Budget & Taxes

(1) Existing law requires county superintendents of schools to provide for an audit of all funds under their jurisdiction and control, and requires the governing board of each local educational agency to either provide for an audit of the books and accounts of the local educational agency or make arrangements with county superintendents of schools to provide for that auditing. Existing law requires the governing board of each school district and each office of the county superintendent of schools to include specified provisions in their contracts for audits and requires financial and compliance audits to be performed in accordance with specified standards. If the governing board of a school district has entered into a contract for an independent audit of its financial statements and the audited financial statements have not been filed with the county superintendent of schools on or before a specified due date, existing law authorizes the county superintendent of schools to, among other things, investigate the causes for the delay, as provided. This bill would expressly apply the above-described provisions to educational joint powers authorities and charter schools. The bill, among other things, would require those financial and compliance audits of local educational agencies to be conducted in accordance with specified filing deadlines and would revise requirements regarding which entity is responsible for providing an audit if a local educational agency has not provided for an audit of their respective books and accounts to include the Controller or a chartering authority, as provided. The bill would require, instead of authorize, a county superintendent of schools to investigate the causes for an above-described delay. The bill would require a local educational agency to post the local educational agency's annual financial and compliance audits on its internet website. Existing law requires the Controller to, among other things, on an annual basis, review and monitor the audit reports performed by independent auditors, determine whether audit reports are in conformance with specified reporting provisions, and notify each local educational agency, the responsible county superintendent of schools, the Superintendent, the Department of Finance, and the auditor regarding each determination. Existing law authorizes the Controller to perform quality control reviews of audit working papers to determine whether audits are performed in conformity with those specified standards. Existing law requires the Controller to annually report to the State Department of Education to apprise the department of school districts and offices of county superintendents of schools that are not in compliance with applicable statutes and regulations related to audits and requires the Controller to make recommendations as to what action should be taken by the department. The bill would require the Controller to, if applicable, notify the responsible chartering authority of each determination made, as referenced above, and would require notification to applicable entities to be made within 6 months of the audit report due date or the audit report issue date, whichever is later. The bill would require the Controller to establish and publish as part of the audit guide a weighted risk-based criteria that considers auditor experience and quality factors in determining which audit engagements are required to undergo a quality control review, as provided. The bill would require the Controller to report and provide recommendations to the Superintendent, instead of the department, of entities not in compliance with applicable statutes and regulations and would include educational joint powers authorities and charter schools as reported entities. The bill, commencing with the 2027–28 fiscal year Guide for Annual Audits of K–12 Local Education Agencies and State Compliance Reporting, would require the Controller to include, among other things, instructions requiring specified supplemental information and schedules in audit report components for local educational agency audits and an appendix with the Controller's desk review checklist that is used to determine whether audit reports are in conformance with specified reporting requirements, as provided. Under existing law, once the Controller or county superintendent of schools makes a final determination that specified audits performed by a certified public accountant or public accountant were not performed in substantial conformity with provisions of an audit guide, or that the audit reports do not conform to the provisions of an audit guide, the certified public accountant or public accountant is ineligible to conduct specified audits for 3 years. Existing law requires audits to be made by a certified public accountant or a public accountant, licensed by the California Board of Accountancy, and selected by a local educational agency, as applicable, from a directory of certified public accountants and public accountants deemed by the Controller as qualified to conduct audits of local educational agencies. In order to be added to, or remain on, the Controller's directory of certified public accountants and public accountants as described above, the bill would require, commencing with the 2027–28 fiscal year, and every 2 years thereafter, audit engagement partners and certified public accountants or public accountants responsible for local educational agency audits to, among other things, complete 16 hours of continuing education, demonstrate specified experience, and maintain compliance with the California Board of Accountancy requirements to keep applicable licenses in active status and good standing, as provided. The bill would also apply the continuing education requirement to audit staff who perform audit procedures of local educational agencies. The bill would extend the above-described rules related to the ineligibility of the certified public accountant or public accountant to audits of charter schools, as provided, and would additionally require the Controller to notify charter schools of those certified public accountants or public accountants determined to be ineligible to conduct audits, as provided. To the extent the bill would impose additional duties on local educational agencies or local officials, the bill would impose a state-mandated local program. (2) The bill, until January 1, 2034, would establish the Office of the Education Inspector General. The bill would provide for the appointment of the Education Inspector General by the Governor from a list of 3 qualified individuals nominated by the Joint Legislative Audit Committee, subject to confirmation by a majority of the Senate. The bill would require the Office of the Education Inspector General to, among other things, (A) conduct and supervise forensic audits and investigations relating to the programs and operations of the department, local educational agencies, and entities managing a charter school related to fraud, misappropriation of funds, and other illegal practices and (B) annually report to the appropriate policy committees of the Legislature on investigations and audits of the programs and operations of the department, local educational agencies, and entities managing a charter school. (3) Existing law requires the Controller, in consultation with the Department of Finance and the State Department of Education, to develop a plan to review and report on financial and compliance audits, and with representatives of other entities, to recommend the statements and other information to be included in the audit reports filed with the state by local educational agencies, and to propose the content of an audit guide. Existing law requires the audit guide to include specified content, as provided. This bill would require the Controller to consult with representatives of 2 additional specified entities and would require the audit guide to include a variety of additional content relating to audits of a local educational agency, as provided. (4) Existing law requires the Commission on Teacher Credentialing to establish standards for the issuance and renewal of credentials, certificates, and permits. Existing law requires the commission and the department to enter into a data sharing agreement for the department to provide the commission with educator assignment data necessary to annually identify educator misassignments and vacant positions at local educational agencies, as provided, as part of the State Assignment Accountability System. Existing law requires the commission to annually use data it receives from the department to produce an initial data file of vacant positions and educator assignments that do not have a clear match of credential to assignment and requires the commission to notify local educational agencies and monitoring authorities of the opportunity to access and review the initial data file of potential misassignments, as defined, and vacant positions. Existing law grants the commission the authority to make a final determination for all potential misassignments. Existing law requires, commencing with the 2020–21 school year, the commission to make annual educator assignment, misassignment, and vacant position data publicly available on its internet website. This bill would require teachers employed by a local educational agency and offering certain courses to hold the certificate, permit, or other document required by the commission for that assignment and be monitored. To the extent that this provision would create new duties for county superintendents of schools and local educational agencies, it would constitute a state-mandated local program. (5) Existing law requires state funding to be calculated and withheld from a school district or county office of education for any fiscal year in which a person renders service as a teacher in kindergarten or any of grades 1 to 12, inclusive, who does not have a valid certification document, as provided. This bill would apply the above-described provisions relating to the penalties for a person rendering services as a teacher who does not have a valid certification document to charter schools, as provided. (6) Existing law requires any entity that has a contract with a school district, county office of education, or charter school to ensure that any employee who interacts with pupils, outside of the immediate supervision and control of the pupil's parent or guardian or a school employee, has a valid criminal records summary, as specified. This bill would require an entity that has a contract with a local educational agency to instead ensure any employee who interacts with pupils has a valid criminal records summary without regard to whether the interaction takes place outside of the immediate supervision and control of the pupil's parent or guardian or a school employee. (7) The Charter Schools Act of 1992 requires each charter school to transmit a copy of its annual, independent financial audit report for the preceding fiscal year to the county office of education, the Controller, and the State Department of Education by December 15 of each year. The act authorizes the establishment, operation, and governance of charter schools. Existing law authorizes a charter school that has an approved charter to receive funding for nonclassroom-based instruction only if a determination for funding is made by the State Board of Education, as specified. The act prohibits, from January 1, 2020, to January 1, 2026, inclusive, the approval of a petition for the establishment of a new charter school offering nonclassroom-based instruction, as specified. This bill would extend that prohibition to instead continue through June 30, 2026. This bill would require the governing body of a charter school, by January 31, 2026, and by January 31 of each year thereafter, to review, at a public meeting as an item on the agenda, the annual audit of the charter school for the prior fiscal year, any audit exceptions identified in that audit, the recommendations or findings of any management letter issued by the auditor, and any description of correction or plans to correct any exceptions or management letter issue. By imposing additional requirements on charter schools, the bill would impose a state-mandated local program. The bill would replace the term "nonclassroom-based instruction" with "flex-based instruction" and define a "flex-based charter school" as a charter school that receives a determination for funding from the state board, as described above. The bill would also make numerous nonsubstantive and conforming changes. (8) Existing law requires each chartering authority to, among other things, monitor the fiscal condition of each charter school under its authority. Existing law authorizes the state board to, based upon the recommendation of the Superintendent of Public Instruction, take appropriate action when the state board finds, among other things, illegal or substantially improper use of charter school funds for the personal benefit of any officer, director, or fiduciary of the charter school, as provided. This bill would require that monitoring to also include a review of a sample of credit and debit card transactions of each charter school under its authority. The bill would require a chartering authority to provide the governing body of the charter school with feedback on any issues of concern identified in the review, as provided. If a chartering authority has reasonable suspicion that fraud, misappropriations of public funds, embezzlement, or other financial crimes, may be occurring, the bill would require the chartering authority to notify the State Department of Education and the county office of education. The bill would require the state board, or the state board's designee, to promptly investigate allegations of false claims or misappropriation of public funds by charter schools if there is probable cause to believe that those crimes have occurred. By imposing additional requirements on charter schools and local educational agencies acting as chartering authorities, the bill would impose a state-mandated local program. (9) Existing law, until January 1, 2026, sets out performance standards and procedures for the renewal of charter schools. Existing law sets out revised standards and procedures that are operative on and after January 1, 2026. This bill would extend, until July 1, 2028, the operation of the performance standards and procedures for the renewal of charter schools that would otherwise be inoperative on January 1, 2026, and would delay the operation of the revised standards and procedures until July 1, 2028. (10) Existing law provides for the apportionment of state funding to a charter school based on the average daily attendance that is generated by pupils engaged in nonclassroom-based instruction, as defined, in accordance with prescribed criteria and procedures. This bill would revise and recast those provisions by, among other things, requiring the determination of funding to be on a percentage basis and require the Superintendent to implement the determination for funding by reducing the charter school's reported average daily attendance by the percentage specified by the state board, as specified, and, commencing with the 2027–28 fiscal year, requiring the state board's Advisory Commission on Charter Schools to recommend to the state board the approval of a funding determination request submitted by a charter school consistent with specified conditions. Beginning with the 2027–28 school year, the bill would require the State Department of Education to annually develop a list that identifies networks of flex-based charter schools, as defined, based on data from the prior school year. (11) Existing law authorizes a school district, county office of education, or charter school to offer independent study to meet the educational needs of pupils when certain requirements are met, including, among others, that the local educational agency has adopted written policies, and implemented those policies, in accordance with rules and regulations adopted by the Superintendent, as specified. Existing law authorizes a local educational agency to claim apportionment credit for independent study only to the extent of the time value of pupil work products. This bill would require a local educational agency to maintain one complete pupil work product in each of 4 specified subjects for a pupil enrolled in independent study for each of 3 specified attendance periods, except as provided. (12) The bill would establish the Charter Authorizer Mentor Grant Program to be administered by the California Collaborative for Educational Excellence for the purpose of providing competitive grants to qualified applicants to provide technical assistance to eligible chartering authorities of charter schools, as defined. The bill would establish the Charter School Authorizer Grant Program within the department to provide grants to chartering authorities for certain increased costs associated with the responsibilities imposed by this bill, as provided. (13) The bill would require the governing board or body of a school district, educational joint powers authority, county office of education, or charter school, on or before July 1, 2027, to adopt a policy in order to evaluate and approve contractors. The bill would require the policy to include specified provisions, including, among other things, that a local educational agency is prohibited from (A) expending public funds for a contract unless the materials, programs, and activities are nonsectarian, (B) offering financial payments or gifts as an incentive for pupil enrollment, referral, or retention, and (C) purchasing or contracting for season passes or membership to amusement or theme parks, zoos, or family entertainment activities, except as provided. (14) Under the California Constitution, whenever the Legislature or a state agency mandates a new program or higher level of service on any local agency, the state is required to provide a subvention of funds to reimburse the local agency, with specified exceptions. Existing law, for purposes of this reimbursement, defines "local agency" to include any city, county, special district, authority, or other political subdivision of the state. This bill, for purposes of the above-described state reimbursement, would explicitly add any charter school to the definition of local agency. (15) This bill would provide that the provisions of this bill are severable. (16) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

The Personal Income Tax Law allows various credits against the tax imposed by that law. This bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2031, would allow a credit against those taxes in an amount equal to 50% of unreimbursed costs paid or incurred by a taxpayer for the purchase of durable medical equipment, as defined, for use by a qualifying dependent, as defined, during the taxable year. The bill would limit the credit to $5,000 per taxable year for each qualifying dependent. Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill also would include additional information required for any bill authorizing a new tax expenditure. This bill would take effect immediately as a tax levy.

Existing state sales and use tax laws impose a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state. The Sales and Use Tax Law provides various exemptions from those taxes. This bill would, on and after July 1, 2026, provide an exemption from the taxes imposed by the Sales and Use Tax Law for the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of, hydrogen fuel, as defined. The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes counties and cities to impose local sales and use taxes in conformity with the Sales and Use Tax Law, and existing laws authorize districts, as specified, to impose transactions and use taxes in accordance with the Transactions and Use Tax Law, which generally conforms to the Sales and Use Tax Law. Amendments to the Sales and Use Tax Law are automatically incorporated into the local tax laws. This bill would provide that the exemption created by the bill does not apply to local sales and use taxes or transactions and use taxes. Existing law imposes or dedicates certain state sales and use tax rates for local funding, including through the Local Revenue Fund 2011. This bill would provide that the exemption created by the bill does not apply to those state sales and use tax rates imposed or dedicated for local government funding, including those rates for which revenues are deposited into the Local Revenue Fund 2011. Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements. This bill would also include additional information required for any bill authorizing a new tax expenditure. This bill would take effect immediately as a tax levy.

Existing law, the California Land Conservation Act of 1965, otherwise known as the Williamson Act, authorizes a city or county to enter into contracts with owners of agricultural land to preserve the land for agricultural use, as specified, in return for reduced property tax assessments. The act also authorizes a landowner of specified agricultural land to petition the city or county to cancel the Williamson Act contract in order to designate the land as a farmland security zone, whereby the land is eligible for a specified property tax valuation and taxed at a reduced rate for specified special taxes. Existing law authorizes the legislative body of a city or a county to establish an enhanced infrastructure financing district, with a governing body referred to as the public financing authority, to finance public capital facilities or other specified projects of communitywide significance. Existing law requires the public financing authority to prepare and adopt a proposed infrastructure financing plan, as specified. Existing law authorizes the plan to require a certain portion of specified taxes levied upon property within the district to be allocated to the district each year, as specified. Existing law authorizes certain local agencies to form a Community Revitalization and Investment Authority within a community revitalization and investment area to carry out a community revitalization plan in that area for specified purposes. Existing law authorizes the plan to require a certain portion of specified taxes levied upon property within the area to be allocated to the authority to finance improvements, as specified. This bill would exclude the taxes levied upon a parcel of land enrolled in or subject to a Williamson Act contract or a farmland security zone contract, as specified, from the above-described allocations to the district or authority, as applicable. This bill would incorporate additional changes to Section 53398.75 of the Government Code proposed by SB 516 to be operative only if this bill and SB 516 are enacted and this bill is enacted last.

Existing law designates the State Water Resources Control Board as the agency responsible for administering specific programs related to drinking water, including, among others, the California Safe Drinking Water Act and the Emerging Contaminants for Small or Disadvantaged Communities Funding Program. This bill, which would become operative upon an appropriation by the Legislature, would enact a perfluoroalkyl and polyfluoroalkyl substances (PFAS) mitigation program. As part of that program, the bill would create the PFAS Mitigation Fund in the State Treasury and would authorize certain moneys in the fund to be expended by the state board, upon appropriation by the Legislature, for specified purposes. The bill would authorize the state board to seek out nonstate, federal, and private funds designated for PFAS remediation and treatment and deposit the funds into the PFAS Mitigation Fund. The bill would continuously appropriate these funds to the state board for specified purposes. The bill would authorize the state board to establish accounts within the PFAS Mitigation Fund. The bill would authorize the state board to expend moneys from the fund in the form of a grant, loan, or contract, or to provide assistance services to water suppliers and sewer system providers, as those terms are defined, for multiple purposes, including, among other things, to cover or reduce the costs for water suppliers associated with treating drinking water to meet the applicable state and federal maximum PFAS contaminant levels. The bill would require a water supplier or sewer system provider to include a clear and definite purpose for how the funds will be used to provide public benefits to their community related to safe drinking water, recycled water, stormwater, or treated wastewater in order to be eligible to receive funds. The bill would require the state board to adopt guidelines to implement these provisions, as provided.

Existing law prescribes the procedures by which a proposed ordinance may be submitted to the governing board of a district by an initiative measure. These procedures do not apply to specified districts, including a district formed under a law that does not provide a procedure for elections. This bill would authorize the voters of any district that has authority to impose a transactions and use tax for transportation purposes to impose a retail transactions and use tax by an initiative measure. The bill would prohibit the initiative tax from exceeding the maximum authorized rate for a tax imposed by an ordinance enacted by the governing body of the district, and the bill would require the initiative measure to contain all spending limitations and substantive accountability standards applicable to a tax imposed by an ordinance enacted by the governing body. To the extent the bill would increase the duties of county elections officials, the bill would impose a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

This measure would urge the United States Congress and the President of the United States to immediately restore and extend the enhanced Affordable Care Act premium tax credits.

(1) The California Constitution authorizes the Legislature to exempt from taxation, in whole or in part, property that is used exclusively for religious, hospital, or charitable purposes, and is owned or held in trust by a nonprofit entity. Pursuant to that authority, existing law provides for a welfare exemption under which property used exclusively for an exempt purpose and owned and operated by specified entities, including foundations, limited liability companies, or corporations meeting certain statutory requirements, is exempt from taxation. Existing law, until the lien date in 2027, also provides that property used exclusively for the preservation of specified natural resources or open-space lands owned or operated by a specified entity meeting specified criteria is deemed to be included within the welfare exemption. This bill would provide that, for purposes of the exemption for property used exclusively for the preservation of specified natural resources or open-space lands, for the property tax lien dates for the 2026–27 fiscal year to the 2031–32 fiscal year, inclusive, property may be owned and operated by a federally recognized Indian tribe or a wholly owned subsidiary of a federally recognized Indian tribe meeting certain requirements. By expanding the duties of local tax officials, this bill would impose a state-mandated local program. (2) Existing law authorizes counties and cities and counties to impose a documentary transfer tax at a specified rate upon deeds, instruments, or other writings by which specified property is transferred. Existing law exempts certain transfers from the imposition of that tax, as specified. This bill would, until January 1, 2031, exempt from that tax the transfer of any deed, instrument, or other writing that makes effective a tribal land return transaction, as defined. (3) Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill would include additional information required for any bill authorizing a new tax expenditure. (4) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above. (5) This bill would take effect immediately as a tax levy.

The California Beverage Container Recycling and Litter Reduction Act, a violation of which is a crime, requires a distributor of beverage containers, as defined, to pay to the Department of Resources Recycling and Recovery a monthly redemption payment for every beverage container sold or transferred, as provided. The act requires the department to deposit those amounts into the California Beverage Container Recycling Fund. The fund is continuously appropriated to, among other things, pay refund values and administrative fees to processors that receive empty beverage containers from recyclers. Until January 1, 2028, the act continuously appropriates $60,000,000 annually from the fund to the department to make market development payments to glass beverage container manufacturers who purchase recycled glass collected within this state for use in manufacturing new beverage containers in this state. This bill would require the department, subject to the availability of funds, to pay a market development payment to a person who purchases a material produced from a by-product of glass recycling or processing that contains certain contaminants, cannot be remelted for use in glass beverage containers or fiberglass insulation, as specified, and that would otherwise be sent to a landfill or be used as low grade aggregate. The bill would, until January 1, 2030, authorize the department to expend up to $5,000,000 annually from the fund for these market development payments and up to $1,000,000 annually to facilitate the transportation of waste glass product by waste glass product end users. By authorizing new uses for continuously appropriated funds, this bill would make an appropriation.

Existing law imposes various taxes, including a tax on income, the gross receipts from the sale of tangible personal property, and real property. This bill would impose a tax on a social media platform provider, as defined, equal to an unspecified percentage of the annual gross receipts derived from the purchase of programmatic advertising for distribution on the provider's social media platform, as provided. The bill would require the California Department of Tax and Fee Administration to administer the tax pursuant to the Fee Collection Procedures Law, the violation of which is a crime. By extending the application of the Fee Collection Procedures Law, this bill would impose a state-mandated local program. This bill would create the Social Media Safety Trust Fund within the State Treasury and would require all moneys raised pursuant to these taxes be deposited into the fund. The bill would establish various accounts within the fund and would allocate moneys into those accounts for expenditure according to specified purposes, including an Education Account, Mental Health Care Account, Research and Development Account, and Social Services Account. The bill would continuously appropriate the moneys in the fund to administer those provisions. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason.