Bill Text: CA AB1463 | 2015-2016 | Regular Session | Amended
Bill Title: Student financial aid: California Covenants Program: tuition certificates: gross income exclusion.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Failed) 2016-11-30 - From Senate committee without further action. [AB1463 Detail]
Download: California-2015-AB1463-Amended.html
BILL NUMBER: AB 1463 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 30, 2016
AMENDED IN SENATE JUNE 23, 2016
AMENDED IN SENATE JUNE 6, 2016
AMENDED IN SENATE SEPTEMBER 4, 2015
AMENDED IN SENATE JUNE 18, 2015
INTRODUCED BY Assembly Member Gatto
FEBRUARY 27, 2015
An act to add Article 20.2 (commencing with Section 69996) to
Chapter 2 of Part 42 of Division 5 of Title 3 of the Education Code,
and to add Section 17131.12 to the Revenue and Taxation Code,
relating to student financial aid. aid, and
declaring the urgency thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 1463, as amended, Gatto. Student financial aid: California
Covenants Program: tuition certificates: gross income exclusion.
(1) Existing law establishes the California State University,
under the administration of the Trustees of the California State
University, and the University of California, under the
administration of the Regents of the University of California, as 2
of the segments of public postsecondary education in this state.
(1) Under existing law, the segments of postsecondary education
in this state include the University of California, the California
State University, the California Community Colleges, independent
institutions of higher education, and private postsecondary
educational institutions.
This bill would establish the California Covenants Program, under
the administration of the Treasurer. The program would be a prepaid
college tuition program, under which an individual could purchase a
fixed percentage of the tuition and mandatory systemwide fees for an
academic year of full-time enrollment as an undergraduate at a campus
of the California State University, the University of California, or
an independent institution of higher education, as specified, for a
beneficiary who meets specified criteria.
The bill would establish the California Covenants Program Fund.
The bill would require that the moneys received by the Treasurer from
the individuals who purchase tuition certificates under the program,
as well as the proceeds from the sale of certain bonds authorized by
the bill, be deposited in the fund. The bill would authorize the
Treasurer, upon appropriation in the annual Budget Act, to allocate
moneys deposited in the fund to the California State University, the
University of California, or an independent institution of higher
education to pay the tuition and mandatory systemwide fees of
beneficiaries of the program during that fiscal year. The bill would
require the Director of Finance to determine, at the commencement of
each fiscal year, whether there are sufficient funds to implement the
program in that fiscal year, and to communicate this determination
to the Treasurer in a timely manner each fiscal year. The bill would
specify that the California State University is required, and the
University of California and independent institutions of higher
education are requested to, requested, to
comply with the bill's provisions.
These provisions would become operative on January 1, 2018.
(2) The Personal Income Tax Law provides for various exclusions
from gross income, including moneys received pursuant to specified
grant programs.
This bill would, for taxable years beginning on or after January
1, 2018, also exclude from gross income amounts invested in, and
disbursed from, the California Covenants Program, as provided.
(3) This bill would declare that it is to take effect immediately
as an urgency statute.
Vote: majority 2/3 . Appropriation:
no. Fiscal committee: yes. State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Article 20.2 (commencing with Section 69996) is added
to Chapter 2 of Part 42 of Division 5 of Title 3 of the Education
Code, to read:
Article 20.2. The California Covenants Program
69996. (a) The California Covenants Program is hereby established
under the administration of the Treasurer. The California Covenants
Program shall be a prepaid college tuition program established to
help families plan, save, and pay for the undergraduate college
education of family members at campuses of the California State
University, the University of California, and independent
institutions of higher education, as defined in Section 66010.
(b) Under the program, the Treasurer shall issue tuition
certificates in accordance with all of the following requirements:
(1) (A) The tuition certificate shall be issued by the Treasurer
for the prepaid purchase of a fixed percentage of the tuition and
mandatory systemwide fees for an academic year of full-time
enrollment as an undergraduate at a campus of the California State
University, the University of California, or an independent
institution of higher education, as defined in Section 66010. The
tuition certificate shall specify the percentage of tuition and
mandatory fees that have been purchased thereby. The certificate
covers annual tuition and fee increases of 7.5 percent or less.
(B) The Treasurer is authorized to determine the cost of the fixed
percentage of tuition and mandatory systemwide fees for the
participating institutions at the commencement of this program in
2018. The Treasurer shall have the discretion to periodically adjust
the cost of the tuition certificates in light of changes in the cost
of living, the economy of the state, and the levels of tuition and
mandatory systemwide fees charged by the participating segments.
(2) The purchaser of a tuition certificate shall specify its
intended beneficiary. The intended beneficiary may be any person who
has not yet commenced grade 11 or its equivalent. A tuition
certificate shall be valid for up to 30 years from the date that it
is purchased.
(3) At the time the tuition certificate is used, the beneficiary
shall either be a California resident or a student who is exempt from
nonresident tuition pursuant to Section 68130.5.
(4) An individual may purchase an initial tuition certificate, or
additional tuition certificates, for a beneficiary only between May 1
and June 30 of calendar years commencing in 2018. The minimum amount
of tuition certificates that an individual may purchase in a
calendar year shall be three hundred dollars ($300).
(5) A tuition certificate shall be used only to cover the cost of
undergraduate tuition and mandatory systemwide fees at the California
State University, the University of California, or independent
institutions of higher education, as defined in Section 66010. A
tuition certificate shall not be used to cover the cost of textbooks,
supplies, or living expenses, including, but not necessarily limited
to, food, housing, and transportation.
(6) If the intended beneficiary of a tuition certificate is unable
to, or chooses not to, attend the institution issuing the
certificate, the initial investment shall be returned to the
individual who purchased the certificate, with interest equal to that
earned by the Pooled Money Investment Fund, and shall not be subject
to a tax penalty pursuant to Section 17131.12 of the Revenue and
Taxation Code.
(c) The Treasurer, in collaboration with the Trustees of the
California State University and the Regents of the University of
California, may establish administrative guidelines and other
requirements for purposes of implementing this article.
69996.3. (a) The California Covenants Program Fund is hereby
established. The moneys received by the Treasurer from the
individuals who purchase tuition certificates under the program, and
from the sale of bonds as authorized under subdivision (b), shall be
deposited in the fund. Upon appropriation by the Legislature in the
annual Budget Act, the moneys in the fund may be allocated by the
Treasurer to the California State University, the University of
California, and participating independent institutions of higher
education, as defined in Section 66010, to pay the tuition and
mandatory systemwide fees of beneficiaries of the program during that
fiscal year.
(b) The Treasurer is authorized to issue bonds backed by the
tuition certificate revenues. The proceeds of any bonds sold pursuant
to this subdivision shall be deposited in the California Covenants
Program Fund established by subdivision (a).
(c) The Director of Finance shall determine, at the commencement
of each fiscal year, whether there are sufficient funds to implement
the program in that fiscal year. The Director of Finance shall
communicate this determination to the Treasurer in a timely manner
each fiscal year.
(d) The California State University shall, and the University of
California and independent institutions of higher education, as
defined in Section 66010, are requested to, comply with the
requirements of this article.
69996.5. This article shall become operative on January 1, 2018.
SEC. 2. Section 17131.12 is added to the Revenue and Taxation
Code, to read:
17131.12. For taxable years beginning on or after January 1,
2018, gross income does not include:
(a) Moneys invested by the taxpayer, including interest accrued by
that investment, in the California Covenants Program established
pursuant to Article 20.2 (commencing with Section 69996) of Chapter 2
of Part 42 of Division 5 of Title 3 of the Education Code.
(b) (1) Disbursements to the taxpayer from the California
Covenants Program for use by a beneficiary at an educational
institution that participates in the program.
(2) Tax, additions to tax, and penalties shall not apply to an
amount disbursed to a taxpayer where the beneficiary does not attend
an educational institution that participates in the California
Covenants Program if the full amount, including interest, is returned
to the taxpayer.
SEC. 3. This act is an urgency statute necessary
for the immediate preservation of the public peace, health, or safety
within the meaning of Article IV of the Constitution and shall go
into immediate effect. The facts constituting the necessity are:
In order to immediately address heightened concerns about the
rising costs of obtaining a postsecondary degree in this state, it is
necessary for this bill to take effect immediately.
