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<ns0:Description>
<ns0:Id>20250SB__006498AMD</ns0:Id>
<ns0:VersionNum>98</ns0:VersionNum>
<ns0:History>
<ns0:Action>
<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2025-01-09</ns0:ActionDate>
</ns0:Action>
<ns0:Action>
<ns0:ActionText>AMENDED_SENATE</ns0:ActionText>
<ns0:ActionDate>2025-02-27</ns0:ActionDate>
</ns0:Action>
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<ns0:LegislativeInfo>
<ns0:SessionYear>2025</ns0:SessionYear>
<ns0:SessionNum>0</ns0:SessionNum>
<ns0:MeasureType>SB</ns0:MeasureType>
<ns0:MeasureNum>64</ns0:MeasureNum>
<ns0:MeasureState>AMD</ns0:MeasureState>
</ns0:LegislativeInfo>
<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Senator Grove</ns0:AuthorText>
<ns0:Authors>
<ns0:Legislator>
<ns0:Contribution>LEAD_AUTHOR</ns0:Contribution>
<ns0:House>SENATE</ns0:House>
<ns0:Name>Grove</ns0:Name>
</ns0:Legislator>
</ns0:Authors>
<ns0:Title>An act to add Article 19.2 (commencing with Section 69995) to Chapter 2 of Part 42 of Division 5 of Title 3 of the Education Code, and to add Section 17132.2 to the Revenue and Taxation Code, relating to education expenses, and making an appropriation therefor.</ns0:Title>
<ns0:RelatingClause>education expenses, and making an appropriation therefor</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Education expenses: School Choice Flex Account Act of 2025.</ns0:Subject>
</ns0:GeneralSubject>
<ns0:DigestText>
<html:p>
(1)
<html:span class="EnSpace"/>
Existing law establishes a system of elementary and secondary education in this state. This system consists of the public and private schools that provide instruction in kindergarten and in grades 1 to 12, inclusive.
</html:p>
<html:p>This bill would enact the School Choice Flex Account Act of 2025 and establish the School Choice Flex Account (SCFA) Trust, to be known as the SCFA Trust, as a fund within the State Treasury to be administered by the SCFA Trust Board. For the 2027–28 to 2030–31, inclusive, school years, the bill would authorize certain children eligible to be enrolled in kindergarten or any of grades 1 to 12, inclusive, to establish an SCFA or Special Education Flex Account (SEFA), based on parent or guardian income. The bill would, beginning with the 2031–32 school year, authorize every child eligible to be enrolled in
kindergarten or any of grades 1 to 12, inclusive, to establish an SCFA or SEFA. The bill would credit a deposit amount to the account of every eligible student enrolled in an eligible school for tuition and certain school expenses. The bill would specify the deposit amounts for the 2027–28 school year, and require the Department of Finance, beginning on July 1, 2028, to determine the SCFA and SEFA deposit amounts annually for the upcoming school year, as provided. The bill would require the Controller to transfer an amount of money from the General Fund to the SCFA Trust in those amounts. The bill would require any unused funds remaining in an SCFA or SEFA account on June 30 of each school year to be returned to the state for the benefit of elementary and secondary education, upon appropriation by the Legislature.</html:p>
<html:p>The bill would specify the membership of the SCFA Trust Board and would vest the SCFA Trust Board with certain powers and duties. The bill would establish
2 accounts within the SCFA Trust, the SCFA Trust Program Account and the SCFA Trust Administrative Account, and would continuously appropriate the moneys in the program account to the SCFA Trust Board for purposes of the bill, thereby making an appropriation.</html:p>
<html:p>The bill would require the Superintendent of Public Instruction to establish a procedure for the parents and legal guardians of eligible students to apply to establish an SCFA or SEFA and submit an executed participation agreement. The bill would authorize the SCFA Trust Board to disburse funds from SCFAs or SEFAs to eligible schools, defined as private full-time day schools accredited by, or, except as provided, awaiting accreditation from, a regional accrediting agency recognized by the state or the United States Department of Education. The bill would specify the procedures for participating eligible schools to receive funds disbursed by the SCFA Trust Board.</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The Classroom Instructional Improvement and Accountability Act, an initiative approved by the voters as Proposition 98 at the November 8, 1988, statewide general election, amended the California Constitution to, among other things, set forth a formula for computing the minimum amount of revenues that the state is required to appropriate for the support of school districts and community college districts based on one of 3 tests in any given fiscal year, one of which is based on the percentage of General Fund revenues appropriated for school districts and community college districts, respectively, in the 1986–87 fiscal year, and 2 of which are based on, among other things, changes in enrollment.
</html:p>
<html:p>This bill would require the Legislature to recalculate that minimum education funding guarantee by including eligible students not enrolled in a public elementary or secondary school before the operative date of
the act in those minimum funding guarantee calculations based on average daily attendance, as provided. The bill would also require the costs of providing SCFA and SEFA deposit amounts for eligible students to be apportioned between the General Fund and the public school district in which those eligible students reside in the same ratio of General Fund and local property tax revenue that would have been used to educate those eligible students in their public school district.</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The Personal Income Tax Law, in modified conformity with federal law, generally defines “gross income” as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income for purposes of computing tax liability.
</html:p>
<html:p>This bill would, for taxable years beginning on or after January 1, 2027, exclude from gross income any amounts received as distribution from an SCFA or SEFA, as
defined, as part of a participation agreement.</html:p>
<html:p>Existing law requires a bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives the tax expenditure will achieve, detailed performance indicators, and data collection requirements.</html:p>
<html:p>This bill would include additional information required for any bill authorizing a new tax expenditure.</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
These provisions would become operative on January 1, 2027, and only if Senate Constitutional Amendment ____ of the 2025–26 Regular Session is approved by the voters at the statewide general election on November 4, 2026.
</html:p>
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<ns0:DigestKey>
<ns0:VoteRequired>TWO_THIRDS</ns0:VoteRequired>
<ns0:Appropriation>YES</ns0:Appropriation>
<ns0:FiscalCommittee>YES</ns0:FiscalCommittee>
<ns0:LocalProgram>NO</ns0:LocalProgram>
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<ns0:ImmediateEffect>NO</ns0:ImmediateEffect>
<ns0:ImmediateEffectFlags>
<ns0:Urgency>NO</ns0:Urgency>
<ns0:TaxLevy>NO</ns0:TaxLevy>
<ns0:Election>NO</ns0:Election>
<ns0:UsualCurrentExpenses>NO</ns0:UsualCurrentExpenses>
<ns0:BudgetBill>NO</ns0:BudgetBill>
<ns0:Prop25TrailerBill>NO</ns0:Prop25TrailerBill>
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</ns0:Description>
<ns0:Bill id="bill">
<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
<ns0:BillSection id="id_6E3AE1E2-7FB7-4566-87DF-03DCBA4DDD74">
<ns0:Num>SECTION 1.</ns0:Num>
<ns0:Content>
<html:p>The Legislature finds and declares all of the following:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
California’s civic, economic, and cultural future requires educational options that prepare every pupil and student for a worthwhile role in our vibrant state.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
For years, opponents have tried to undermine efforts to help struggling California pupils and students by stating that adjusting public funds to give pupils and students the best educational chance was wrong. Instead of lifting families out of poverty and inspiring the next generation of entrepreneurs, scientists, and leaders, we have trapped children into a
one-size-fits-all system that encourages failure rather than success. Parents watch their children struggle, and our “democratically governed public schools” have stopped investing in our children’s futures and are leaving the most marginalized pupils and students behind.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
Educators are forced to “teach to the test,” instead of identifying and cultivating their pupils’ and students’ potential. And yet California has been ranked significantly lower than the national average at least since 2000 and the latest reports show this state once again is not meeting the minimal education standards.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
Throughout the years, research has consistently shown that private school students tend to perform better on standardized tests. For example, grade 8 private school students averaged
about 20 points higher than public school pupils on the reading assessment in 2022, and grade 4 students had nearly the same advantage in average scores. The most recent National Assessment of Educational Progress data shows that private school students score better in almost all subjects as well.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
Pupils, students, parents, and educators increasingly want a learning environment where each pupil and student is uniquely known and valued, with customized learning experiences focused on children’s interests and aptitudes, and trust and respect for the parents’ role in developing and educating their children.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
For special education in California, school districts must work with private schools and parents to create the most inclusive and thoughtful services for pupils in
special education programs. School districts must spend a proportionate share of federal dollars for these programs, but there are no laws prohibiting school districts from spending additional state funds to help these pupils and parents.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
Even though private schools are not obligated to create an individualized education program (IEP), once a student with a disability is enrolled in a religious or other private school, the school district must conduct meetings to develop, review, and revise services that will benefit the child and the plan must go through the same process and procedures required in the development of an IEP.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
Yet financial barriers have many parents feeling that they have no options but to send their children to neighborhood schools. Private
schools, charter schools, and home schools are achieving better educational results, but these options are unaffordable or unavailable for most pupils and students. ZIP Codes and lotteries determine the educational options available for most low- and middle-income pupils and students.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Before the COVID-19 pandemic, approximately 10 percent of pupils and students in California were using alternative education options, but the pandemic required families to try alternatives. In 2023, a survey of 3,820 parents of schoolage children showed that more than one-half of them either considered or are considering a new school. In that study, a majority of Hispanic, Latino, and Black parents, approximately 65 percent, said they were looking into or thinking about a new learning environment for their kids.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
California now spends approximately $24,000 per year for each child in public school, including approximately $18,000 from state funds. Spending more on the current and outdated system has not created better results, and many low- to middle-class taxpaying families are not given a choice but to send their pupils to a school in this system. Allowing parents to decide the school that offers the best options and learning experiences for their pupil or student is a better use of education funds. The increasing demand for alternatives will create a range of exciting educational opportunities that all pupils and students can enjoy.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
California is the fifth largest economy in the world and needs to offer a world-class, individualized, and customized education to every K–12 pupil or student in our state in order to continue providing
for a sustainable and vibrant economy. As such, the state needs to innovate its education system to encourage our children to discover their unique talents, turn those talents into skills, and use those skills to create value for themselves and for others.
</html:p>
<html:p>
(l)
<html:span class="EnSpace"/>
Therefore, the people hereby enact the School Choice Flex Account Act of 2025. The act includes the following provisions:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
During the 2027–28 school year, $8,000 will be available to each pupil and each student, and $16,000 will be available to each pupil and each student with exceptional needs, to be used toward tuition and education expenses at an accredited private school of their choice. The annual amount shall be adjusted each year. A School Choice Flex Account or Special Education Flex Account will be established at the
request of the pupil’s or student’s parent or legal guardian.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The School Choice Flex Account and Special Education Flex Account will be available to the lowest income families for the first two years after the act becomes operative, low- and middle- income families for the two following years, and all families beginning four years after the act is operative.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
All of this will be achieved at no additional cost to taxpayers.
</html:p>
</ns0:Content>
</ns0:BillSection>
<ns0:BillSection id="id_58D62F56-D782-4015-BA3A-FA036C22DC1A">
<ns0:Num>SEC. 2.</ns0:Num>
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Article 19.2 (commencing with Section 69995) is added to Chapter 2 of Part 42 of Division 5 of Title 3 of the
<ns0:DocName>Education Code</ns0:DocName>
, to read:
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<ns0:Num>19.2.</ns0:Num>
<ns0:LawHeadingVersion id="id_D0C5D087-327C-4781-B411-F10331AEF26D">
<ns0:LawHeadingText>School Choice Flex Account Act of 2025</ns0:LawHeadingText>
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<ns0:Num>69995.</ns0:Num>
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<ns0:Content>
<html:p>This article shall be known, and may be cited, as the School Choice Flex Account Act of 2025.</html:p>
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</ns0:LawSection>
<ns0:LawSection id="id_A74B4F32-560F-4E91-9B54-6DDBD7128922">
<ns0:Num>69995.01.</ns0:Num>
<ns0:LawSectionVersion id="id_A8011169-49A7-4BA1-BBDA-E47223E677EE">
<ns0:Content>
<html:p>For purposes of this article, the following definitions apply:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
“Account beneficiary” means the eligible student for whom an SCFA or SEFA was established by the SCFA Trust Board.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
“Administrative account” means the account established within the SCFA Trust pursuant to subdivision (f) of Section 69995.02 from which the costs of administering the SCFA Trust are paid.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
“Costs of administration” means the actual costs of the SCFA Trust Board to administer SCFAs and SEFAs, subject to the limit established in subdivision (d) of Section 69995.03.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
“Deposit amount” means the amount calculated pursuant to subdivision (d) of Section 69995.02.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
“Elementary and secondary eligible education expenses” means the expenses typically associated with the education of a pupil enrolled in a public elementary or secondary school or an eligible student enrolled in an eligible school, other than tuition, including, but not limited to, books, school supplies and equipment, academic tutoring, academic testing fees, special education and related services for students who are individuals with exceptional needs, and transportation to and from school and school functions. Expenses incurred by an eligible student to attend a community college before high school graduation, including tuition, are elementary and secondary eligible education
expenses.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
“Eligible school” means a private full-time day school, as described in Section 48222, operating in the state and accredited by a regional accrediting agency recognized by the state or the United States Department of Education, or a school that has applied for that accreditation but the application is pending, and the school has not been denied accreditation in the prior two years by the same accrediting agency, that has filed an application with the Superintendent pursuant to Section 69995.09.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
“Eligible student” means a child eligible to enroll in a public elementary or secondary school and enrolled in an eligible school, except as follows:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
For the 2027–28 and 2028–29 school years, a child is an eligible
student only if the child’s parent or guardian’s taxable income is less than fifty thousand dollars ($50,000) per year for a single filer or one hundred thousand dollars ($100,000) per year for dual filers.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
For the 2029–30 and 2030–31 school years, a child is an eligible student only if the child’s parent or guardian’s taxable income is less than one hundred thousand dollars ($100,000) per year for a single filer or two hundred thousand dollars ($200,000) per year for dual filers.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
“Individualized education program” has the same meaning as that term is described in Section 56345.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
“Participation agreement” means the uniform contract created by the SCFA Trust Board that must be executed by the SCFA Trust Board and the parent or legal guardian of an eligible student that directs the SCFA Trust Board to disburse funds to an eligible school on behalf of the account beneficiary.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
“Program account” means the account created in the SCFA Trust pursuant to subdivision (f) of Section 69995.02 from which moneys transferred from the General Fund, investment earnings, and other grants, gifts, or appropriations are maintained and segregated into SCFAs and SEFAs for eligible students.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
“SCFA” or “School Choice Flex Account” means an account composed of funds that may be used for elementary and secondary eligible
education expenses for the applicable school year. Any funds deposited in an SCFA that are unused, as of June 30 of each year, shall be returned to the state for the benefit of elementary and secondary education, upon appropriation by the Legislature.
</html:p>
<html:p>
(l)
<html:span class="EnSpace"/>
“SCFA Trust” means the School Choice Flex Account Trust established by subdivision (a) of Section 69995.02.
</html:p>
<html:p>
(m)
<html:span class="EnSpace"/>
“SCFA Trust Board” means the School Choice Flex Account Trust Board established by subdivision (a) of Section 69995.03.
</html:p>
<html:p>
(n)
<html:span class="EnSpace"/>
“SEFA” or “Special Education Flex Account” means a School Choice Flex Account for students who are individuals with exceptional needs, as defined by Section 56026. A student for whom funds are expended pursuant to an SEFA shall not also receive
funds pursuant to a separate SCFA. Any funds deposited in an SEFA that are unused, as of June 30 of each year, shall be returned to the state for the benefit of elementary and secondary education, upon appropriation by the Legislature.
</html:p>
<html:p>
(o)
<html:span class="EnSpace"/>
“Tuition” means the amount charged by an eligible school to enroll a pupil or student at the school for a particular grade level and registration fees associated with application and enrollment.
</html:p>
<html:p>
(p)
<html:span class="EnSpace"/>
“Unclaimed funds” means funds remaining in an SCFA or SEFA at the end of the applicable school year.
</html:p>
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</ns0:LawSectionVersion>
</ns0:LawSection>
<ns0:LawSection id="id_668899E2-5EB7-4BC5-80C8-92D3DD1D68ED">
<ns0:Num>69995.02.</ns0:Num>
<ns0:LawSectionVersion id="id_5819641F-6FEE-4B01-BB6E-83FF63BCF6D8">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
There is hereby established an instrumentality of the State of California to be known as the School Choice Flex Account Trust.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
Every eligible student whose parent or guardian desires to enroll the child in an eligible school may establish an SCFA, or, if applicable, an SEFA, pursuant to this article.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
Every eligible student enrolled in an eligible school shall be entitled to a credit to the child’s SCFA or SEFA for tuition and elementary and secondary eligible education expenses.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
The SCFA deposit amount for the 2027–28 school year
shall be eight thousand dollars ($8,000). The SEFA deposit amount for the 2027–28 school year shall be sixteen thousand dollars ($16,000). Beginning July 1, 2028, the Department of Finance shall adjust the SCFA and SEFA deposit amounts annually by the same percentage required by the state for the support of school districts in the same fiscal year, pursuant to Section 8 of Article XVI of the California Constitution.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Each school year, the Controller shall transfer an amount of moneys from the General Fund to the SCFA Trust equal to the sum of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The SCFA deposit amount determined pursuant to subdivision (d) multiplied by the number of SCFAs established pursuant to subdivision (b).
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The SEFA deposit amount determined pursuant to subdivision (d) multiplied by the number of SEFAs established pursuant to subdivision (b).
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The SCFA or SEFA deposit amount for an individual student may be adjusted for an SCFA or SEFA established after the beginning of the school year pursuant to an application submitted pursuant to subdivision (b) of Section 69995.04. The Controller shall make at least three transfers to the SCFA Trust during each fiscal year, with the first transfer occurring on August 1 and the last transfer occurring on or before June 15. The Controller shall adjust the amount of moneys transferred from the General Fund to the SCFA Trust to ensure that the total amount of moneys transferred during the school year equals the amount required to be transferred pursuant to this article. The Controller shall
report the total amount of moneys transferred from the General Fund to the SCFA Trust pursuant to this article to the Department of Finance and the Legislature on or before June 15 of each year. This article does not prohibit the Legislature from appropriating
additional funds to the SCFA Trust.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
The SCFA Trust is hereby established as a fund in the State Treasury. The SCFA Trust Program Account and the SCFA Trust Administrative Account are hereby established as accounts within the SCFA Trust. Notwithstanding Section 13340 of the Government Code, the program account is hereby continuously appropriated, without regard to fiscal years, to the SCFA Trust Board for purposes of this article. Moneys in the administrative account shall be available for expenditure, upon appropriation, for the purposes specified in this article. Moneys in the SCFA Trust shall only be used for purposes of this article and shall not be taken, used, borrowed, or collateralized for any other purpose.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
Any unit of federal, state, or local
government, or any other person, firm, partnership, or corporation, may make a grant, gift, or other appropriation for deposit into the administrative account or the program account.
</html:p>
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</ns0:LawSection>
<ns0:LawSection id="id_EA440B73-D68B-4BE2-B080-7D2CCD3384D1">
<ns0:Num>69995.03.</ns0:Num>
<ns0:LawSectionVersion id="id_112C518F-C64A-4398-98B9-45C54899D009">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
The purposes, powers, and duties of the SCFA Trust are vested in, and shall be exercised by, the School Choice Flex Account Trust Board, which is hereby established.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The SCFA Trust Board shall consist of the following members:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The members of the Scholarshare Investment Board as provided in subparagraph (B) of paragraph (2) of subdivision (a) of Section 69984.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The Superintendent.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
One member, appointed by the Governor, representing elementary and
secondary private full-time day schools that are parochial or religious.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
One member, appointed by the Governor, representing elementary and secondary private full-time day schools that are not parochial or religious.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The SCFA Trust Board shall have all the necessary powers and duties provided to the Scholarshare Investment Board under Article 19 (commencing with Section 69980), including, but not limited to, all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The power to invest moneys in the SCFA Trust for the benefit of the SCFA Trust and account beneficiaries.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The duty to publicly report investments and investment performance.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The duty to distribute funds from SCFAs and SEFAs and audit the SCFAs and SEFAs to ensure that all funds disbursed to eligible schools are used by and for the account beneficiary and in furtherance of the act.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
The power to accept any grants, gifts, appropriations, and other moneys from any unit of federal, state, or local government or any other person, firm, partnership, or corporation for deposit into the administrative account or the program account.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
The duty to return unclaimed funds to the state for the benefit of elementary and secondary education, upon appropriation by the Legislature.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
The power to adopt regulations to implement this article.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
Moneys transferred by the Controller pursuant to subdivision (e) of Section 69995.02 shall be allocated by the SCFA Trust Board to the program account and administrative account. All moneys allocated to the program account shall be promptly invested and accounted for separately for each individual SCFA and SEFA. All costs of administration, including investment management fees, of the SCFA Trust shall be paid out of the administrative account, which shall not exceed, on an annual basis, 1 percent of the total amount of moneys in the program account.
</html:p>
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</ns0:LawSection>
<ns0:LawSection id="id_34D04BA2-2383-445F-9C1A-C84C81DF0D6F">
<ns0:Num>69995.04.</ns0:Num>
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<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
The Superintendent shall create an online application for a parent or legal guardian to request that an SCFA or SEFA be established for an eligible student and submit an executed participation agreement pursuant to this article. The Superintendent shall also accept applications and executed participation agreements submitted by mail.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The deadline for submitting an application and executed participation agreement for the first school year for which an SCFA or SEFA is to be established for an eligible student shall be April 1 of the previous school year. The Superintendent shall establish at least one additional opportunity and deadline for a parent or legal
guardian to submit an application and executed participation agreement during the school year. The SCFA and SEFA deposit amounts for SCFAs or SEFAs established during a school year shall be less than the full SCFA or SEFA deposit amount established pursuant to subdivision (d) of Section 69995.02.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The parent or legal guardian of an eligible student shall identify the eligible student as the account beneficiary of the SCFA or SEFA and execute the participation agreement.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
Once an application and participation agreement have been submitted, the Superintendent shall confirm that the child is enrolled in an eligible school and the participation agreement shall be transmitted to the eligible school.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
So long as the
account beneficiary remains eligible to receive the SCFA or SEFA deposit amount and to direct the expenditure of funds pursuant to this article, no additional application or participation agreement shall be required. However, an application and participation agreement shall be amended by the parent or legal guardian if the account beneficiary enrolls in a different eligible school.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
The Superintendent shall create an online process for a parent or legal guardian, public school district, eligible school, or any other person to report that a child is no longer eligible or is no longer enrolled in an eligible school. Upon receipt of this information, the Superintendent shall confirm the eligibility status of the child by providing adequate notice to the parent or legal guardian of the child and to the school, and an opportunity for each to
be heard. If the Superintendent determines that a child is no longer eligible, that determination may be appealed by the parent or legal guardian on behalf of the child pursuant to the administrative adjudication procedures described in Chapter 4.5 (commencing with Section 11400) of Part 1 of Division 3 of Title 2 of the Government Code.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
<ns0:LawSection id="id_C1F9677A-F049-42A1-8A62-3738E9BB077C">
<ns0:Num>69995.05.</ns0:Num>
<ns0:LawSectionVersion id="id_5EC558B8-5FB0-45EE-9B17-2851D1D46B38">
<ns0:Content>
<html:p>The Superintendent shall do all of the following:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
Create an online application for a school to become eligible to receive funds from an SCFA or SEFA established pursuant to this article.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
Publish and periodically update on its internet website a list of eligible schools by name and address.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
Provide contact information for each eligible school on its internet website.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
Post the tuition and other eligible education expenses charged for each grade level at an eligible school on its internet
website.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
<ns0:LawSection id="id_43F9F631-965B-411E-A385-FAC2D1411A97">
<ns0:Num>69995.06.</ns0:Num>
<ns0:LawSectionVersion id="id_7567208B-BCAB-4829-AFB4-855ADD41C63B">
<ns0:Content>
<html:p>The SCFA Trust Board shall do all of the following:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
Establish an SCFA or SEFA within the program account for each eligible student who has requested an account from the Superintendent.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
Enter into participation agreements pursuant to this article.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
Credit each SCFA or SEFA with the appropriate SCFA or SEFA deposit amount for each eligible student.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
Credit investment earnings of the program account to each SCFA or SEFA, as appropriate.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
Provide parents and legal guardians of account beneficiaries with the ability to securely review online SCFA or SEFA activity, including SCFA or SEFA deposits or credits, SCFA or SEFA investment earnings, and SCFA or SEFA disbursements to an eligible school on behalf of the account beneficiary.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
Protect the privacy of parents, legal guardians, and account beneficiaries.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Pursuant to the terms of an executed participation agreement, and except as provided in paragraph (2), disburse funds on behalf of an account beneficiary to an eligible school on a monthly basis.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Notwithstanding paragraph (1), the SCFA Trust Board may enter into an agreement with an eligible school to
provide for a different disbursement schedule.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
Randomly audit funds disbursed from SCFAs and SEFAs to ensure student eligibility, student enrollment, student attendance, and school eligibility.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Withhold any ineligible disbursement made to an eligible school from any future disbursements.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
Create a uniform participation agreement for use by the Superintendent, the SCFA Trust Board, and the parents and legal guardians of eligible students. An eligible school identified in a participation agreement shall be a third-party beneficiary of an executed participation agreement.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
<ns0:LawSection id="id_9E83AAED-6B6F-4744-90F1-8874FADAAEEF">
<ns0:Num>69995.07.</ns0:Num>
<ns0:LawSectionVersion id="id_3CF49859-2E76-4623-906C-BC9DA2053B9A">
<ns0:Content>
<html:p>The SCFA Trust Board shall adopt regulations to implement this article.</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
<ns0:LawSection id="id_5A82CECA-B176-4AA2-87B2-57857B76FCA9">
<ns0:Num>69995.08.</ns0:Num>
<ns0:LawSectionVersion id="id_33D12607-C2C8-40D1-91EE-48BFC89107DC">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
The SCFA Trust Board shall only disburse funds from an SCFA or SEFA to an eligible school.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The state shall not limit the number of eligible schools or the number of students enrolled in an eligible school. The state shall not impose conditions on the eligibility of a private school to receive funds, other than conditions based on any of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Periodic certification that an eligible student is enrolled and attending the eligible school.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Periodic certification that the amount disbursed from an SCFA or SEFA is only used
for tuition and eligible education expenses.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Accreditation required to obtain status as an eligible school pursuant to subdivision (f) of Section 69995.01.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Public disclosure of the receipt and expenditure of SCFA or SEFA funds as required by the SCFA Trust Board.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
The general health and safety standards applicable to the facilities of all private schools operating in the state.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
<ns0:LawSection id="id_52EB145C-89E9-481D-9BA2-3ACA6FF24B86">
<ns0:Num>69995.09.</ns0:Num>
<ns0:LawSectionVersion id="id_74446B9C-62D7-4ACE-8A26-28EF6662B07F">
<ns0:Content>
<html:p>A private full-time day school may become an eligible school by filing an application with the Superintendent. A private full-time day school that becomes an eligible school may accept funds from an SCFA or SEFA for the tuition and eligible educational expenses of an account beneficiary who is admitted to the eligible school.</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
<ns0:LawSection id="id_752EB662-8CE9-4280-AE34-FDE0849C9BB0">
<ns0:Num>69995.1.</ns0:Num>
<ns0:LawSectionVersion id="id_84574256-DF77-4273-BA81-17E7219AFF95">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
Notwithstanding Section 69995.02, and except as provided in subdivision (b), the child of a parent or legal guardian who chooses to educate the child at home pursuant to an affidavit filed pursuant to Section 33190 shall not be entitled to establish an SCFA or SEFA pursuant to this article. This article shall not prohibit the state from offering financial aid for education-related expenses to the parents or legal guardians of homeschooled children ineligible for an SCFA or SEFA.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
Notwithstanding subdivision (a), the parent or legal guardian of a child enrolled in an eligible school to facilitate homeschooling may establish an SCFA or SEFA for the child pursuant
to this article.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
<ns0:LawSection id="id_3C2BBFB0-4495-4F58-A214-902D6FFD77BC">
<ns0:Num>69995.11.</ns0:Num>
<ns0:LawSectionVersion id="id_418611B3-9FF1-4E9B-BAAF-7D3C2F607181">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
An eligible school shall not share, refund, or rebate any funds received from an SCFA or SEFA with or to the parent, legal guardian, or eligible student in any manner.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The SCFA Trust Board may terminate and suspend an SCFA or SEFA, as applicable, and participation agreement if the parent, legal guardian, or eligible student fails to comply with the terms of the participation agreement with the intent to defraud or misuse the funds distributed on behalf of an account beneficiary upon notice to the parent or legal guardian and an opportunity to be heard. If the SCFA Trust Board terminates or suspends an SCFA or SEFA, that determination may be appealed by the
parent, legal guardian, or eligible student pursuant to the administrative adjudication procedures described in Chapter 4.5 (commencing with Section 11400) of Part 1 of Division 3 of Title 2 of the Government Code.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
<ns0:LawSection id="id_39749EE2-C02E-4B9F-B559-D26327CA5686">
<ns0:Num>69995.12.</ns0:Num>
<ns0:LawSectionVersion id="id_A974C53C-2661-44C0-9FE0-3931ED5FB309">
<ns0:Content>
<html:p>The Legislature shall provide for the allocation of costs associated with this article as follows:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
For the cost of providing an SCFA or SEFA deposit amount for an eligible student not enrolled in a public elementary or secondary school before the operative date of this article, the Legislature shall rebase, as necessary, the minimum funding guarantee for school districts, as provided in Section 8 of Article XVI of the California Constitution, to include such eligible students in the definition of “average daily attendance” as defined in Section 8.1 of Article XVI of the California Constitution.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
For the costs of
providing an SCFA or SEFA deposit amount for an eligible student, the cost for that SCFA or SEFA deposit amount shall be apportioned between the General Fund and the public school district in which the eligible student resides, in the same ratio of General Fund and local property tax revenue that would have been used to educate that eligible student in the student’s public school district. The Legislature shall provide for the transfer of funds from a school district to the state as necessary to carry out this provision.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
<ns0:LawSection id="id_85A36C27-81BF-4379-A078-B0F38419C365">
<ns0:Num>69995.13.</ns0:Num>
<ns0:LawSectionVersion id="id_48FE3A57-EFF4-4F1D-8655-C34C5F83B8A6">
<ns0:Content>
<html:p>This article shall become operative on January 1, 2027, but shall become operative only if Senate Constitutional Amendment ____ of the 2025–26 Regular Session is approved by the voters at the statewide general election on November 4, 2026.</html:p>
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</ns0:BillSection>
<ns0:BillSection id="id_B38041D6-2422-4CB2-8045-541C97FE74B3">
<ns0:Num>SEC. 3.</ns0:Num>
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Section 17132.2 is added to the
<ns0:DocName>Revenue and Taxation Code</ns0:DocName>
, to read:
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<ns0:Fragment>
<ns0:LawSection id="id_E4D1745E-3768-43E6-AE45-73FD53C059C3">
<ns0:Num>17132.2.</ns0:Num>
<ns0:LawSectionVersion id="id_CF5F5960-4171-4F61-A93A-5B03AD502720">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
For taxable years beginning on or after January 1, 2027, gross income shall not include distributions from a School Choice Flex Account or Special Education Flex Account pursuant to a participation agreement.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
For purposes of this section, the following definitions apply:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
“School Choice Flex Account” means a School Choice Flex Account established under the School Choice Flex Account Act of 2025 (Article 19.2 (commencing with Section 69995) of Chapter 2 of Part 42 of Division 5 of Title 3 of the Education Code).
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
“Participation
agreement” has the same meaning as that term is defined in subdivision (i) of Section 69995.01 of the Education Code.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
“Special Education Flex Account” means a Special Education Flex Account established under the School Choice Flex Account Act of 2025 (Article 19.2 (commencing with Section 69995) of Chapter 2 of Part 42 of Division 5 of Title 3 of the Education Code).
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
For purposes of complying with Section 41, as it pertains to the exclusions from income provided by this section, the Legislature finds and declares the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The goal, purpose, and objective of the exclusion from income is to encourage parents and legal guardians to participate in the School Choice Flex
Account or Special Education Flex Account and to maximize the value of the School Choice Flex Account or Special Education Flex Account.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The performance indicators used to determine whether the exclusion from income is achieving its stated purpose shall be the number of taxpayers receiving distributions from a School Choice Flex Account or Special Education Flex Account that, but for this section, would have been included in income, and the average dollar value of income so excluded.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
No later than July 1, 2027, and annually thereafter, the Franchise Tax Board shall submit a report to the Legislature, in compliance with Section 9795 of the Government Code, that details the number of taxpayers that received distributions from a School Choice Flex
Account or Special Education Flex Account that, but for this section, would have been included in income, and the average dollar value of income so excluded.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
This section shall become operative on January 1, 2027, but shall become operative only if Senate Constitutional Amendment ____ of the 2025–26 Regular Session is approved by the voters at the statewide general election on November 4, 2026.
</html:p>
</ns0:Content>
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</ns0:BillSection>
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|