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SB-805 Small nonprofit performing arts organizations: payroll and paymaster services: grants.(2021-2022)

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Date Published: 09/14/2021 09:00 PM
SB805:v93#DOCUMENT

Enrolled  September 14, 2021
Passed  IN  Senate  September 10, 2021
Passed  IN  Assembly  September 10, 2021
Amended  IN  Assembly  September 03, 2021
Amended  IN  Assembly  June 24, 2021
Amended  IN  Senate  May 20, 2021
Amended  IN  Senate  April 20, 2021
Amended  IN  Senate  March 10, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 805


Introduced by Senator Rubio
(Principal coauthor: Senator Allen)
(Coauthor: Senator Portantino)

February 19, 2021


An act to add Sections 8750.5 and 8753.7 to the Government Code, relating to state government.


LEGISLATIVE COUNSEL'S DIGEST


SB 805, Rubio. Small nonprofit performing arts organizations: payroll and paymaster services: grants.
Existing law, the Dixon-Zenovich-Maddy California Arts Act of 1975, establishes the Arts Council, consisting of 11 appointed members. Existing law specifies the duties of the council, including, among others, encouraging artistic awareness, participation, and expression, helping independent local groups develop their own art programs, promoting the employment of artists and those skilled in crafts in both the public and private sector, awarding prizes or directing grants to individuals or organizations, as specified, and establishing grant application criteria and procedure.
This bill would, upon appropriation by the Legislature, require the council to establish and administer the California Nonprofit Performing Arts Paymaster program. The bill would require the council to issue a request for proposals and award contracts to be a California nonprofit performing arts paymaster on a competitive basis to 2 or more nonprofit contractors to provide payroll and paymaster services to small nonprofit performing arts organizations, as defined. The bill would require the council to establish a criteria to rate and rank applicants and establish necessary contract terms. The bill would, upon appropriation, require the council to provide a nonprofit contractor selected to provide payroll services with a grant award in an amount necessary to fund the initial startup costs.
This bill would authorize a nonprofit contractor providing services to charge a fee to a nonprofit performing arts organization that receives payroll or paymaster services, provided that the fee does not exceed the cost of providing the services. The bill would require a nonprofit contractor that provides services under these provisions to submit an annual report to the council by July 31 of each year that provides specified information from the prior fiscal year, including, among other things, a detailed accounting of all fees charged and collected.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 The Legislature finds and declares all of the following:
(a) Small nonprofit performing arts companies (SNPACs) create and preserve opportunities for performers and people in the performing arts sector, particularly workers in marginalized communities.
(b) SNPACs are often the on-ramps for emerging performers and people entering the performing arts industries, and they are incubators for new works.
(c) Because of historic undercapitalization of community-based arts and the effects of prolonged shutdown, SNPACs are reducing the number of people they hire and the number of programs they offer.
(d) SNPACs present stories that resonate with and reflect the community, the artists, and the social context of the times. The size of cast and the need for designers, choreographers, and other production workers is largely dictated by the requirements of the story being told. It is important to preserve this outlet for First Amendment speech that represents and engages marginalized groups.
(e) SNPACs have historically provided networking, educational, and mentoring opportunities for artists who are Black, Indigenous, or other people of color, facilitating connections necessary for career advancement and have provided performance experience that helps to open doors to work in larger, less accessible companies.
(f) Because of their mission to make theater accessible through low ticket prices and free services, the majority of SNPACs cannot cover the costs of production through tickets sales alone and must, on average, raise funds to cover 40 to 60 percent of the costs of each production.
(g) SNPACs provide substantial economic benefits to their communities through their leveraging effect on the economy from tourism, leisure spending, and engagement of ancillary services.
(h) Workers in the live performing arts experienced one of the state’s highest unemployment rates during the over 15-month-long pandemic shutdown of small live performance venues.
(i) Each SNPAC creates an average of 64 jobs annually for a cumulative average of 121,436 jobs created by the sector each year.
(j) Establishing a sustainable infrastructure and path for SNPAC growth will improve the health of the entire sector and help small companies grow and increase wages. For many SNPACs, payroll has long been a challenge, because they often have regular turnover as the company of performers and crew will vary from show to show. According to local media reports, paymasters have been charging fees that can drive the employment premium for some California SNPACs as high as 30 percent.
(k) Substantial savings can be achieved by funding regional nonprofit and arts services organizations to act as production worker administration hubs for SNPACs, starting with payroll services. It is, therefore, the intent of the Legislature in enacting this measure to fund paymaster and payroll services.
(l) It is the intent of the Legislature in enacting this act to recognize the special circumstances and the charitable nature of SNPACs while promoting job creation in the sector.

SEC. 2.

 Section 8750.5 is added to the Government Code, to read:

8750.5.
 For purposes of this chapter, the following definitions apply:
(a) “Council” means the Arts Council established pursuant to Section 8751.
(b) “Performing arts” means the types of arts that are performed live for a remote or in person audience, including, but not limited to, music, dance, and drama.
(c) (1) “Nonprofit performing arts organization” means a performing arts organization that is exempt from taxation pursuant to Section 501(c)(3) of the Internal Revenue Code and whose primary mission is the creation or presentation of performing arts.
(2) Performing arts organizations that are eligible to apply may also include organizations that are fiscally sponsored organizations and not a formally established 501(c)(3) nonprofit, for which criteria may be determined by the council.
(d) “Small nonprofit performing arts organization” means a nonprofit performing arts organization with an average adjusted gross revenue equal to or less than one million four hundred thousand dollars ($1,400,000), except that this amount shall be adjusted every five years based on the California Consumer Price Index as compiled and reported by the Department of Industrial Relations.
(e) “Adjusted gross revenue” means the average annual revenue received over the preceding three years, in whatever form, received or accrued from whatever source, excluding matching funds received pursuant to Section 8753.8 and excluding revenue earmarked by the grantor or donor solely for capital expenditures or any pass-through funds collected for the benefit of another organization that is received during an organization’s tax year.
(f) “Capital expenditures” means funds used by a company to acquire, upgrade, and maintain fixed assets such as property, plants, buildings, technology, or equipment.
(g) “California nonprofit performing arts paymaster” means a person or business entity, contracted by the council and an employer that is a small nonprofit performing arts organization or some other qualifying entity, that does all of the following:
(1) Calculates, processes, and produces wage payments to the employer’s employees under the employer’s federal employer identification number.
(2) Withholds and remits applicable taxes to government agencies using the employer’s federal employer identification number.
(3) Issues federal and state income tax forms to the employer’s employees using the employer’s federal employer identification number.
(4) Provides workers’ compensation and unemployment insurance administration.

SEC. 3.

 Section 8753.7 is added to the Government Code, to read:

8753.7.
 (a) Upon appropriation by the Legislature, the council shall establish and administer the California Nonprofit Performing Arts Paymaster program for the purpose of providing low-cost payroll and paymaster services to small nonprofit performing arts organizations.
(b) (1) The council shall issue a request for proposals and award contracts to be a California nonprofit performing arts paymaster on a competitive basis to two or more nonprofit contractors to provide low-cost payroll and paymaster services to small nonprofit performing arts organizations.
(2) The council shall establish criteria to rate and rank applicants under this subdivision.
(3) The council shall specify in the request for proposals the contract terms and conditions deemed necessary for the purposes of this section.
(4) A contract entered pursuant to this subdivision shall require the nonprofit contractor to provide the payroll and paymaster services for at least five years.
(c) Subject to appropriation by the Legislature, the council shall provide a nonprofit contractor selected pursuant to subdivision (b) with a grant award in an amount necessary to fund the initial startup costs of providing payroll and paymaster services pursuant to this section.
(d) (1) A nonprofit contractor providing payroll and paymaster services pursuant to this section may charge a fee to a small nonprofit performing arts organization that receives those services.
(2) A fee charged pursuant to this subdivision shall not exceed the amount necessary to cover the cost of providing the payroll or paymaster service to the small nonprofit performing arts organization.
(e) A nonprofit contractor that enters a contract with the council pursuant to subdivision (b) shall submit an annual report to the council by July 31 of each year that includes, at a minimum, all of the following information from the preceding fiscal year:
(1) The number of small nonprofit performing arts organizations that received payroll or paymaster services from the nonprofit contractor pursuant to this section.
(2) A detailed accounting of the cost of providing the payroll and paymaster services to small nonprofit performing arts organizations.
(3) A detailed accounting of all fees charged and collected pursuant to subdivision (d).
(f) The council may adopt regulations for the purpose of establishing and administering this section.
(g) Nothing in this section, including the use of the paymaster, shall change a small nonprofit performing arts organization’s status or its obligations as an employer under Chapter 38 of the Statutes of 2020.