BILL NUMBER: SB 1381AMENDED BILL TEXT AMENDED IN SENATE APRIL 4, 2016 INTRODUCED BY Senator Mendoza FEBRUARY 19, 2016 An act to add Section17053 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.33333.5 to the Education Code, relating to teachers. LEGISLATIVE COUNSEL'S DIGEST SB 1381, as amended, Mendoza.Personal income taxes: credit: teachers.Teachers: grants. Existing law establishes the State Department of Education, under the administration of the Superintendent of Public Instruction, and assigns to the department numerous duties relating to the financing, governance, and guidance of the public elementary and secondary schools in this state. This bill would establish a grant program under the administration of the department for full-time, credentialed teachers, as defined. The bill would provide that, commencing with the 2017-18 school year, and each school year thereafter, a full-time, credentialed teacher who has completed his or her first school year of full-time teaching as of the end of that school year would receive a grant of $1,000 during the next school year. The bill would provide that, commencing with the 2018-19 school year, and each school year thereafter, a full-time, credentialed teacher who has completed 2 school years of full-time teaching as of the end of that school year would receive a grant of $1,000 during the next school year. The bill would further provide that, commencing with the 2019-20 school year, and each school year thereafter, a full-time, credentialed teacher who has completed 3 school years of full-time teaching as of the end of that school year would receive a grant of $2,500 during the next school year. The bill would also provide that, commencing with the 2020-21 school year, and each school year thereafter, a full-time, credentialed teacher who has completed 4 school years of full-time teaching as of the end of that school year would receive a grant of $2,500 during the next school year. The bill would also provide that, commencing with the 2021-22 school year, and each school year thereafter, a full-time, credentialed teacher who has completed 5 school years of full-time teaching as of the end of that school year would receive a grant of $5,000 during the next school year. The bill would further provide that, commencing with the 2022-23 school year, and each school year thereafter, a full-time credentialed teacher who has completed 6 or more school years of full-time teaching would receive a grant of $5,000 during the next school year. The bill would specify that a qualifying teacher may receive grants under these provisions in multiple school years, but would prohibit a teacher from receiving more than one grant in a school year under these provisions. The bill would require the department to submit a report to the Legislature on or before July 1, 2022, on the effectiveness of the grant program.The Personal Income Tax Law allows various credits against the taxes imposed by that law.This bill would, for taxable years beginning on or after January 1, 2017, allow a credit under the Personal Income Tax Law in an amount equal to $5,000 to a qualified taxpayer, as defined to include specified full-time teachers. This bill would state the intent of the Legislature to enact legislation to provide that the credit amount in excess of tax liability would be refundable in those years in which an appropriation for that purpose is made by the Legislature and includes findings relating to that appropriation.This bill would take effect immediately as a tax levy.Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated 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) In the last decade, there has been a 70-percent drop in the number of people preparing to become California teachers. Last year, 22,000 new credentialed teachers were needed, but only 15,000 were acquired. (b) California has the highest pupil-teacher ratio in the nation, and the gap widened during the budget cuts. By 2013, the state's pupil-teacher ratio reached 24 to 1, compared to the national average of 16 to 1. (c) According to the California Teachers Association, nearly one in three teachers leave the profession within seven years, 13 percent of teachers leave the profession by the end of their second year, and, every year, 10 percent of teachers in high-poverty schools transfer to other schools. (d) California's registered voters consider the shortage of K-12 teachers a very serious problem, according to a poll commissioned by EdSource and the Learning Policy Institute. The survey of 1,002 registered voters statewide found there is strong support (85 percent) for having the state offer additional scholarships or partially forgive a teacher's college loans as a way to increase the number of those entering the teaching profession. (e) A 1997 study by S. Paul Wright, Sandra P. Horn, and William L. Sanders studied teachers and their classroom effects on pupil achievement. Through their results, they found that the most important factor affecting pupil achievement is the teacher, and that improving the effectiveness of teachers can improve education for children (Wright, Horn, and Sanders, 1997). A 2011 study conducted by Raj Chetty, John N. Friedman, and Jonah E. Rockoff suggested that pupils with effective teachers are more likely to attend college, attend higher-ranked colleges, earn higher salaries, live in higher socioeconomic status neighborhoods, and save more for retirement. (f) A study published by the Learning Policy Institute, Addressing California's Emerging Teacher Shortage: An Analysis of Sources and Solutions, reported that in mathematics and science, the number of credentials awarded to new, fully prepared teachers plunged by 32 percent and 14 percent, respectively, over the last four years (Linda Darling-Hammond, Roberta Furger, Patrick M. Shields, and Leib Sutcher, 2016). Consequently, the amount of underprepared mathematics and science teachers, such as those with temporary permits and waivers and intern credentials, increased by 23 percent and 51 percent, respectively (Darling-Hammond, Furger, Shields, and Sutcher, 2016). In special education, the number of credentials issued decreased by 21 percent between school years 2011-12 and school year 2013-14, while substandard permits and credentials decreased by 10 percent. Nearly one-half of the special education teachers licensed in California in school year 2013-14 lacked full preparation for teaching (Darling-Hammond, Furger, Shields, and Sutcher, 2016). SEC. 2. Section 33333.5 is added to the Education Code , to read: 33333.5. (a) The department shall administer a program providing grants to full-time, credentialed teachers in accordance with all of the following: (1) Commencing with the 2017-18 school year, and each school year thereafter, a full-time, credentialed teacher who has completed his or her first school year of teaching as of the end of that school year shall receive a grant of one thousand dollars ($1,000) during the next school year. (2) Commencing with the 2018-19 school year, and each school year thereafter, a full-time, credentialed teacher who has completed two school years of full-time teaching as of the end of that school year shall receive a grant of one thousand dollars ($1,000) during the next school year. (3) Commencing with the 2019-20 school year, and each school year thereafter, a full-time, credentialed teacher who has completed three school years of full-time teaching as of the end of that school year shall receive a grant of two thousand five hundred dollars ($2,500) during the next school year. (4) Commencing with the 2020-21 school year, and each school year thereafter, a full-time, credentialed teacher who has completed four school years of full-time teaching as of the end of that school year shall receive a grant of two thousand five hundred dollars ($2,500) during the next school year. (5) Commencing with the 2021-22 school year, and each school year thereafter, a full-time, credentialed teacher who has completed five school years of full-time teaching as of the end of that school year shall receive a grant of five thousand dollars ($5,000) during the next school year. (6) Commencing with the 2022-23 school year, and each school year thereafter, a full-time, credentialed teacher who has completed six or more school years of full-time teaching as of the end of that school year shall receive a grant of five thousand dollars ($5,000) during the next school year. (7) A qualifying teacher may receive grants under this section in multiple school years, but no teacher shall receive more than one grant in a school year under this section. (b) As used in this section, the following terms shall have the following meanings: (1) "Credentialed teacher" means a full-time teacher credentialed pursuant to Sections 80021 to 80025, inclusive, of Chapter 1 of Division 8 of Title 5 of the California Code of Regulations, if he or she serves as the teacher of record in a California public elementary or secondary school for a classroom for at least one schoolday during the taxable year in which the credit is claimed. "Credentialed teacher" shall not include a teacher who solely possesses a 30-day substitute teaching permit, as defined in Section 80025 of Chapter 1 of Division 8 of Title 5 of the California Code of Regulations. "Credentialed teacher" shall not include a teacher whose sole public school employment as a teacher of record during the school year occurred at a charter school established under the Charter Schools Act of 1992 (Part 26.8 (commencing with Section 47600) of Division 4). (2) "Full time" means a minimum of 35 hours per week worked. SEC. 3. The State Department of Education shall submit a report to the Legislature on or before July 1, 2022, on the effectiveness of the grant program established pursuant to Section 33333.5 of the Education Code as added by Section 2 of this act. This report shall be submitted in compliance with Section 9795 of the Government Code.SECTION 1.Section 17053 is added to the Revenue and Taxation Code, to read: 17053. (a) For each taxable year beginning on or after January 1, 2017, there shall be allowed to a qualified taxpayer a credit against the "net tax," as defined in Section 17039, in an amount equal to five thousand dollars ($5,000). (b) For the purposes of this section: (1) "Full time" means a minimum of 35 hours per week worked. (2) "Qualified taxpayer" means a full-time teacher credentialed pursuant to Sections 80021 to 80025, inclusive, of Chapter 1 of Division 8 of Title 5 of the California Code of Regulations, if he or she serves as the teacher of record for a classroom for at least one schoolday during the taxable year in which the credit is claimed. "Qualified taxpayer" shall not include a teacher who solely possesses a 30-day substitute teaching permit, as defined in Section 80025 of Chapter 1 of Division 8 of Title 5 of the California Code of Regulations. (c) (1) Subject to paragraph (2), 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 years if necessary, until the credit is exhausted. (2) It is the intent of the Legislature to enact legislation to provide that in the case where the credit allowed by this section exceeds the "net tax," the excess, in lieu of the carryforward pursuant to paragraph (1), may be refunded to taxpayers, upon appropriation by the Legislature. (d) Section 41 does not apply to the tax credit allowed by this section.SEC. 2.The Legislature finds and declares that it is the intent of the Legislature that, pursuant to legislation to be enacted by the Legislature, the state would treat an appropriation that would be made as described in paragraph (2) of subdivision (c) of Section 17053 of the Revenue and Taxation Code as a tax expenditure program that would have no impact on school funding, state reserves, or debt-related payments. To this end, any appropriation for the refundable portion of the tax credit that would be allowed pursuant to legislation by the Legislature would not reduce state obligations set forth in Sections 8, 20, and 21 of Article XVI of the California Constitution.SEC. 3.This act provides for a tax levy within the meaning of Article IV of the Constitution and shall go into immediate effect.