Tennessee 2025-2026 Regular Session

Tennessee House Bill HB0218 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
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2		-	SENATE BILL 270
3		-	By Oliver
	2	+	<BillNo> <Sponsor>
4	3
5	4		HOUSE BILL 218
6	5		By Behn
7	6
8	7
9	8		HB0218
10	9		000864
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13	12		AN ACT to amend Tennessee Code Annotated, Title 4,
14	13		Chapter 51; Title 49 and Title 67, relative to the
15	14		"Universal Pre-K Funding Act."
16	15
17	16		WHEREAS, the Committee for Economic Development began issuing its "Child Care in
18	17		State Economies" report in 2015; and
19	18		WHEREAS, as detailed in these reports, the Committee for Economic Development has
20	19		found that access to affordable child care increases labor force participation and supports state
21	20		and local economic growth; and
22	21		WHEREAS, the Committee for Economic Development also determined that access to
23	22		affordable child care supports parents seeking additional education and training, which
24	23		contributes to higher earnings over an individual's lifetime; and
25	24		WHEREAS, according to the 2022 Brookings Institute's article "What Does the
26	25		Tennessee Pre-K Study Really Tell Us About Public Preschool Programs?", on average,
27	26		children who attended preschool enter kindergarten with stronger school readiness skills than if
28	27		they had stayed home; and
29	28		WHEREAS, the Brookings Institute also determined that benefits from preschool are
30	29		greater for children from families with low incomes, dual-language learners, and children of
31	30		color; and
32	31		WHEREAS, the Brookings Institute found that without public programs, both
33	32		economically marginalized and middle-class families often have trouble affording preschool and
34	33		are left with lower-quality options than they would like; and
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39	38		WHEREAS, research shows that enrolling children in a full-day universal pre-
40	39		kindergarten program increases parents' work hours and raises their earnings by 21.7%, lasting
41	40		for at least six years; and
42	41		WHEREAS, pre-kindergarten programs in this State have been voluntary and dependent
43	42		on federal and other funding; and
44	43		WHEREAS, in order to establish a universal pre-kindergarten program throughout
45	44		Tennessee, it is necessary to develop a dedicated source of funding; and
46	45		WHEREAS, the taxation of digital advertising can provide a stable and dedicated source
47	46		of funds to support a universal pre-kindergarten program; now, therefore,
48	47		BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
49	48		SECTION 1. This act is known and may be cited as the "Universal Pre-K Funding Act."
50	49		SECTION 2. Tennessee Code Annotated, Section 49-6-103, is amended by deleting the
51	50		language "on a voluntary basis" in subsection (a); by deleting the language ", nor shall anything
52	51		in this section and §§ 49-6-104 – 49-6-110 be construed to be an entitlement to any service or
53	52		program authorized by §§ 49-6-104 – 49-6-110" in subsection (b); and by deleting subsection
54	53		(c) and substituting instead the following:
55	54		(c) Each LEA shall provide a pre-kindergarten program that provides the number
56	55		of classrooms necessary to serve all eligible children, as defined in § 49-6-104.
57	56		SECTION 3. Tennessee Code Annotated, Section 49-6-104, is amended by deleting the
58	57		section and substituting instead the following:
59	58		(a) As used in this section, "eligible child" means a child who is four (4) years of
60	59		age on or before August 15 and who resides in the geographic area served by the LEA.
61	60		(b) Each LEA shall establish a pre-kindergarten program that enrolls eligible
62	61		children. Each pre-kindergarten program must be designed to comprehensively address
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67	66		the educational needs of the children enrolled in the program, including, but not limited
68	67		to, the child's cognitive, physical, social, and emotional needs.
69	68		(c) Each LEA shall establish an initial enrollment deadline for eligible children to
70	69		enroll in the pre-kindergarten program. If, in the application period for a school year, the
71	70		number of program applications received by the LEA exceeds the number of students
72	71		the LEA is able to serve, then the LEA shall select students for participation in the pre-
73	72		kindergarten program through an enrollment lottery process.
74	73		(d) A pre-kindergarten program established pursuant to this section must:
75	74		(1) Consist of a maximum class size of twenty (20) students;
76	75		(2) Have at least one (1) licensed teacher per classroom who is certified
77	76		in early childhood education;
78	77		(3) Have at least one (1) educational assistant per classroom who holds
79	78		a child development associate credential or associate degree in early childhood
80	79		education, or who is actively working toward acquiring such credentials;
81	80		provided, however, that if a person with such credentials is unavailable, then
82	81		educational assistants who hold a high school diploma and who have relevant
83	82		experience working with children in pre-kindergarten or other early childhood
84	83		programs may be employed to satisfy this requirement;
85	84		(4) Provide a minimum of five and one-half (5.5) hours of quality
86	85		instructional time per day;
87	86		(5) Use an educational, age-appropriate curriculum that is aligned with
88	87		the early learning standards approved by the department of education and that
89	88		includes, at a minimum, literacy, writing, math, and science skills;
90	89		(6) Have a developmental learning program that addresses the cognitive,
91	90		physical, emotional, social, and communication areas of child development;
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96	95		(7) Meet the criteria for a "high-quality pre-kindergarten program," as
97	96		identified by the department of education; and
98	97		(8) Comply with the state board of education's rules and policies related
99	98		to early childhood education and pre-kindergarten programs.
100	99		(e) Enrollment in a pre-kindergarten program is voluntary.
101	100		SECTION 4. Tennessee Code Annotated, Section 49-6-105, is amended by deleting the
102	101		section and substituting instead the following:
103	102		(a) An LEA may contract and enter into collaborative agreements for the
104	103		operation of a pre-kindergarten program with non-school system entities in the
105	104		geographical area served by the LEA, including, but not limited to, nonprofit and for-profit
106	105		child care providers and Head Start programs. An LEA shall not contract or collaborate
107	106		with a child care provider licensed by the department of human services, unless the
108	107		provider has attained the highest designation under the rated licensing system
109	108		administered by the department, pursuant to title 71, chapter 3, part 5.
110	109		(b) LEAs shall use the pre-k/kindergarten growth portfolio model approved by
111	110		the state board of education, or a comparable alternative measure of student growth
112	111		approved by the state board of education and adopted by the LEA, in the evaluation of
113	112		pre-kindergarten and kindergarten teachers pursuant to § 49-1-302.
114	113		(c) LEAs shall notify teachers evaluated using a growth portfolio model of any
115	114		training or professional development opportunities available on growth portfolio models.
116	115		SECTION 5. Tennessee Code Annotated, Section 49-6-106, is amended by deleting the
117	116		section.
118	117		SECTION 6. Tennessee Code Annotated, Section 49-6-107, is amended by deleting the
119	118		section and substituting instead the following:
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124	123		(a) Subject to appropriations, the state shall fund one hundred percent (100%) of
125	124		the costs required for an LEA to provide the number of classrooms, and to employ the
126	125		number of licensed teachers and educational assistants, required for the LEA to comply
127	126		with the requirements of § 49-6-104(d). Subject to appropriations, the commissioner of
128	127		education shall allocate to each LEA an amount sufficient for the LEA to serve all eligible
129	128		children, as defined in § 49-6-104, in the LEA's pre-kindergarten program.
130	129		(b) Notwithstanding subsection (a), if an LEA receives an allocation pursuant to
131	130		this section that is less than the allocation the LEA received for the prior school year,
132	131		then the local government may appropriate and allocate funds to the LEA to make up for
133	132		the state cuts without being subject to a continuation of funding effort requirement as to
134	133		those funds for any year during which the state reinstates the funding or restores the
135	134		previous cuts, and during any subsequent year should the state fail to restore the
136	135		funding cuts.
137	136		(c) It is the legislative intent that funds in the universal pre-K fund, established in
138	137		§ 67-4-1307, must be made available for appropriation and expenditure in accordance
139	138		with this section.
140	139		(d) An eligible child, as defined in § 49-6-104, is not required to pay tuition or
141	140		fees to enroll in, or attend, a pre-kindergarten program established by an LEA. This
142	141		section does not prohibit an LEA from charging fees for child care provided outside the
143	142		instructional day of the LEA's pre-kindergarten program.
144	143		SECTION 7. Tennessee Code Annotated, Section 49-6-108, is amended by deleting
145	144		subdivision (1) and deleting subdivisions (5) and (6) and substituting instead the following:
146	145		(5) Review existing regulations and standards, and recommend needed
147	146		changes, to promote a consistent assessment and monitoring process for providers of
148	147		pre-kindergarten programs established under §§ 49-6-103 — 49-6-110; and
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153	152		(6) Provide an annual report to the governor and the general assembly on the
154	153		status of pre-kindergarten programs, which must include, at a minimum, the number,
155	154		location, and types of providers of pre-kindergarten classrooms and the number of
156	155		children served. The annual report must be posted on the department of education,
157	156		office of early learning's website to provide public access to the report.
158	157		SECTION 8. Tennessee Code Annotated, Title 67, Chapter 4, is amended by adding
159	158		the following as a new part:
160	159		67-4-1301. Findings.
161	160		The general assembly finds and declares the following:
162	161		(1) The largest internet corporations use their monopolistic control of
163	162		essential online platforms to extract economic rents from their users in the form
164	163		of personal data. This personal data is highly valuable and acquired at a steep
165	164		discount, as demonstrated by the massive profit these corporations make selling
166	165		this information to digital advertisers. For the purposes of stability and equity in
167	166		the tax base, such economic rents are a favorable target for taxation;
168	167		(2) Tennessee sales and use tax statutes provide that specified digital
169	168		products are taxed at the state rate of seven percent (7%) and a standard local
170	169		tax rate of two and one-half percent (2.5%), instead of the local tax rate in effect
171	170		in a county or municipality. However, many digital transactions are hard to bring
172	171		into the digital sales tax base because instead of paying a monetary fee,
173	172		customers sometimes barter their personal information for access to digital
174	173		platforms. This personal information is in turn sold for use in targeted
175	174		advertisements on digital platforms. To tax this consumption, leading tax
176	175		economists have suggested using the receipts earned from digital data
177	176		transactions as a proxy for the value of the barter;
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182	181		(3) As has been noted by many, including the Organisation for Economic
183	182		Co-operation and Development (OECD), the value of the consumption provided
184	183		by digital platforms is typically greater as the size of its network is greater. As
185	184		such, the general assembly finds that the consumption value provided by
186	185		networks of a small size is negligible, especially when compared to the
187	186		compliance burden that would be imposed on smaller digital platforms; and
188	187		(4) Digital advertising is not substantially similar to traditional print or
189	188		broadcast advertising, as traditional advertising neither relies on the extraction of
190	189		valuable personal information from users, nor does it serve as a proxy for
191	190		currently untaxed consumption.
192	191		67-4-1302. Part definitions.
193	192		As used in this part, unless the context otherwise requires:
194	193		(1) "Annual gross revenues" means income or revenue from all sources,
195	194		before any expenses or taxes, computed according to generally accepted
196	195		accounting principles;
197	196		(2) "Assessable base" means the annual gross revenues derived from
198	197		data transactions from digital advertising services in this state;
199	198		(3) "Commissioner" means the commissioner of education;
200	199		(4) "Department" means the department of education;
201	200		(5) "Digital advertising services":
202	201		(A) Means data transactions from advertising services on a digital
203	202		interface; and
204	203		(B) Includes advertisements in the form of banner advertising,
205	204		search engine advertising, interstitial advertising, and other comparable
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210	209		advertising services that use personal information about the people to
211	210		whom the ads are being served;
212	211		(6) "Digital interface" means any type of software, including a website,
213	212		part of a website, or application that a user is able to access;
214	213		(7) "Person":
215	214		(A) Means an individual, firm, partnership, association,
216	215		corporation, limited liability company, trust, or other legal or business
217	216		entity;
218	217		(B) Includes a receiver, executor, trustee, guardian, or other
219	218		representative appointed by order of any court; and
220	219		(C) Does not include a governmental entity or a unit or
221	220		instrumentality of a governmental entity; and
222	221		(8) "User" means an individual or other person who accesses a digital
223	222		interface with a device.
224	223		67-4-1303. Tax imposed.
225	224		(a) A data transaction privilege tax is imposed on a person's annual gross
226	225		revenues that are derived from data transactions from digital advertising services in this
227	226		state.
228	227		(b)
229	228		(1) The portion of a person's annual gross revenues derived from data
230	229		transactions from digital advertising services in this state must be determined
231	230		using an apportionment factor.
232	231		(2) The apportionment factor is a fraction, the numerator of which is the
233	232		person's annual gross revenues derived from data transactions from digital
234	233		advertising services in this state, and the denominator of which is the person's
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239	238		annual gross revenues derived from data transactions from digital advertising
240	239		services in the United States.
241	240		(3) The department shall promulgate rules that specify how to determine
242	241		the state from which revenues from data transactions from digital advertising
243	242		services are derived.
244	243		67-4-1304. Tax rate.
245	244		The data transaction privilege tax imposed pursuant to § 67-4-1303 is levied at
246	245		the rate of nine and one-half percent (9.5%) of the assessable base and applies only to
247	246		persons with an assessable base of fifty million dollars ($50,000,000) or more.
248	247		67-4-1305. Returns.
249	248		(a) Each person that, in a calendar year, has an assessable base of at least fifty
250	249		million dollars ($50,000,000) shall complete and file with the department a return on or
251	250		before April 15 of the following year.
252	251		(b)
253	252		(1) A person that reasonably expects that the person's assessable base
254	253		will be fifty million dollars ($50,000,000) or more shall complete and file with the
255	254		department a declaration of estimated tax on or before April 15 of that year.
256	255		(2) A person required under subdivision (b)(1) to file a declaration of
257	256		estimated tax for a taxable year shall complete and file with the department a
258	257		quarterly estimated tax return on or before June 15, September 15, and
259	258		December 15 of that year.
260	259		(c) A person required to file a return under this section shall file with the return
261	260		an attachment that provides any information that the department requires to determine
262	261		annual gross revenues derived from data transactions from digital advertising services in
263	262		this state.
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268	267		(d) A person required to file a return under this section shall maintain records of
269	268		data transactions from digital advertising services provided in this state and the basis for
270	269		the calculation of the data transaction privilege tax owed for a minimum of five (5) years.
271	270		(e) The chief executive officer, proprietor, owner, or highest-ranking manager
272	271		shall sign annual and quarterly returns to certify the accuracy of the information
273	272		contained therein under penalty of perjury.
274	273		67-4-1306. Tax payment.
275	274		(a) Except as provided in subsection (b), a person who is required to file a return
276	275		under this part shall pay the data transaction privilege tax with the return that covers the
277	276		period for which the tax is due.
278	277		(b) A person required to file estimated data transaction privilege tax returns
279	278		under § 67-4-1305(b) shall pay:
280	279		(1) At least twenty-five percent (25%) of the estimated data transaction
281	280		privilege tax shown on the declaration or amended declaration for the taxable
282	281		year:
283	282		(A) With the declaration or amended declaration that covers the
284	283		year; and
285	284		(B) With each quarterly return for that year; and
286	285		(2) Any unpaid digital transaction privilege tax for the year shown on the
287	286		person's return that covers that year with the return.
288	287		67-4-1307. Allocation of tax revenue – Universal pre-K fund.
289	288		(a) All revenue from the data transaction privilege tax collected under this part,
290	289		including penalties and interest, must be deposited in a special account in the state
291	290		treasury to be known as the universal pre-K fund. The fund must be administered by the
292	291		department of education and used exclusively to fund, establish, and maintain a
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297	296		universal pre-kindergarten program in each public and public charter elementary school
298	297		in this state in accordance with §§ 49-6-104 and 49-6-107. Moneys in the fund may be
299	298		invested by the state treasurer in accordance with § 9-4-603. Notwithstanding another
300	299		law to the contrary, interest accruing on investments and deposits of the universal pre-K
301	300		fund must be credited to the fund, shall not revert to the general fund, and must be
302	301		carried forward into the subsequent fiscal year. Any balance remaining unexpended at
303	302		the end of a fiscal year in the fund shall not revert to the general fund but must be
304	303		carried forward into the subsequent fiscal year.
305	304		(b) Notwithstanding subsection (a), five-tenths percent (.5%) of the revenue from
306	305		the data transaction privilege tax collected under this part, including penalties and
307	306		interest, must be paid into the state treasury and earmarked and allocated to the
308	307		department of revenue for the administration and enforcement of this part.
309	308		(c) For purposes of this section, "universal pre-kindergarten" means a program
310	309		established pursuant to § 49-6-104, and includes a program established under § 49-6-
311	310		104 that is intended to provide high-quality education before attending kindergarten and
312	311		has a purpose to:
313	312		(1) Increase access to voluntary high-quality pre-kindergarten programs;
314	313		(2) Provide developmentally appropriate activities for children in this
315	314		state;
316	315		(3) Expand early childhood community capacity;
317	316		(4) Support linguistically and culturally appropriate curricula; and
318	317		(5) Focus on school readiness.
319	318		67-4-1308. Violations and penalties.
320	319		(a) If the total amount of the digital transaction privilege tax due for the year is
321	320		less than three hundred dollars ($300), then it is a Class E felony for:
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326	325		(1) A person subject to this part to knowingly:
327	326		(A) Fail to file a return;
328	327		(B) Violate § 67-4-1305 or § 67-4-1306;
329	328		(C) Fail to keep books and records as required by this part;
330	329		(D) File a fraudulent return; or
331	330		(E) Violate a rule promulgated by the department for the
332	331		administration and enforcement of this part;
333	332		(2) An officer or agent of a corporation or manager, member, or agent of
334	333		a limited liability company subject to this part to knowingly sign a fraudulent
335	334		return filed on behalf of such corporation or limited liability company; or
336	335		(3) An accountant or other agent to knowingly enter false information on
337	336		the return of any taxpayer.
338	337		(b) If the total amount of the digital transaction privilege tax due for the year is
339	338		three hundred dollars ($300) or more, then it is a Class D felony for:
340	339		(1) A person subject to this part to knowingly:
341	340		(A) Fail to file a return;
342	341		(B) Violate § 67-4-1305 or § 67-4-1306;
343	342		(C) Fail to keep books and records as required by this part;
344	343		(D) File a fraudulent return; or
345	344		(E) Violate a rule promulgated by the department for the
346	345		administration and enforcement of this part;
347	346		(2) An officer or agent of a corporation or manager, member, or agent of
348	347		a limited liability company subject to this part to knowingly sign a fraudulent
349	348		return filed on behalf of such corporation or limited liability company; or
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354	353		(3) An accountant or other agent to knowingly enter false information on
355	354		the return of any taxpayer.
356	355		(c) A prosecution for an act in violation of this section must commence within
357	356		three (3) years of the commission of the act.
358	357		67-4-1309. Rulemaking.
359	358		The commissioner shall promulgate rules and forms necessary to implement this
360	359		part. Rules must be promulgated in accordance with the Uniform Administrative
361	360		Procedures Act, compiled in title 4, chapter 5.
362	361		SECTION 9. The headings in this act are for reference purposes only and do not
363	362		constitute a part of the law enacted by this act. However, the Tennessee Code Commission is
364	363		requested to include the headings in any compilation or publication containing this act.
365	364		SECTION 10. For purposes of rulemaking, this act takes effect upon becoming a law,
366	365		the public welfare requiring it. Sections 1-7 of this act take effect upon becoming a law, the
367	366		public welfare requiring it, and apply to the 2026-2027 school year and each school year
368	367		thereafter. Section 8 of this act takes effect January 1, 2026, the public welfare requiring it.