Student financial aid: California Covenants Program: tuition certificates: gross income exclusion.

(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 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.