Tennessee 2025-2026 Regular Session

Tennessee Senate Bill SB0270 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
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2	2	HOUSE BILL 218
3	3	By Behn
4	4
5	5	SENATE BILL 270
6	6	By Oliver
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8	8
9	9	SB0270
10	10	000864
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13	13	AN ACT to amend Tennessee Code Annotated, Title 4,
14	14	Chapter 51; Title 49 and Title 67, relative to the
15	15	"Universal Pre-K Funding Act."
16	16
17	17	WHEREAS, the Committee for Economic Development began issuing its "Child Care in
18	18	State Economies" report in 2015; and
19	19	WHEREAS, as detailed in these reports, the Committee for Economic Development has
20	20	found that access to affordable child care increases labor force participation and supports state
21	21	and local economic growth; and
22	22	WHEREAS, the Committee for Economic Development also determined that access to
23	23	affordable child care supports parents seeking additional education and training, which
24	24	contributes to higher earnings over an individual's lifetime; and
25	25	WHEREAS, according to the 2022 Brookings Institute's article "What Does the
26	26	Tennessee Pre-K Study Really Tell Us About Public Preschool Programs?", on average,
27	27	children who attended preschool enter kindergarten with stronger school readiness skills than if
28	28	they had stayed home; and
29	29	WHEREAS, the Brookings Institute also determined that benefits from preschool are
30	30	greater for children from families with low incomes, dual-language learners, and children of
31	31	color; and
32	32	WHEREAS, the Brookings Institute found that without public programs, both
33	33	economically marginalized and middle-class families often have trouble affording preschool and
34	34	are left with lower-quality options than they would like; and
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39	39	WHEREAS, research shows that enrolling children in a full-day universal pre-
40	40	kindergarten program increases parents' work hours and raises their earnings by 21.7%, lasting
41	41	for at least six years; and
42	42	WHEREAS, pre-kindergarten programs in this State have been voluntary and dependent
43	43	on federal and other funding; and
44	44	WHEREAS, in order to establish a universal pre-kindergarten program throughout
45	45	Tennessee, it is necessary to develop a dedicated source of funding; and
46	46	WHEREAS, the taxation of digital advertising can provide a stable and dedicated source
47	47	of funds to support a universal pre-kindergarten program; now, therefore,
48	48	BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
49	49	SECTION 1. This act is known and may be cited as the "Universal Pre-K Funding Act."
50	50	SECTION 2. Tennessee Code Annotated, Section 49-6-103, is amended by deleting the
51	51	language "on a voluntary basis" in subsection (a); by deleting the language ", nor shall anything
52	52	in this section and §§ 49-6-104 – 49-6-110 be construed to be an entitlement to any service or
53	53	program authorized by §§ 49-6-104 – 49-6-110" in subsection (b); and by deleting subsection
54	54	(c) and substituting instead the following:
55	55	(c) Each LEA shall provide a pre-kindergarten program that provides the number
56	56	of classrooms necessary to serve all eligible children, as defined in § 49-6-104.
57	57	SECTION 3. Tennessee Code Annotated, Section 49-6-104, is amended by deleting the
58	58	section and substituting instead the following:
59	59	(a) As used in this section, "eligible child" means a child who is four (4) years of
60	60	age on or before August 15 and who resides in the geographic area served by the LEA.
61	61	(b) Each LEA shall establish a pre-kindergarten program that enrolls eligible
62	62	children. Each pre-kindergarten program must be designed to comprehensively address
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67	67	the educational needs of the children enrolled in the program, including, but not limited
68	68	to, the child's cognitive, physical, social, and emotional needs.
69	69	(c) Each LEA shall establish an initial enrollment deadline for eligible children to
70	70	enroll in the pre-kindergarten program. If, in the application period for a school year, the
71	71	number of program applications received by the LEA exceeds the number of students
72	72	the LEA is able to serve, then the LEA shall select students for participation in the pre-
73	73	kindergarten program through an enrollment lottery process.
74	74	(d) A pre-kindergarten program established pursuant to this section must:
75	75	(1) Consist of a maximum class size of twenty (20) students;
76	76	(2) Have at least one (1) licensed teacher per classroom who is certified
77	77	in early childhood education;
78	78	(3) Have at least one (1) educational assistant per classroom who holds
79	79	a child development associate credential or associate degree in early childhood
80	80	education, or who is actively working toward acquiring such credentials;
81	81	provided, however, that if a person with such credentials is unavailable, then
82	82	educational assistants who hold a high school diploma and who have relevant
83	83	experience working with children in pre-kindergarten or other early childhood
84	84	programs may be employed to satisfy this requirement;
85	85	(4) Provide a minimum of five and one-half (5.5) hours of quality
86	86	instructional time per day;
87	87	(5) Use an educational, age-appropriate curriculum that is aligned with
88	88	the early learning standards approved by the department of education and that
89	89	includes, at a minimum, literacy, writing, math, and science skills;
90	90	(6) Have a developmental learning program that addresses the cognitive,
91	91	physical, emotional, social, and communication areas of child development;
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96	96	(7) Meet the criteria for a "high-quality pre-kindergarten program," as
97	97	identified by the department of education; and
98	98	(8) Comply with the state board of education's rules and policies related
99	99	to early childhood education and pre-kindergarten programs.
100	100	(e) Enrollment in a pre-kindergarten program is voluntary.
101	101	SECTION 4. Tennessee Code Annotated, Section 49-6-105, is amended by deleting the
102	102	section and substituting instead the following:
103	103	(a) An LEA may contract and enter into collaborative agreements for the
104	104	operation of a pre-kindergarten program with non-school system entities in the
105	105	geographical area served by the LEA, including, but not limited to, nonprofit and for-profit
106	106	child care providers and Head Start programs. An LEA shall not contract or collaborate
107	107	with a child care provider licensed by the department of human services, unless the
108	108	provider has attained the highest designation under the rated licensing system
109	109	administered by the department, pursuant to title 71, chapter 3, part 5.
110	110	(b) LEAs shall use the pre-k/kindergarten growth portfolio model approved by
111	111	the state board of education, or a comparable alternative measure of student growth
112	112	approved by the state board of education and adopted by the LEA, in the evaluation of
113	113	pre-kindergarten and kindergarten teachers pursuant to § 49-1-302.
114	114	(c) LEAs shall notify teachers evaluated using a growth portfolio model of any
115	115	training or professional development opportunities available on growth portfolio models.
116	116	SECTION 5. Tennessee Code Annotated, Section 49-6-106, is amended by deleting the
117	117	section.
118	118	SECTION 6. Tennessee Code Annotated, Section 49-6-107, is amended by deleting the
119	119	section and substituting instead the following:
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124	124	(a) Subject to appropriations, the state shall fund one hundred percent (100%) of
125	125	the costs required for an LEA to provide the number of classrooms, and to employ the
126	126	number of licensed teachers and educational assistants, required for the LEA to comply
127	127	with the requirements of § 49-6-104(d). Subject to appropriations, the commissioner of
128	128	education shall allocate to each LEA an amount sufficient for the LEA to serve all eligible
129	129	children, as defined in § 49-6-104, in the LEA's pre-kindergarten program.
130	130	(b) Notwithstanding subsection (a), if an LEA receives an allocation pursuant to
131	131	this section that is less than the allocation the LEA received for the prior school year,
132	132	then the local government may appropriate and allocate funds to the LEA to make up for
133	133	the state cuts without being subject to a continuation of funding effort requirement as to
134	134	those funds for any year during which the state reinstates the funding or restores the
135	135	previous cuts, and during any subsequent year should the state fail to restore the
136	136	funding cuts.
137	137	(c) It is the legislative intent that funds in the universal pre-K fund, established in
138	138	§ 67-4-1307, must be made available for appropriation and expenditure in accordance
139	139	with this section.
140	140	(d) An eligible child, as defined in § 49-6-104, is not required to pay tuition or
141	141	fees to enroll in, or attend, a pre-kindergarten program established by an LEA. This
142	142	section does not prohibit an LEA from charging fees for child care provided outside the
143	143	instructional day of the LEA's pre-kindergarten program.
144	144	SECTION 7. Tennessee Code Annotated, Section 49-6-108, is amended by deleting
145	145	subdivision (1) and deleting subdivisions (5) and (6) and substituting instead the following:
146	146	(5) Review existing regulations and standards, and recommend needed
147	147	changes, to promote a consistent assessment and monitoring process for providers of
148	148	pre-kindergarten programs established under §§ 49-6-103 — 49-6-110; and
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153	153	(6) Provide an annual report to the governor and the general assembly on the
154	154	status of pre-kindergarten programs, which must include, at a minimum, the number,
155	155	location, and types of providers of pre-kindergarten classrooms and the number of
156	156	children served. The annual report must be posted on the department of education,
157	157	office of early learning's website to provide public access to the report.
158	158	SECTION 8. Tennessee Code Annotated, Title 67, Chapter 4, is amended by adding
159	159	the following as a new part:
160	160	67-4-1301. Findings.
161	161	The general assembly finds and declares the following:
162	162	(1) The largest internet corporations use their monopolistic control of
163	163	essential online platforms to extract economic rents from their users in the form
164	164	of personal data. This personal data is highly valuable and acquired at a steep
165	165	discount, as demonstrated by the massive profit these corporations make selling
166	166	this information to digital advertisers. For the purposes of stability and equity in
167	167	the tax base, such economic rents are a favorable target for taxation;
168	168	(2) Tennessee sales and use tax statutes provide that specified digital
169	169	products are taxed at the state rate of seven percent (7%) and a standard local
170	170	tax rate of two and one-half percent (2.5%), instead of the local tax rate in effect
171	171	in a county or municipality. However, many digital transactions are hard to bring
172	172	into the digital sales tax base because instead of paying a monetary fee,
173	173	customers sometimes barter their personal information for access to digital
174	174	platforms. This personal information is in turn sold for use in targeted
175	175	advertisements on digital platforms. To tax this consumption, leading tax
176	176	economists have suggested using the receipts earned from digital data
177	177	transactions as a proxy for the value of the barter;
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182	182	(3) As has been noted by many, including the Organisation for Economic
183	183	Co-operation and Development (OECD), the value of the consumption provided
184	184	by digital platforms is typically greater as the size of its network is greater. As
185	185	such, the general assembly finds that the consumption value provided by
186	186	networks of a small size is negligible, especially when compared to the
187	187	compliance burden that would be imposed on smaller digital platforms; and
188	188	(4) Digital advertising is not substantially similar to traditional print or
189	189	broadcast advertising, as traditional advertising neither relies on the extraction of
190	190	valuable personal information from users, nor does it serve as a proxy for
191	191	currently untaxed consumption.
192	192	67-4-1302. Part definitions.
193	193	As used in this part, unless the context otherwise requires:
194	194	(1) "Annual gross revenues" means income or revenue from all sources,
195	195	before any expenses or taxes, computed according to generally accepted
196	196	accounting principles;
197	197	(2) "Assessable base" means the annual gross revenues derived from
198	198	data transactions from digital advertising services in this state;
199	199	(3) "Commissioner" means the commissioner of education;
200	200	(4) "Department" means the department of education;
201	201	(5) "Digital advertising services":
202	202	(A) Means data transactions from advertising services on a digital
203	203	interface; and
204	204	(B) Includes advertisements in the form of banner advertising,
205	205	search engine advertising, interstitial advertising, and other comparable
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210	210	advertising services that use personal information about the people to
211	211	whom the ads are being served;
212	212	(6) "Digital interface" means any type of software, including a website,
213	213	part of a website, or application that a user is able to access;
214	214	(7) "Person":
215	215	(A) Means an individual, firm, partnership, association,
216	216	corporation, limited liability company, trust, or other legal or business
217	217	entity;
218	218	(B) Includes a receiver, executor, trustee, guardian, or other
219	219	representative appointed by order of any court; and
220	220	(C) Does not include a governmental entity or a unit or
221	221	instrumentality of a governmental entity; and
222	222	(8) "User" means an individual or other person who accesses a digital
223	223	interface with a device.
224	224	67-4-1303. Tax imposed.
225	225	(a) A data transaction privilege tax is imposed on a person's annual gross
226	226	revenues that are derived from data transactions from digital advertising services in this
227	227	state.
228	228	(b)
229	229	(1) The portion of a person's annual gross revenues derived from data
230	230	transactions from digital advertising services in this state must be determined
231	231	using an apportionment factor.
232	232	(2) The apportionment factor is a fraction, the numerator of which is the
233	233	person's annual gross revenues derived from data transactions from digital
234	234	advertising services in this state, and the denominator of which is the person's
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239	239	annual gross revenues derived from data transactions from digital advertising
240	240	services in the United States.
241	241	(3) The department shall promulgate rules that specify how to determine
242	242	the state from which revenues from data transactions from digital advertising
243	243	services are derived.
244	244	67-4-1304. Tax rate.
245	245	The data transaction privilege tax imposed pursuant to § 67-4-1303 is levied at
246	246	the rate of nine and one-half percent (9.5%) of the assessable base and applies only to
247	247	persons with an assessable base of fifty million dollars ($50,000,000) or more.
248	248	67-4-1305. Returns.
249	249	(a) Each person that, in a calendar year, has an assessable base of at least fifty
250	250	million dollars ($50,000,000) shall complete and file with the department a return on or
251	251	before April 15 of the following year.
252	252	(b)
253	253	(1) A person that reasonably expects that the person's assessable base
254	254	will be fifty million dollars ($50,000,000) or more shall complete and file with the
255	255	department a declaration of estimated tax on or before April 15 of that year.
256	256	(2) A person required under subdivision (b)(1) to file a declaration of
257	257	estimated tax for a taxable year shall complete and file with the department a
258	258	quarterly estimated tax return on or before June 15, September 15, and
259	259	December 15 of that year.
260	260	(c) A person required to file a return under this section shall file with the return
261	261	an attachment that provides any information that the department requires to determine
262	262	annual gross revenues derived from data transactions from digital advertising services in
263	263	this state.
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268	268	(d) A person required to file a return under this section shall maintain records of
269	269	data transactions from digital advertising services provided in this state and the basis for
270	270	the calculation of the data transaction privilege tax owed for a minimum of five (5) years.
271	271	(e) The chief executive officer, proprietor, owner, or highest-ranking manager
272	272	shall sign annual and quarterly returns to certify the accuracy of the information
273	273	contained therein under penalty of perjury.
274	274	67-4-1306. Tax payment.
275	275	(a) Except as provided in subsection (b), a person who is required to file a return
276	276	under this part shall pay the data transaction privilege tax with the return that covers the
277	277	period for which the tax is due.
278	278	(b) A person required to file estimated data transaction privilege tax returns
279	279	under § 67-4-1305(b) shall pay:
280	280	(1) At least twenty-five percent (25%) of the estimated data transaction
281	281	privilege tax shown on the declaration or amended declaration for the taxable
282	282	year:
283	283	(A) With the declaration or amended declaration that covers the
284	284	year; and
285	285	(B) With each quarterly return for that year; and
286	286	(2) Any unpaid digital transaction privilege tax for the year shown on the
287	287	person's return that covers that year with the return.
288	288	67-4-1307. Allocation of tax revenue – Universal pre-K fund.
289	289	(a) All revenue from the data transaction privilege tax collected under this part,
290	290	including penalties and interest, must be deposited in a special account in the state
291	291	treasury to be known as the universal pre-K fund. The fund must be administered by the
292	292	department of education and used exclusively to fund, establish, and maintain a
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297	297	universal pre-kindergarten program in each public and public charter elementary school
298	298	in this state in accordance with §§ 49-6-104 and 49-6-107. Moneys in the fund may be
299	299	invested by the state treasurer in accordance with § 9-4-603. Notwithstanding another
300	300	law to the contrary, interest accruing on investments and deposits of the universal pre-K
301	301	fund must be credited to the fund, shall not revert to the general fund, and must be
302	302	carried forward into the subsequent fiscal year. Any balance remaining unexpended at
303	303	the end of a fiscal year in the fund shall not revert to the general fund but must be
304	304	carried forward into the subsequent fiscal year.
305	305	(b) Notwithstanding subsection (a), five-tenths percent (.5%) of the revenue from
306	306	the data transaction privilege tax collected under this part, including penalties and
307	307	interest, must be paid into the state treasury and earmarked and allocated to the
308	308	department of revenue for the administration and enforcement of this part.
309	309	(c) For purposes of this section, "universal pre-kindergarten" means a program
310	310	established pursuant to § 49-6-104, and includes a program established under § 49-6-
311	311	104 that is intended to provide high-quality education before attending kindergarten and
312	312	has a purpose to:
313	313	(1) Increase access to voluntary high-quality pre-kindergarten programs;
314	314	(2) Provide developmentally appropriate activities for children in this
315	315	state;
316	316	(3) Expand early childhood community capacity;
317	317	(4) Support linguistically and culturally appropriate curricula; and
318	318	(5) Focus on school readiness.
319	319	67-4-1308. Violations and penalties.
320	320	(a) If the total amount of the digital transaction privilege tax due for the year is
321	321	less than three hundred dollars ($300), then it is a Class E felony for:
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326	326	(1) A person subject to this part to knowingly:
327	327	(A) Fail to file a return;
328	328	(B) Violate § 67-4-1305 or § 67-4-1306;
329	329	(C) Fail to keep books and records as required by this part;
330	330	(D) File a fraudulent return; or
331	331	(E) Violate a rule promulgated by the department for the
332	332	administration and enforcement of this part;
333	333	(2) An officer or agent of a corporation or manager, member, or agent of
334	334	a limited liability company subject to this part to knowingly sign a fraudulent
335	335	return filed on behalf of such corporation or limited liability company; or
336	336	(3) An accountant or other agent to knowingly enter false information on
337	337	the return of any taxpayer.
338	338	(b) If the total amount of the digital transaction privilege tax due for the year is
339	339	three hundred dollars ($300) or more, then it is a Class D felony for:
340	340	(1) A person subject to this part to knowingly:
341	341	(A) Fail to file a return;
342	342	(B) Violate § 67-4-1305 or § 67-4-1306;
343	343	(C) Fail to keep books and records as required by this part;
344	344	(D) File a fraudulent return; or
345	345	(E) Violate a rule promulgated by the department for the
346	346	administration and enforcement of this part;
347	347	(2) An officer or agent of a corporation or manager, member, or agent of
348	348	a limited liability company subject to this part to knowingly sign a fraudulent
349	349	return filed on behalf of such corporation or limited liability company; or
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354	354	(3) An accountant or other agent to knowingly enter false information on
355	355	the return of any taxpayer.
356	356	(c) A prosecution for an act in violation of this section must commence within
357	357	three (3) years of the commission of the act.
358	358	67-4-1309. Rulemaking.
359	359	The commissioner shall promulgate rules and forms necessary to implement this
360	360	part. Rules must be promulgated in accordance with the Uniform Administrative
361	361	Procedures Act, compiled in title 4, chapter 5.
362	362	SECTION 9. The headings in this act are for reference purposes only and do not
363	363	constitute a part of the law enacted by this act. However, the Tennessee Code Commission is
364	364	requested to include the headings in any compilation or publication containing this act.
365	365	SECTION 10. For purposes of rulemaking, this act takes effect upon becoming a law,
366	366	the public welfare requiring it. Sections 1-7 of this act take effect upon becoming a law, the
367	367	public welfare requiring it, and apply to the 2026-2027 school year and each school year
368	368	thereafter. Section 8 of this act takes effect January 1, 2026, the public welfare requiring it.