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

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Date Published: 05/20/2021 09:00 PM
SB805:v96#DOCUMENT

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, 8753.7, and 8753.8 to the Government Code, relating to state government.


LEGISLATIVE COUNSEL'S DIGEST


SB 805, as amended, Rubio. Small nonprofit performing arts organizations: payroll and paymaster services grants: employment 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. The bill would require the council to issue a request for proposals and award contracts 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.
This bill would establish the Performing Arts Equitable Payroll Fund, and would require the council, upon appropriation by the Legislature, to establish and administer a grant program using moneys in the fund to award grants for the purpose of enabling small nonprofit performing arts organizations to hire and pay employees at least minimum wage. The bill would require the council to award the grants in amounts according to a specified matching schedule based on the adjusted gross revenue, as defined, of the organization.
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 aver-age 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 also the intent of the Legislature in enacting this measure to fund SNPACs based on their ability to pay for their labor to ensure they can pay all workers minimum wage. To this end, this measure, upon appropriation by the Legislature, creates a schedule of matching funds based on a calculation of the recipient SNPAC’s 3-year average adjusted gross revenue that excludes certain restricted capital expenditure and pass through funds, which cannot be used to pay for a SNPAC’s labor.
(m) 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) “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.
(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, up-grade, and maintain fixed assets such as property, plants, buildings, technology, or equipment.

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 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 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 is section.
(4) A contract entered pursuant to this subdivision shall require the nonprofit contractor to provide the payroll and paymaster services for at least 10 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 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.

SEC. 4.

 Section 8753.8 is added to the Government Code, to read:

8753.8.
 (a) The Performing Arts Equitable Payroll Fund is hereby created in the State Treasury.
(b) Upon appropriation by the Legislature, the council shall establish and administer a grant program using moneys in the fund to award grants for the purpose of enabling small nonprofit performing arts organizations to hire and pay employees at least minimum wage.
(c) (1) The council shall award a grant to a small nonprofit performing arts organizations in an amount pursuant to the following matching schedule:

(A)For an organization with adjusted gross revenue of two hundred fifty thousand dollars ($250,000) or less, the award amount shall be four times the lesser of the amount the organization contributes to payroll or 25 percent of the organization’s adjusted gross revenue.

(A) For an organization with adjusted gross revenue of twenty-five thousand dollars ($25,000) or less, the award amount shall be the lesser of four and one-half times the amount the organization contributes to payroll or twenty-five thousand dollars ($25,000).
(B) For an organization with adjusted gross revenue above twenty-five thousand dollars ($25,000) but not more than fifty thousand dollars ($50,000), the award amount shall be the lesser of four and one-half times the amount the organization contributes to payroll or fifty thousand dollars ($50,000).
(C) For an organization with adjusted gross revenue above fifty thousand dollars ($50,000) but not more than seventy-five thousand dollars ($75,000), the award amount shall be the lesser of four and one-quarter times the amount the organization contributes to payroll or seventy-five thousand dollars ($75,000).
(D) For an organization with adjusted gross revenue above seventy-five thousand dollars ($75,000) but not more than one hundred thousand dollars ($100,000), the award amount shall be the lesser of four and one-quarter times the amount the organization contributes to payroll or one hundred thousand dollars ($100,000).
(E) For an organization with adjusted gross revenue above one hundred thousand dollars ($100,000) but not more than one hundred fifty thousand dollars ($150,000), the award amount shall be the lesser of four times the amount the organization contributes to payroll or one hundred fifty thousand dollars ($150,000).
(F) For an organization with adjusted gross revenue above one hundred fifty thousand dollars ($150,000) but not more than two hundred thousand dollars ($200,000), the award amount shall be the lesser of four times the amount the organization contributes to payroll or two hundred thousand dollars ($200,000).
(G) For an organization with adjusted gross revenue above two hundred thousand dollars ($200,000) but not more than two hundred fifty thousand dollars ($250,000), the award amount shall be the lesser of four times the amount the organization contributes to payroll or two hundred fifty thousand dollars ($250,000).

(B)

(H) For an organization with adjusted gross revenue above two hundred fifty thousand dollars ($250,000) but not more than three hundred fifty thousand dollars ($350,000), the award amount shall be three and three-quarters times the lesser of three and three-quarters times the amount the organization contributes to payroll or 25 percent of the organization’s adjusted gross revenue. two hundred eighty thousand dollars ($280,000).

(C)

(I) For an organization with adjusted gross revenue above three hundred fifty thousand dollars ($350,000) but not more than four hundred fifty thousand dollars ($450,000), the award amount shall be three and one-half times the lesser of three and one-half times the amount the organization contributes to payroll or 25 percent of the organization’s adjusted gross revenue. three hundred fifty thousand dollars ($350,000).

(D)

(J) For an organization with adjusted gross revenue above four hundred fifty thousand dollars ($450,000) but not more than five hundred fifty thousand dollars ($550,000), the award amount shall be three and one-quarter times the lesser of three times the amount the organization contributes to payroll or 25 percent of the organization’s adjusted gross revenue. three hundred seventy-five thousand dollars ($375,000).

(E)

(K) For an organization with adjusted gross revenue above five hundred fifty thousand dollars ($550,000) but not more than six hundred fifty thousand dollars ($650,000), the award amount shall be three times the lesser of two and one-half times the amount the organization contributes to payroll or 25 percent of the organization’s adjusted gross revenue. three hundred seventy-five thousand dollars ($375,000).

(F)

(L) For an organization with adjusted gross revenue above six hundred fifty thousand dollars ($650,000) but not more than seven hundred fifty thousand dollars ($750,000), the award amount shall be two and three-quarters times the lesser of two times the amount the organization contributes to payroll or 25 percent of the organization’s adjusted gross revenue. three hundred fifty thousand dollars ($350,000).

(G)

(M) For an organization with adjusted gross revenue above seven hundred fifty thousand dollars ($750,000) but not more than eight hundred fifty thousand dollars ($850,000), the award amount shall be two times the lesser of one and one-half times the amount the organization contributes to payroll or 25 percent of the organization’s adjusted gross revenue. three hundred thousand dollars ($300,000).

(H)

(N) For an organization with adjusted gross revenue above eight hundred fifty thousand dollars ($850,000) but not more than one million dollars ($1,000,000), the award amount shall be equal to the lesser of the amount the organization contributes to payroll or 25 percent of the organization’s adjusted gross revenue. two hundred twenty-five thousand dollars ($225,000).

(I)

(O) For an organization with adjusted gross revenue above one million dollars ($1,000,000) but not more than one million two hundred thousand dollars ($1,200,000), the award amount shall be 50 percent of the lesser of 50 percent of the amount the organization contributes to payroll or 25 percent of the organization’s adjusted gross revenue. one hundred thirty-five thousand dollars ($135,000).

(J)

(P) For an organization with adjusted gross revenue above one million two hundred thousand dollars ($1,200,000) but not more than one million four hundred thousand dollars ($1,400,000), the award amount shall be 25 percent of the lesser of 25 percent of the amount the organization contributes to payroll or 25 percent of the organization’s adjusted gross revenue. eighty thousand dollars ($80,000).
(2) The categories of organizations based on adjusted gross revenue specified in the paragraph (1) shall be adjusted every five years based on the California Consumer Price Index as compiled and reported by the Department of Industrial Relations.