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AB-347 Preschool: privately funded pilot program: tax credits.(2019-2020)



SECTION 1.

 Article 7.5 (commencing with Section 8239.5) is added to Chapter 2 of Part 6 of Division 1 of Title 1 of the Education Code, to read:

Article  7.5. California Preschool Investment Pilot Program
8239.5.
 The Legislature finds and declares that by providing an additional source of funding, the state can expand the number of preschool slots and the number of subsidies provided to help reduce the waitlist for parents seeking prekindergarten childcare assistance.
8239.6.
 For purposes of this article, the following definitions apply:
(a) “Department” means the State Department of Education.
(b) “Fund” means the California Preschool Investment Fund.
(c) “Person” means an individual, partnership, corporation, limited liability company, association, or other group, however organized.
(d) “Program” means the five-county investor funded preschool pilot program.
8239.7.
 (a) On or before June 1, 2020, a county may apply to the department for consideration of inclusion in the program. For purposes of this section, a county’s local childcare and development planning council, established pursuant to Chapter 2.3 (commencing with Section 8499), shall be responsible for making the application authorized pursuant to this section.
(b) On or before September 1, 2020, the department shall determine, pursuant to subdivision (c), the five counties that shall be included in the program. When making this determination, the department shall ensure that urban, suburban, and rural counties are represented in the program.
(c) The department shall make the determination of which five counties shall be included in the program by giving priority to counties that meet any of the following factors:
(1) The length of the county’s waitlist of individuals seeking public childcare assistance.
(2) The ability to increase the number of preschool slots available to children in the county.
(3) Whether the county received federal Race to the Top funds, authorized under the federal American Recovery and Reinvestment Act of 2009 (Public Law 111-5), with favorable consideration going to the counties that received the funds.
8239.8.
 (a) (1) The department may accept monetary contributions made by a person for funding the purposes of this article. The California Preschool Investment Fund is hereby created in the State Treasury to receive any monetary contributions made pursuant to this article.
(2) (A) The department shall establish a procedure for a person to make monetary contributions to the fund and for a person to obtain from the department a receipt that indicates the amount of monetary contributions made by that person. The receipt shall also contain, at minimum, the date the monetary contribution was made, the name of the person who made the contribution, the amount of the monetary contribution, and whether the person has or has not been allocated a tax credit pursuant to Section 17053.89 or 23688.7 of the Revenue and Taxation Code.
(B) Subject to the annual cap described in subdivision (f) of Sections 17053.89 and 23688.7 of the Revenue and Taxation Code, the department shall allocate credits to contributors on a first-come-first-served basis.
(C) The department shall notify the Franchise Tax Board of the credits allocated on at least a monthly basis, and the Franchise Tax Board and the department shall place this information on their respective internet websites together with information as to the amount of remaining credits, at least every calendar quarter, including information as to whether the cap described in subdivision (f) of Sections 17053.89 and 23688.7 of the Revenue and Taxation Code may be reached by the end of the calendar quarter.
(3) Moneys in the fund shall be allocated as follows:
(A) First, moneys in the fund shall be transferred to the General Fund in an amount equal to the aggregate amount of certified credits allowed pursuant to Sections 17053.89 and 23688.7 of the Revenue and Taxation Code for the taxable year.
(B) Second, upon appropriation:
(i) To the Franchise Tax Board and the department for reimbursement of all administrative costs incurred by those agencies in connection with their duties under this article.
(ii) To the department for purposes of this article, as provided in subdivision (b).
(b) The moneys appropriated to the department pursuant to clause (ii) of subparagraph (B) of paragraph (3) of subdivision (a) shall be used to fund the California state preschool programs, pursuant to Article 7 (commencing with Section 8235). The moneys shall only be used to support state preschools located in one of the five counties participating in the program.
8239.9.
 A county selected to participate in the program pursuant to Section 8239.7 shall annually report to the department’s Early Learning and Care Division. The report shall contain the county’s assessment of how the program is performing.
8239.10.
 (a) This article shall remain in effect only until January 1, 2025, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2025, deletes or extends that date.
(b) Any moneys remaining in the fund as of January 1, 2025, shall be transferred to any other state fund identified by the department that provides funding for increased access to preschool programs for low-income children.

SEC. 2.

 Section 41202 of the Education Code is amended to read:

41202.
 The words and phrases set forth in subdivision (b) of Section 8 of Article XVI of the Constitution of the State of California shall have the following meanings:
(a) “Moneys to be applied by the State,” as used in subdivision (b) of Section 8 of Article XVI of the California Constitution, means appropriations from the General Fund that are made for allocation to school districts, as defined, or community college districts. An appropriation that is withheld, impounded, or made without provisions for its allocation to school districts or community college districts shall not be considered to be “moneys to be applied by the State.”
(b) (1)  “General Fund revenues which may be appropriated pursuant to Article XIII B,” as used in paragraph (1) of subdivision (b) of Section 8 of Article XVI of the California Constitution, means General Fund revenues that are the proceeds of taxes as defined by subdivision (c) of Section 8 of Article XIII B of the California Constitution, including, for the 1986–87 fiscal year only, any revenues that are determined to be in excess of the appropriations limit established pursuant to Article XIII B of the California Constitution for the fiscal year in which they are received. General Fund revenues for a fiscal year to which paragraph (1) of subdivision (b) of Section 8 of Article XVI of the California Constitution is being applied shall include, in that computation, only General Fund revenues for that fiscal year that are the proceeds of taxes, as defined in subdivision (c) of Section 8 of Article XIII B of the California Constitution, and shall not include prior fiscal year revenues. Commencing with the 1995–96 fiscal year, and each fiscal year thereafter, “General Fund revenues that are the proceeds of taxes,” as defined in subdivision (c) of Section 8 of Article XIII B of the California Constitution, includes any portion of the proceeds of taxes received from the state sales tax that are transferred to the counties pursuant to, and only if, legislation is enacted during the 1995–96 fiscal year the purpose of which is to realign children’s programs. The amount of the proceeds of taxes shall be computed for any fiscal year in a manner consistent with the manner in which the amount of the proceeds of taxes was computed by the Department of Finance for purposes of the Governor’s Budget for the Budget Act of 1986 (Chapter 186 of the Statutes of 1986). 1986. 
(2) (A)   For purposes of calculating the moneys to be applied by the state, as used in subdivision (b) of Section 8 of Article XVI of the California Constitution, the General Fund revenues that are the proceeds of taxes, as defined in subdivision (c) of Section 8 of Article XIII   B of the California Constitution, shall include the total annual amount of credit claimed pursuant to Sections 17053.89 and 23688.7 of the Revenue and Taxation Code as though they were proceeds of taxes.
(B) This paragraph shall become inoperative on January 1, 2025.
(c) “General Fund revenues appropriated for school districts,” as used in paragraph (1) of subdivision (b) of Section 8 of Article XVI of the California Constitution, means the sum of appropriations made that are for allocation to school districts, as defined in Section 41302.5, regardless of whether those appropriations were made from the General Fund to the Superintendent, to the Controller, or to any other fund or state agency for the purpose of allocation to school districts. The full amount of any appropriation shall be included in the calculation of the percentage required by paragraph (1) of subdivision (b) of Article XVI of the California Constitution, without regard to any unexpended balance of any appropriation. Any reappropriation of funds appropriated in any prior year shall not be included in the sum of appropriations.
(d) “General Fund revenues appropriated for community college districts,” as used in paragraph (1) of subdivision (b) of Section 8 of Article XVI of the California Constitution, means the sum of appropriations made that are for allocation to community college districts, regardless of whether those appropriations were made from the General Fund to the Controller, to the Chancellor of the California Community Colleges, or to any other fund or state agency for the purpose of allocation to community college districts. The full amount of any appropriation shall be included in the calculation of the percentage required by paragraph (1) of subdivision (b) of Article XVI of the California Constitution, without regard to any unexpended balance of any appropriation. Any reappropriation of funds appropriated in any prior year shall not be included in the sum of appropriations.
(e) “Total allocations to school districts and community college districts from General Fund proceeds of taxes appropriated pursuant to Article XIII B,” as used in paragraph (2) or (3) of subdivision (b) of Section 8 of Article XVI of the California Constitution, means the sum of appropriations made that are for allocation to school districts, as defined in Section 41302.5, and community college districts, regardless of whether those appropriations were made from the General Fund to the Controller, to the Superintendent, to the Chancellor of the California Community Colleges, or to any other fund or state agency for the purpose of allocation to school districts and community college districts. The full amount of any appropriation shall be included in the calculation of the percentage required by paragraph (2) or (3) of subdivision (b) of Section 8 of Article XVI of the California Constitution, without regard to any unexpended balance of any appropriation. Any reappropriation of funds appropriated in any prior year shall not be included in the sum of appropriations.
(f) “General Fund revenues appropriated for school districts and community college districts, respectively” and “moneys to be applied by the state for the support of school districts and community college districts,” as used in Section 8 of Article XVI of the California Constitution, shall include funds appropriated to local educational agencies, as defined in Section 8208,  for part-day California state preschool programs under Article 7 (commencing with Section 8235) of Chapter 2 of Part 6 of Division 1 of Title 1, funds appropriated to local educational agencies, as defined in subdivision (a l) of  Section 8208, to create a full day of care for children participating in the California state preschool program, and funds appropriated for the After School Education and Safety Program established pursuant to Article 22.5 (commencing with Section 8482) of Chapter 2 of Part 6 of Division 1 of Title 1, and shall not include any of the following:
(1) Any appropriation that is not made for allocation to a school district, as defined in Section 41302.5, or to a community college district, regardless of whether the appropriation is made for any purpose that may be considered to be for the benefit to a school district, as defined in Section 41302.5, or a community college district. This paragraph shall not be construed to exclude any funding appropriated to local educational agencies, as defined in Section 8208,  for part-day California state preschool programs under Article 7 (commencing with Section 8235) of Chapter 2 of Part 6 of Division 1 of Title 1, to local educational agencies, as defined in Section 8208, to  create a full day of care for children participating in the California state preschool program, or for the After School Education and Safety Program established pursuant to Article 22.5 (commencing with Section 8482) of Chapter 2 of Part 6 of Division 1 of Title 1.
(2) Any appropriation made to the Teachers’ Retirement Fund or to the Public Employees’ Retirement Fund except those appropriations for reimbursable state mandates imposed on or before January 1, 1988.
(3) Any appropriation made to service any public debt approved by the voters of this state.
(4) With the exception of the programs identified in paragraph (1), commencing with the 2011–12 fiscal year, any funds appropriated for the Child Care and Development Services Act, pursuant to Chapter 2 (commencing with Section 8200) of Part 6 of Division 1 of Title 1.
(g) “Allocated local proceeds of taxes,” as used in paragraph (2) or (3) of subdivision (b) of Section 8 of Article XVI of the California Constitution, means, for school districts as defined, those local revenues, except revenues identified pursuant to paragraph (5) of subdivision (j) of Section 42238.02, that are used to offset state aid for school districts in calculations performed pursuant to Sections 2558 and 42238 and Chapter 7.2 (commencing with Section 56836) of Part 30.
(h) “Allocated local proceeds of taxes,” as used in paragraph (2) or (3) of subdivision (b) of Section 8 of Article XVI of the California Constitution, means, for community college districts, those local revenues that are used to offset state aid for community college districts. In no event shall the revenues or receipts derived from student fees be considered “allocated local proceeds of taxes.”
(i) For purposes of calculating the 4-percent entitlement pursuant to subdivision (a) of Section 8.5 of Article XVI of the California Constitution, “the total amount required pursuant to Section 8(b)” shall mean the General Fund aid required for schools pursuant to subdivision (b) of Section 8 of Article XVI of the California Constitution, and shall not include allocated local proceeds of taxes.
(j) This section shall become inoperative on December 15, 2012, and, as of January 1, 2013, is repealed, only if the Schools and Local Public Safety Protection Act of 2012 (Attorney General reference number 12-0009) is not approved by the voters at the November 6, 2012, statewide general election, or if the provisions of that act that modify personal income tax rates do not become operative due to a conflict with another initiative measure that is approved at the same election and receives a greater number of affirmative votes.

SEC. 3.

 Section 17053.89 is added to the Revenue and Taxation Code, to read:

17053.89.
 (a) For taxable years beginning on or after January 1, 2020, and before January 1, 2024, there shall be allowed as a credit against the “net tax,” as defined in Section 17039, an amount equal to 40 percent of the amount contributed by the taxpayer during the taxable year to the California Preschool Investment Fund, created by Section 8239.8 of the Education Code.
(b) A credit shall only be allowed if the taxpayer has received a receipt from the State Department of Education pursuant to Section 8239.8 of the Education Code that indicates that the taxpayer has made a contribution to the California Preschool Investment Fund and that a credit would be allowed under this section. The taxpayer shall provide the receipt upon request to the Franchise Tax Board.
(c) (1) In the case where the credit allowed by this section exceeds the “net tax,” the excess may be carried over to reduce the “net tax” in the following year, and succeeding four years if necessary, until the credit is exhausted.
(2) A deduction otherwise allowed under this part for any amount contributed by the taxpayer upon which the credit is based shall be reduced by the amount of the credit allowed in subdivision (a).
(d) Credit under this section shall be allowed only for credits claimed on a timely filed original return of the taxpayer.
(e) (1) The Franchise Tax Board may prescribe regulations necessary or appropriate to carry out the purposes of this section.
(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code does not apply to any standard, criterion, procedure, determination, rule, notice, or guideline established or issued by the Franchise Tax Board pursuant to this section.
(f) The aggregate amount of credit that may be allowed pursuant to this section and Section 23688.7 shall not exceed two hundred fifty million dollars ($250,000,000) for each calendar year.
(g) This section is repealed on December 1, 2024.

SEC. 4.

 Section 23688.7 is added to the Revenue and Taxation Code, to read:

23688.7.
 (a) For taxable years beginning on or after January 1, 2020, and before January 1, 2024, there shall be allowed as a credit against the “tax,” as defined in Section 23036, an amount equal to 40 percent of the amount contributed by the taxpayer during the taxable year to the California Preschool Investment Fund, created by Section 8239.8 of the Education Code.
(b) A credit shall only be allowed if the taxpayer has received a receipt from the State Department of Education pursuant to Section 8239.8 of the Education Code that indicates that the taxpayer has made a contribution to the California Preschool Investment Fund and that a credit would be allowed under this section. The taxpayer shall provide the receipt upon request to the Franchise Tax Board.
(c) (1) In the case where the credit allowed by this section exceeds the “tax,” the excess may be carried over to reduce the “tax” in the following year, and succeeding four years if necessary, until the credit is exhausted.
(2) A deduction otherwise allowed under this part for any amount contributed by the taxpayer upon which the credit is based shall be reduced by the amount of the credit allowed in subdivision (a).
(d) Credit under this section shall be allowed only for credits claimed on a timely filed original return of the taxpayer.
(e) (1) The Franchise Tax Board may prescribe regulations necessary or appropriate to carry out the purposes of this section.
(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code does not apply to any standard, criterion, procedure, determination, rule, notice, or guideline established or issued by the Franchise Tax Board pursuant to this section.
(f) The aggregate amount of credit that may be allowed pursuant to this section and Section 17053.89 shall not exceed two hundred fifty million dollars ($250,000,000) for each calendar year.
(g) This section is repealed on December 1, 2024.