SB 0824 - Fiscal Note

Fiscal Note - SB 0824 - Authorizes state income tax credit for sponsoring and mentoring programs for at-risk students

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 3523-01

BILL NO. SB 824

SUBJECT: Business and Commerce; Children and Minors; Education, Elementary and Secondary; Taxation and Revenue-General-Income

TYPE: Original

DATE: February 24, 1998

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
General Revenue	($49,143 to Unknown)	($52,075 to Unknown)	($53,409 to Unknown)
Total Estimated Net Effect on All State Funds	($49,143 to UNKNOWN)	($52,075 to UNKNOWN)	($53,409 to UNKNOWN)

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
None
Total Estimated Net Effect on All Federal Funds	$0	$0	$0

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
Local Government	$0	$0	$0

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 4 pages.

FISCAL ANALYSIS

ASSUMPTION

Officials of the Department of Revenue (DOR) state this legislation allows an income tax credit for taxpayers sponsoring and mentoring programs for at-risk students. This tax credit is monitored and certified by DESE, pursuant to section 135.348.6.

ADMINISTRATIVE IMPACT:

The number of taxpayers eligible for this tax credit is unknown. For every 3,680 credits received, one Tax Processing Technician I will be requested to pre-edit and verify the credit. For every 20,000 errors generated from this credit in MINITS and every 12,000 errors generated in COINS, one Tax Processing Technician would be needed. The modifications to the income and corporate tax systems and to the forms and reports will be completed by the Information Systems Division with existing staff and resources.

Officials of the Department of Elementary and Secondary Education (DESE) state this proposal establishes an income tax credit of up to $2,000 per eligible student for expenses paid for the participation of a student in a sponsorship and mentoring program established by a school district and approved by DESE. DESE shall establish guidelines and criteria for approval of sponsorship and mentoring programs established by school districts and for determining eligibility of students for participation in sponsorship and mentoring programs. Such determinations for eligibility of students shall be based upon a definition of an at-risk student as established by the department by rule. A local school board may establish a sponsorship and mentoring program and apply to DESE for approval of such program. The school board of each district which has an approved program shall annually certify to DESE the number of eligible students participating in the program. DESE shall provide written notification to the Department of Revenue of each eligible student participating in an approved program, the student's school district, the name of the qualified taxpayer, and the amount of such credit.

ADMINISTRATIVE IMPACT:

Department of Elementary and Secondary Education

In order to efficiently track the program, nine designated areas would be established with 2 FTE per area (1 supervisor and 1 program specialist I) to maintain records and contact with the local school districts.

2 FTE (1 director and 1 program specialist II) would be needed to coordinate the program at the state level to insure that information is disseminated effectively.

DESE included a total of 20 FTE in the fiscal impact. The Oversight Division assumes DESE could accomplish the provisions of the proposal with one FTE Supervisor ($34,044) in the

ASSUMPTION (continued)

central office to coordinate the program with school districts.

This proposal would result in a decrease in Total State Revenues.

FISCAL IMPACT - State Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
GENERAL REVENUE FUND
Loss to General Revenue Fund
Additional Income Tax Credit for
Mentoring Program for At-Risk Students	(unknown)	(unknown)	(unknown)
Cost to General Revenue Fund
Department of Elementary and
Secondary Education (DESE)
Personal Service (1 FTE)	($29,079)	($35,767)	($36,662)
Fringe Benefits	($8,151)	($10,025)	($10,276)
Expense and Equipment	($11,913)	($6,283)	($6,471)
Total Costs - DESE	($49,143)	($52,075)	($53,409)
ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND	($49,143 TO	($52,075 TO	($53,409 TO
	UNKNOWN)	UNKNOWN)	UNKNOWN)
FISCAL IMPACT - Local Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
	$0	$0	$0

FISCAL IMPACT - Small Business

Small businesses would expect to be fiscally impacted to the extent that they sponsor an at-risk student or mentoring program and qualify for an income tax credit.

DESCRIPTION

This act establishes an income tax credit of up to two thousand dollars for expenses paid by a qualified taxpayer for the participation of a student in a sponsorship and mentoring program established by a school district and approved by the Department of Elementary and Secondary

DESCRIPTION (continued)

Education. The tax credit shall be allowed for taxable years commencing on or after January 1, 1998, and the credit allowed shall not exceed two thousand dollars per eligible student. The tax credit shall be claimed at the time such taxpayer files a return and shall be applied against income tax liability after all other credits have been applied. Where the amount of the credit exceeds the tax liability, the difference between the credit and the tax liability shall not be refundable but may be carried forward to any of the taxpayer's four subsequent taxable years. A

credit shall only be allowed for a student who participates in the program for at least eight months during the tax year for which the credit is claimed. The Department shall establish guidelines and criteria for approval of sponsorship and mentoring programs and for determining the eligibility of students which shall be based upon a definition of an at-risk student as established by the Department. A school board may establish a sponsorship and mentoring program and apply to the Department for approval of the program. The school board shall annually certify, to the Department, the number of eligible students participating in the program. A school principal may recommend for participation, to the school board, students who do not meet the definition of "at-risk" students, and the school board may submit the names of the students and the circumstances which justify their participation to the Department for approval. The Department of Elementary and Secondary Education shall provide written notification to the Department of Revenue of each eligible student participating in an approved program, the student's school district, the name of the qualified taxpayer approved to receive a tax credit and the amount of the credit.

This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.

SOURCES OF INFORMATION

Department of Elementary and Secondary Education

Department of Revenue

Office of Administration

Division of Budget and Planning

Jeanne Jarrett, CPA

Director

February 24, 1998