SF 3384

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

1.1                                        A bill for an act
1.2     relating to early childhood; establishing an allowance for early childhood 
1.3     learning preparedness and enrichment expenses; reducing class sizes for K-3 
1.4     to meet the statutory state standard; creating a fourth individual income tax 
1.5     bracket and increasing the rate of taxes on that income, subject to reduction 
1.6     if the tax compliance gap is reduced; adjusting the income limits for the 
1.7     education credit; appropriating money;amending Minnesota Statutes 2004, 
1.8     sections 126C.05, subdivision 1; 126C.12, subdivision 1; 290.06, subdivision 
1.9     2d; Minnesota Statutes 2005 Supplement, sections 290.06, subdivision 2c; 
1.10    290.0674, subdivision 2; proposing coding for new law in Minnesota Statutes, 
1.11    chapter 124D.
1.12    BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.13        Section 1. [124D.33] EARLY CHILDHOOD LEARNING PREPAREDNESS AND 
1.14    ENRICHMENT ALLOWANCE.
1.15        Subdivision 1. Allowance; purpose. An early childhood learning preparedness and 
1.16    enrichment allowance program is established, which will provide an allowance to families 
1.17    of young children, to be used for learning preparedness and to enrich, enhance, improve, 
1.18    or benefit the child's physical, educational, artistic, or musical development.
1.19        Subd. 2. Eligibility; allowance amount. A claimant with a child who is at least 
1.20    six months old through age five on April 15 of the year when the allowance is claimed is 
1.21    eligible to receive an allowance of $200 for each eligible child. In addition, the allowance 
1.22    for each eligible child must be increased according to the following:
Family IncomeAdditional Allowance Amount2.3     Under $10,000                           $1,000                                  
2.4     $10,000 - $19,999                       $900                                    
2.5     $20,000 - $29,999                       $800                                    
2.6     $30,000 - $39,999                       $700                                    
2.7     $40,000 - $49,999                       $600                                    
2.8     $50,000 - $74,999                       $500                                    
2.9     $75,000 - $99,999                       $400                                    
2.10    $100,000 - $149,999                     $300                                    
2.11    $150,000 - $249,999                     $200                                    
2.12    $250,000 and over                       $0                                      
2.13    As used in this section, "family income" is equal to "income" as defined in 
2.14    Minnesota Statutes, section 290.067, subdivision 2a, for the taxable year preceding the 
2.15    calendar year when the allowance is claimed, and "claimant" means an individual who 
2.16    meets the requirements of section 152 of the Internal Revenue Code of 1986, as amended 
2.17    through December 31, 2005, to claim the eligible child as a dependent.
2.18        Subd. 3. Commissioner of revenue duties; determining eligible claimants; 
2.19    payment of the allowance. (a) The commissioner of revenue shall include on the 
2.20    individual income tax form the information that is necessary to determine claimants who 
2.21    are eligible to receive an allowance, and must develop a method to locate potential 
2.22    claimants who do not file state income tax forms and inform them of the availability of 
2.23    the allowance. 
2.24    (b) The commissioner of revenue shall establish a process to transfer the allowance 
2.25    to claimants electronically.
2.26    (c) Claims for the allowance must be submitted by April 15. The commissioner of 
2.27    revenue must certify the allowance no later than August 15 of the year when the claim is 
2.28    submitted.
2.29        Subd. 4. Commissioner of education duties. (a) The commissioner shall, after 
2.30    consultation with stakeholders and professionals:
2.31    (1) define outcomes and indicators for local early childhood boards;
2.32    (2) provide technical assistance to local early childhood boards;
2.33    (3) establish minimum administrative and service guidelines and standards for 
2.34    the local early childhood boards;
2.35    (4) design and implement a method of monitoring and evaluating early childhood 
2.36    education enrichment criteria and local early childhood boards; 
3.1     (5) develop a process to review program categories recommended by local early 
3.2     childhood boards, and timely make a determination regarding the program category 
3.3     submitted by the local board; and
3.4     (6) develop a process for payments to providers based on the allowances.
3.5     (b) The commissioner is granted rulemaking authority as necessary to carry out the 
3.6     duties in paragraph (a).
3.7         Subd. 5. Local early childhood board composition and duties. (a) "Local early 
3.8     childhood board" means the group composed of one member of the following groups, if 
3.9     they exist in the school district:
3.10    (1) other early childhood education-related boards;
3.11    (2) three parents of children age five or under who represent the economic and 
3.12    ethnic diversity of the community;
3.13    (3) licensed child care providers;
3.14    (4) early childhood education providers;
3.15    (5) a representative from a program that provides physical education opportunities to 
3.16    children;
3.17    (6) school superintendents' designee;
3.18    (7) public or private nonprofit agencies serving youth and families;
3.19    (8) an individual or a representative from a program that provides musical instruction 
3.20    or classes to children;
3.21    (9) a representative from the arts community;
3.22    (10) local child care resource and referral programs; and
3.23    (11) the county board of commissioners.
3.24    (b) A local early childhood board must:
3.25    (1) assess the community's current capacity to address the early childhood learning 
3.26    preparedness and enrichment needs of children from six months to kindergarten entrance;
3.27    (2) create and implement a method to qualify early childhood program learning 
3.28    preparedness and categories in the community, according to the criteria under subdivision 
3.29    7;
3.30    (3) qualify program categories that aim to meet early childhood learning 
3.31    preparedness and enrichment needs;
3.32    (4) create an ongoing evaluation of program categories in relation to outcomes 
3.33    for children and families;
3.34    (5) provide an appropriate public forum in the community to evaluate whether 
3.35    a program category continues to meet community expectations and the criteria under 
3.36    subdivision 7; and
4.1     (6) develop procedures to restrict allowance payments only to providers that meet 
4.2     community expectations and the criteria under subdivision 7.
4.3         Subd. 6. Local school boards; charter school boards; nonpublic school boards.
 4.4     School boards in the school district, including boards from the public school system, 
4.5     charter schools, and nonpublic schools, may provide comments and recommendations 
4.6     to the local early childhood board, with regard to the board's duties under subdivision 5, 
4.7     paragraph (b), clauses (2), (3), and (4). The commissioner of education makes the final 
4.8     program category determination under subdivision 4, paragraph (a), clause (5).
4.9         Subd. 7. General criteria for activities. The early childhood allowance must be 
4.10    used during the 12 months following receipt of the allowance by the claimant for a child 
4.11    who is at least six months old through age five, to pay for qualified learning preparedness 
4.12    activities, or programs or classes that enrich, improve, or benefit the child's physical, 
4.13    educational, artistic, or musical development. The allowance may not be used for base 
4.14    child care costs or expenses.
4.15        Subd. 8. Allowance is not income for purposes of other publicly funded 
4.16    programs. Notwithstanding any law to the contrary, the allowance does not count as 
4.17    earned income for purposes of the medical assistance, MinnesotaCare, MFIP, or child 
4.18    care assistance programs.
4.19    EFFECTIVE DATE.This section is effective for claims filed after December 
4.20    31, 2006.

4.21        Sec. 2. Minnesota Statutes 2004, section 126C.05, subdivision 1, is amended to read:
4.22        Subdivision 1. Pupil unit. Pupil units for each Minnesota resident pupil in average 
4.23    daily membership enrolled in the district of residence, in another district under sections  
4.24    123A.05 to  123A.08,  124D.03,  124D.06,  124D.07,  124D.08, or  124D.68; in a charter 
4.25    school under section  124D.10; or for whom the resident district pays tuition under section  
4.26    123A.18,  123A.22,  123A.30,  123A.32,  123A.44,  123A.488,  123B.88, subdivision 
4.27    4,  124D.04,  124D.05,  125A.03 to  125A.24,  125A.51, or  125A.65, shall be counted 
4.28    according to this subdivision. 
4.29    (a) A prekindergarten pupil with a disability who is enrolled in a program approved 
4.30    by the commissioner and has an individual education plan is counted as the ratio of the 
4.31    number of hours of assessment and education service to 825 times  1.25 with a minimum 
4.32    average daily membership of 0.28, but not more than  1.25 pupil units. 
4.33    (b) A prekindergarten pupil who is assessed but determined not to be handicapped is 
4.34    counted as the ratio of the number of hours of assessment service to 825 times  1.25. 
5.1     (c) A kindergarten pupil with a disability who is enrolled in a program approved 
5.2     by the commissioner is counted as the ratio of the number of hours of assessment and 
5.3     education services required in the fiscal year by the pupil's individual education program 
5.4     plan to 875, but not more than one.
5.5     (d) A kindergarten pupil who is not included in paragraph (c) is counted as .557 0.65 
5.6      of a pupil unit for fiscal year 2000 2007 and thereafter.
5.7     (e) A pupil who is in any of grades 1 to 3 is counted as  1.115 1.2 pupil units for fiscal 
5.8     year 2000 2007 and thereafter. 
5.9     (f) A pupil who is any of grades 4 to 6 is counted as  1.06 pupil units for fiscal 
5.10    year 1995 and thereafter. 
5.11    (g) A pupil who is in any of grades 7 to 12 is counted as 1.3 pupil units.
5.12    (h) A pupil who is in the postsecondary enrollment options program is counted 
5.13    as 1.3 pupil units.

5.14        Sec. 3. Minnesota Statutes 2004, section 126C.12, subdivision 1, is amended to read:
5.15        Subdivision 1. Revenue. Of a district's general education revenue for fiscal year 
5.16    2000 2007 and thereafter each school district shall reserve an amount equal to the formula 
5.17    allowance multiplied by the following calculation:
5.18    (1) the sum of adjusted marginal cost pupils in average daily membership, according 
5.19    to section  126C.05, subdivision 5, in kindergarten times .057 .15; plus 
5.20    (2) the sum of adjusted marginal cost pupils in average daily membership, according 
5.21    to section  126C.05, subdivision 5, in grades 1 to 3 times .115 .2; plus 
5.22    (3) the sum of adjusted marginal cost pupils in average daily membership, according 
5.23    to section  126C.05, subdivision 5, in grades 4 to 6 times .06. 

5.24        Sec. 4. Minnesota Statutes 2005 Supplement, section 290.06, subdivision 2c, is 
5.25    amended to read:
5.26        Subd. 2c. Schedules of rates for individuals, estates, and trusts. (a) The income 
5.27    taxes imposed by this chapter upon married individuals filing joint returns and surviving 
5.28    spouses as defined in section 2(a) of the Internal Revenue Code must be computed by 
5.29    applying to their taxable net income the following schedule of rates:
5.30    (1) On the first $25,680 $29,980, 5.35 percent;
5.31    (2) On all over $25,680 $29,980, but not over $102,030 $119,100, 7.05 percent;
5.32    (3) On all over $102,030 $119,100, but not over $270,000, 7.85 percent;
5.33    (4) On all over $270,000, 9.25 percent.
6.1     Married individuals filing separate returns, estates, and trusts must compute their 
6.2     income tax by applying the above rates to their taxable income, except that the income 
6.3     brackets will be one-half of the above amounts.
6.4     (b) The income taxes imposed by this chapter upon unmarried individuals must be 
6.5     computed by applying to taxable net income the following schedule of rates:
6.6     (1) On the first $17,570 $20,510, 5.35 percent;
6.7     (2) On all over $17,570 $20,510, but not over $57,710 $67,360, 7.05 percent;
6.8     (3) On all over $57,710 $67,360, but not over $180,000, 7.85 percent;
6.9     (4) On all over $180,000, 9.25 percent.
6.10    (c) The income taxes imposed by this chapter upon unmarried individuals qualifying 
6.11    as a head of household as defined in section 2(b) of the Internal Revenue Code must be 
6.12    computed by applying to taxable net income the following schedule of rates:
6.13    (1) On the first $21,630 $25,250, 5.35 percent;
6.14    (2) On all over $21,630 $25,250, but not over $86,910 $101,450, 7.05 percent;
6.15    (3) On all over $86,910 $101,450, but not over $229,500, 7.85 percent;
6.16    (4) On all over $229,500, 9.25 percent.
6.17    (d) In lieu of a tax computed according to the rates set forth in this subdivision, the 
6.18    tax of any individual taxpayer whose taxable net income for the taxable year is less than 
6.19    an amount determined by the commissioner must be computed in accordance with tables 
6.20    prepared and issued by the commissioner of revenue based on income brackets of not 
6.21    more than $100. The amount of tax for each bracket shall be computed at the rates set 
6.22    forth in this subdivision, provided that the commissioner may disregard a fractional part of 
6.23    a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.
6.24    (e) An individual who is not a Minnesota resident for the entire year must compute 
6.25    the individual's Minnesota income tax as provided in this subdivision. After the 
6.26    application of the nonrefundable credits provided in this chapter, the tax liability must 
6.27    then be multiplied by a fraction in which:
6.28    (1) the numerator is the individual's Minnesota source federal adjusted gross income 
6.29    as defined in section 62 of the Internal Revenue Code and increased by the additions 
6.30    required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), and (9), 
6.31    and reduced by the Minnesota assignable portion of the subtraction for United States 
6.32    government interest under section 290.01, subdivision 19b, clause (1), and the subtractions 
6.33    under section 290.01, subdivision 19b, clauses (9), (10), (14), (15), and (16), after applying 
6.34    the allocation and assignability provisions of section 290.081, clause (a), or 290.17; and
6.35    (2) the denominator is the individual's federal adjusted gross income as defined in 
6.36    section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in 
7.1     section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), and (9), and reduced by the 
7.2     amounts specified in section 290.01, subdivision 19b, clauses (1), (9), (10), (14), (15), 
7.3     and (16).
7.4     EFFECTIVE DATE.This section is effective for taxable years beginning after 
7.5     December 31, 2005.

7.6         Sec. 5. Minnesota Statutes 2004, section 290.06, subdivision 2d, is amended to read:
7.7         Subd. 2d. Inflation adjustment of brackets. (a) For taxable years beginning after 
7.8     December 31, 2000 2006, the minimum and maximum dollar amounts for each rate 
7.9     bracket for which a tax is imposed in subdivision 2c shall be adjusted for inflation by the 
7.10    percentage determined under paragraph (b). For the purpose of making the adjustment as 
7.11    provided in this subdivision all of the rate brackets provided in subdivision 2c shall be the 
7.12    rate brackets as they existed for taxable years beginning after December 31, 1999 2005, 
7.13    and before January 1, 2001 2007. The rate applicable to any rate bracket must not be 
7.14    changed. The dollar amounts setting forth the tax shall be adjusted to reflect the changes 
7.15    in the rate brackets. The rate brackets as adjusted must be rounded to the nearest $10 
7.16    amount. If the rate bracket ends in $5, it must be rounded up to the nearest $10 amount.
7.17    (b) The commissioner shall adjust the rate brackets and by the percentage determined 
7.18    pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in 
7.19    section 1(f)(3)(B) the word "1999" "2005" shall be substituted for the word "1992." For 
7.20    2001, the commissioner shall then determine the percent change from the 12 months 
7.21    ending on August 31, 1999 2005, to the 12 months ending on August 31, 2000 2006, and 
7.22    in each subsequent year, from the 12 months ending on August 31, 1999 2005, to the 12 
7.23    months ending on August 31 of the year preceding the taxable year. The determination of 
7.24    the commissioner pursuant to this subdivision shall not be considered a "rule" and shall 
7.25    not be subject to the Administrative Procedure Act contained in chapter 14.
7.26    No later than December 15 of each year, the commissioner shall announce the 
7.27    specific percentage that will be used to adjust the tax rate brackets.

7.28        Sec. 6. Minnesota Statutes 2005 Supplement, section 290.0674, subdivision 2, is 
7.29    amended to read:
7.30        Subd. 2. Limitations. (a) For claimants with income not greater than $33,500 250 
7.31    percent of the federal poverty guidelines, the maximum credit allowed for a family is 
7.32    $1,000 multiplied by the number of qualifying children in kindergarten through grade 12 
7.33    in the family. The maximum credit for families with one qualifying child in kindergarten 
7.34    through grade 12 is reduced by $1 for each $4 of household income over $33,500 250 
8.1     percent of the federal poverty guidelines, and the maximum credit for families with two 
8.2     or more qualifying children in kindergarten through grade 12 is reduced by $2 for each 
8.3     $4 of household income over $33,500 250 percent of the federal poverty guidelines, 
8.4     but in no case is the credit less than zero.
8.5     For purposes of this section "income" has the meaning given in section 290.067, 
8.6     subdivision 2a. In the case of a married claimant, a credit is not allowed unless a joint 
8.7     income tax return is filed.
8.8     (b) For a nonresident or part-year resident, the credit determined under subdivision 1 
8.9     and the maximum credit amount in paragraph (a) must be allocated using the percentage 
8.10    calculated in section 290.06, subdivision 2c, paragraph (e).
8.11    EFFECTIVE DATE.This section is effective for taxable years beginning after 
8.12    December 31, 2005.

8.13        Sec. 7. DIRECTION TO DEPARTMENT.
8.14    The commissioner of education shall adjust all formulas in taxes payable in 2007 
8.15    to ensure that education finance levies are not increased as a result of the pupil weight 
8.16    changes in section 2.

8.17        Sec. 8. CLOSING TAX COMPLIANCE GAP; GOVERNOR'S 
8.18    RECOMMENDATION TO REDUCE INCOME TAX RATES.
8.19    On August 1, of 2007 and each subsequent year, the governor must submit to the 
8.20    legislature an estimate of the amount by which tax compliance activities conducted by the 
8.21    Department of Revenue under section 9 and Laws 2005, chapter 156, article 1, section 
8.22    15, subdivisions 2 and 3, have reduced the amount of the tax compliance gap during the 
8.23    preceding 12-month period. If the amount exceeds $100,000,000 in any year, the governor 
8.24    must recommend to the legislature a reduction in the income tax rate established for the 
8.25    fourth income brackets under section 4 that would reduce the revenue attributable to the 
8.26    tax on the fourth income bracket by the amount of reduction in the tax compliance gap.

8.27        Sec. 9. APPROPRIATION.
8.28    $....... is appropriated to the commissioner of revenue to pay the cost of participation 
8.29    in the "Fed-State" tax processing program of the Internal Revenue Service.