: State Children’s Trust Fund

SOURCE: Author

DIGEST: This bill reauthorizes the addition of the State Children's Trust Fund check-off to 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. Check-off amounts may be claimed as charitable contributions on taxpayers’ tax returns in the subsequent year.

2. 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:

• California Firefighters’ Memorial Foundation Fund,

• California Peace Officer Memorial Foundation Fund, and

• California Seniors Special Fund.

3. Requires the Franchise Tax Board (FTB) to deposit the total of all contributions 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 FTB, the Controller, and an administrative agency may deduct from the amount of donations each VCF receives for direct costs of administering a fund.

This bill will reauthorize the addition of the State Children's Trust Fund check-off to the personal income tax return.

Background

There are currently 18 check-offs listed on the tax return form. The tax check-off program typically collects $4-5 million in annual contributions for all VCFs.

The State Children's Trust Fund first appeared on the 1983 personal income tax return. By 2014, the inflation-adjusted minimum contribution threshold was $324,972, but the fund only received contributions of approximately $303,000. As a result, the fund was not included on the 2014 personal income tax return (which is filed in 2015) and discontinued. Reauthorizing the Fund effectively resets the minimum contribution to $250,000 in contravention of the general policy for voluntary contribution funds.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee, FTB estimates that this bill will result in an annual revenue loss of $8,000 (General Fund) for every $250,000 contributed by itemizing taxpayers. FTB, the Department of Social Services, and the Controller’s Office will be reimbursed for related administrative costs.

SUPPORT: (Verified 7/1/15)

California Family Resource Association

Child Abuse Prevention Center

Child Abuse Prevention Council of Sacramento

Children’s Bureau of Southern California

Insights Counseling Group

Kern County Network for Children

Kids First

Local Planning Council for Child Care & Development in Del Norte County

North County Rape Crisis & Child Protection Center

Orangewood Children’s Foundation

Plumas Crisis Intervention and Resource Center

Prevent Child Abuse California

Roundhouse Council

Santa Maria Valley Youth & Family Center

The Partnership for Safe Families & Communities of Ventura County

OPPOSITION: (Verified 7/1/15)

California Department of Finance

ARGUMENTS IN SUPPORT: Supporters note that the State Children's Trust Fund has, until now, been one of the twenty donation options on California Tax Forms. AB 924 would reinstate the State Children's Trust Fund, ensuring that voluntary contributions to the Fund remain an option on tax forms.

Additionally, the loss of this funding stream is resulting in fewer prevention programs that directly target child abuse and neglect, a preventable tragedy that affects nearly half a million California children each year.

ARGUMENTS IN OPPOSITION: Opponents argue 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: 74-0, 5/22/15

AYES: Achadjian, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, 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-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Wilk, Williams, Wood, Atkins

NO VOTE RECORDED: Alejo, Jones, O'Donnell, Olsen, Waldron, Weber

Prepared by: Myriam Bouaziz / GOV. & F. / (916) 651-4119

7/1/15 16:08:49

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

AB 924 (Cooley) - Personal income tax: voluntary contributions: State Children’s Trust Fund.

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

Bill Summary: AB 924 would reauthorize the addition of the State Children's Trust Fund check-off to the personal income tax return.

Fiscal Impact:

• The Franchise Tax Board (FTB) estimates that this bill would result in an annual revenue loss of $8,000 (General Fund) for every $250,000 contributed by itemizing taxpayers.

• The Department of Social Services (DSS) would incur minor and absorbable costs to administer the program and provide grants.

• The State Controller’s Office, DSS, and FTB and would be reimbursed for related administrative costs.

Background: Current law allows taxpayers to contribute money to one or more of 18 voluntary contribution funds during the process of filing their state income tax return (tax check-off). 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 State Children's Trust Fund (Fund) first appeared on the personal income tax return in 1983. By 2014, the inflation-adjusted minimum contribution threshold was $324,972, but that year the Fund only received contributions of about $303,000. Consequently, it was omitted from personal income tax return beginning taxable year 2014.

Proposed Law: This bill would reauthorize the addition of the State Children's Trust Fund), and thereby permit a taxpayer to make a voluntary contribution to the Fund on the state personal income tax return, beginning (1) when an existing checkoff for a charitable fund contribution has been removed, or (2) as soon as space is available. The Fund would be required to meet the minimum annual contribution threshold of $250,000, indexed for inflation, and its provisions would automatically sunset on January 1 of the fifth taxable year following the Fund's first appearance on the personal income tax return.

Upon appropriation by the Legislature, funds raised would be allocated to DSS, up to 10 percent of which may be used for public education about child abuse and neglect prevention and early intervention, and the remainder of which may be used for innovative child abuse and neglect prevention and intervention programs operated by nonprofit organizations and public institutions of higher education.

Related Legislation: SB 164 (Simitian, Chapter 669, Statutes of 2011) extended the repeal date of the Fund’s voluntary contribution check-off from January 1, 2013, to January 1, 2018, subject to meeting the annual minimum contribution requirement.

Staff Comments: FTB data indicate that roughly one-half of taxpayers who contribute to the Fund itemize their deductions. The average tax rate for these taxpayers is about six percent, which produces the $9,000 annual revenue loss. In 2012, about 89,000 out of 15 million taxpayers (or less than one percent) utilized one or more of the 18 check-offs; aggregate contributions totaled $4.8 million.

Reauthorizing the Fund would effectively reset its annual minimum contribution to $250,000.

-- END --

SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Robert M. Hertzberg, Chair

2015 - 2016 Regular

PERSONAL INCOME TAX: VOLUNTARY CONTRIBUTIONS: STATE CHILDREN’S TRUST FUND

Reauthorizes the addition of the State Children's Trust Fund check-off to the personal income tax return.

Background and Existing Law

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 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:

• 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 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 FTB, the Controller, and an administrative agency may deduct from the amount of donations each VCFs receives for direct costs of administering a fund.

There are currently 18 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 924 reauthorizes the addition of the State Children's Trust Fund (Fund), and allows a taxpayer to make a voluntary contribution to the Fund on the state personal income tax return, beginning once an existing check-off for charitable fund contribution has been removed, or as soon as space is available. The bill requires the Fund to meet a minimum contribution threshold of $250,000, indexed yearly for inflation.

Additionally, the bill provides that all money transferred to the Fund, upon appropriation by the Legislature, be allocated as follows:

• To FTB and the State Controller for reimbursement of all costs incurred in administering the VCF,

• Up to 10% to the State Department of Social Services (CDSS) to pursue public education about child abuse, neglect prevention, and early intervention to encourage voluntary contributions to the Fund. The CDSS may delegate these duties by entering into a contract with a designated private entity that has demonstrated experience in education and promotion and,

• The remainder to the CDSS for innovative child abuse, neglect prevention, and intervention programs operated by private nonprofit organizations or public institutions of higher education with recognized expertise, in fields related to child welfare and for evaluation, research, or dissemination of information concerning existing program models.

AB 924 provides that the bill automatically sunsets on January 1 of the fifth taxable year following the Fund's first appearance on the personal income tax form.

State Revenue Impact

FTB estimates annual revenue losses of roughly $8,000 for every $250,000 contributed to the Fund by taxpayers who itemize.

Comments

1. Purpose of the bill. According to the author, “Over the last five years the Trust Fund received between $305,000 and $760,000 from voluntary check-off contributions annually. The contributions each year have represented roughly 52 percent of the revenue deposited into the fund, a critically important source of funding activities. The loss of this funding stream is resulting in fewer prevention programs that directly target child abuse and neglect receiving funds. To ensure these programs remain supported, AB 924 reinstates the State Children's Trust Fund as a donation option for a person to make in completing their taxes, if they expect a refund.”

2. Hitting the reset button. The State Children's Trust Fund first appeared on the 1983 personal income tax return. By 2014, the inflation-adjusted minimum contribution threshold was $324,972, but the fund only received contributions of approximately $303,000. As a result, the fund was not included on the 2014 personal income tax return (which is filed in 2015) and discontinued. Reauthorizing the Fund effectively resets the minimum contribution to $250,000 in contravention of the general policy for voluntary contribution funds.

3. 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 to 18 check-offs. Last year 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. SB 1207 (Wolk) was held on suspense in Assembly Appropriations.

4. 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 18. With legislation introduced every year to add new VCFs, there is little reason to expect this number to stop growing. The growing number results in significant costs to the Franchise Tax Board (FTB). It is estimated that FTB can only handle 12-15 more check-offs before it has to redesign its information technology system, at a cost of $800,000 to $1 million.

Assembly Actions

Assembly Revenue and Taxation 7-0

Assembly Appropriations 17-0

Assembly Floor 74-0

Support and Opposition

(6/11/15)

Support: California Family Resource Association; Child Abuse Prevention Center; Child Abuse Prevention Council of Sacramento; Children’s Bureau of Southern California; Insights Counseling Group; Kern County Network for Children; Kids First; Local Planning Council for Child Care & Development in Del Norte County; North County Rape Crisis & Child Protection Center; Orangewood Children’s Foundation; Plumas Crisis Intervention and Resource Center; Prevent Child Abuse California; Roundhouse Council; Santa Maria Valley Youth & Family Center; The Partnership for Safe Families & Communities of Ventura County.

Opposition: California Department of Finance.

-- END --

Date of Hearing: May 13, 2015

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Jimmy Gomez, Chair

ABPCA Bill Id:AB 924

Author:(Cooley) – As Amended Ver:April 29, 2015

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

SUMMARY:

This bill reauthorizes the addition of the State Children's Trust Fund (Fund), and allows a taxpayer to make a voluntary contribution to the Fund on the state personal income tax return, beginning once an existing checkoff for charitable fund contribution has been removed.

Funds raised would, upon appropriation by the Legislature, be allocated to the Department of Social Services (DSS), up to 10% of which may be used for public education about child abuse and neglect prevention and early intervention, and the remainder of which may be used for innovative child abuse and neglect prevention and intervention programs operated by nonprofit organizations and public institutions of higher education.

The bill requires the Fund to meet the minimum annual contribution threshold of $250,000, indexed for inflation, and would require the Fund's provisions to automatically sunset on January 1 of the fifth taxable year following the Fund's first appearance on the personal income tax return.

FISCAL EFFECT:

1) Minor and absorbable costs to the DSS to administer program and grants, funded by up to 5% of the contributions to the Fund; insignificant administrative costs to the Franchise Tax Board (FTB), reimbursed from contributions to the Fund.

2) Estimated GF revenue decreases of approximately $8,000 in each year the voluntary contribution fund remains on the personal income tax return.

COMMENTS:

1) Purpose. According to the author, the State Children's Trust Fund received between $305,00- and $760,000 annually over the past 5 years from the voluntary checkoff program, representing half of the revenue deposited in the Fund. The author claims the loss of this funding has resulted in fewer prevention programs that directly target child abuse and neglect. AB 924 reinstates the State Children's Trust Fund as a donation option on the tax form, restoring that source of potential funding.

2) Worthy Cause, Modest Support. With few exceptions, voluntary contribution funds remain on the personal income tax return until they are either repealed or fail to meet their minimum contribution amount, typically $250,000, indexed for inflation. If FTB estimates a contribution fund is likely to fail to meet the minimum contribution amount, that fund is repealed effective January 1 of that calendar year.

An identically-named voluntary contribution fund first appeared on the 1983 personal income tax return. By 2014, the inflation-adjusted minimum contribution threshold was $324,972, but the fund only received contributions of approximately $303,000. As a result, the fund was not included on the 2014 personal income tax return (which is filed in 2015) and discontinued. Reauthorizing the Fund effectively resets the minimum contribution to $250,000 in contravention of the general policy for voluntary contribution funds.

3) Spend Money to Make Money. This bill allows DSS to spend up to 10% of Fund moneys to encourage additional contributions to the Fund, presumably to prevent the Fund from being removed again for failing to meet its minimum contribution threshold. With limited space for voluntary contribution funds and increasing competition among charitable causes for inclusion, this evolutionary mechanism may help funds better defend their position on the Darwinian voluntary checkoff page of the personal income tax return.

Analysis Prepared by: Joel Tashjian / APPR. / (916) 319-2081

Date of Hearing: April 20, 2015

ASSEMBLY COMMITTEE ON REVENUE AND TAXATION

Philip Ting, Chair

ABPCA Bill Id:AB 924

Author:(Cooley) – As Amended Ver:April 13, 2015

Majority vote. Fiscal committee.

SUBJECT: Personal income tax: voluntary contributions: State Children's Trust Fund

SUMMARY: Reauthorizes the addition of the State Children's Trust Fund (Fund) checkoff to the personal income tax (PIT) return upon the removal of another voluntary contribution fund (VCF) from the return, or as soon as space is available. Specifically, this bill:

1. 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) and the State Controller for reimbursement of all costs incurred in administering the VCF;
      
      

   2. Up to 10% to the State Department of Social Services (CDSS) to pursue public education about child abuse and neglect prevention and early intervention in order to encourage voluntary contributions to the Fund. The CDSS may delegate these duties by entering into a contract with a designated private entity that has demonstrated experience in education and promotion; and,
      
      

   3. The remainder to the CDSS for innovative child abuse and neglect prevention and intervention programs operated by private nonprofit organizations or public institutions of higher education with recognized expertise in fields related to child welfare and for evaluation, research, or dissemination of information concerning existing program models for the purpose of replication of successful models as specified in Welfare and Institutions Code (WIC) Section 18965 et seq.
      
      

2. Provides that it is the Legislature's intent to create an additional source of funding, and that moneys generated shall not be used in place of funds from other sources that are available to the Fund.
   
   

3. Provides for the Fund provisions' automatic sunset on January 1 of the fifth taxable year following the Fund's first appearance on the PIT return.

4. Requires the Fund to meet a minimum contribution threshold of $250,000 indexed for inflation.

EXISTING LAW:

1. Allows taxpayers to contribute to one or more of 18 VCFs on the 2014 PIT return.
   
   

2. Provides a specific sunset date for each VCF, except for the California Seniors Special Fund and the State Parks Protection Fund.
   
   

3. Requires each VCF to meet an annual minimum contribution amount to remain in effect, except for the California Firefighters' Memorial Fund, the California Peace Officer Memorial Foundation Fund, and the California Seniors Special Fund.
   
   

4. Establishes, pursuant to WIC Section 18969, the Fund in the State Treasury. Money in the Fund, upon appropriation by the Legislature, is allocated to the CDSS to fund child abuse and neglect prevention and intervention programs.
   
   

5. Provides that the CDSS shall use no more than 5% of the funds appropriated under WIC Section 18969 for administrative costs.

FISCAL EFFECT: The FTB estimates annual revenue losses of roughly $8,000 for every $250,000 contributed to the Fund by taxpayers who itemize.

COMMENTS:

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

Over the last five years, the Trust Fund received between $305,000 and $760,000 from voluntary "check-off" contributions annually. The contributions each year have represented roughly 52 percent of the revenue deposited into the fund, a critically important source of funding activities. The loss of this funding stream is resulting in fewer prevention programs that directly target child abuse and neglect receiving funds. To ensure these programs remain supported, AB 924 reinstates [. . .] the State Children's Trust Fund as a donation option for a person to make in completing their taxes, if they expect a refund.

2. Proponents of this bill note the following:

The State Children's Trust Fund has, until now, been one of the twenty donation options on California Tax Forms. AB 924 would reinstate the State Children's Trust Fund, ensuring that voluntary contributions to the Fund remain an option on tax forms.

The loss of this funding stream is resulting in fewer prevention programs that directly target child abuse and neglect, a preventable tragedy that affects nearly half a million California children each year.

3. Committee Staff Comments

   1. So many causes, so little space: There are countless worthy causes that would benefit from the inclusion of a VCF on the state's income tax returns. At the same time, space on the returns is limited. Thus, it could be argued that the current system for adding VCFs to the form is subjective and essentially rewards organizations that can convince the Legislature to include their fund on the form.

   2. The prior VCF: Prior law authorized individuals to designate contributions in excess of tax liability to an identically-named VCF. This VCF first appeared on the 1983 PIT return. In 2014, the VCF's inflation-adjusted minimum contribution threshold was $324,972. The VCF, however, only received valid contributions totaling $303,159. Thus, the VCF was not included on the 2014 PIT return filed in 2015.

   3. VCF policy: This Committee's VCF policy provides that "[A]ll proponents seeking authorization for a new or reauthorized checkoff shall provide information justifying their expectation that the checkoff will meet its minimum contribution requirement." In addition, this Committee's VCF policy states that, "Checkoffs that have failed to meet their minimum contribution requirement will not be extended or reauthorized." To this end, Committee staff questions the precedent of simply re-establishing past VCFs when they fail to garner sufficient support to remain on the form. Moreover, the Committee may wish to consider whether it is appropriate to effectively "re-set" this VCF's minimum contribution threshold back to $250,000, as if it were a completely new VCF.

   4. A question of percentages: This bill would allow the CDSS to spend up to 10% of Fund moneys to encourage voluntary contributions to the Fund. Ostensibly, this is being done to prevent the Fund from falling off the PIT return in the future for failing to meet its minimum contribution threshold. While it is not entirely clear from this bill's language, Committee staff assumes that the 10% limit applies to the entire amount contributed to the VCF, and not the remaining amount distributed to the CDSS after reimbursing the FTB and the State Controller for their administrative expenses. Thus, if the Fund were to receive $250,000 through the VCF, up to $25,000 could be spent to promote future donations. The CDSS could apparently spend this money directly or contract promotion services out to a private entity.

It is not clear, however, how this limitation would interact, if at all, with the existing limitation on administrative expenses imposed by WIC Section 18969, which established the Fund and specifies that the CDSS shall use no more than 5% of the funds appropriated under WIC Section 18969 for administrative costs. Would this 5% limitation also apply to moneys generated through the VCF? If so, would this 5% cap for administrative costs be on top of the 10% available for VCF promotion? The author may wish to clarify these issues through appropriate amendments.

REGISTERED SUPPORT / OPPOSITION:

Support

Child Abuse Prevention Council of Sacramento

Insights Counseling Group

Kern County Network for Children

KidsFirst

Plumas Crisis Intervention and Resource Center

Prevent Child Abuse California

Opposition

None on file

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