SB 252 — AN ACT ESTABLISHING TAX CREDITS FOR EMPLOYERS WHO MAKE PAYMENTS TOWARD TUITION COSTS OF EMPLOYEES AND FOR TAXPAYERS WHO DONATE TO ENDOWED PROFESSORSHIPS.

Senate General Assembly RaisedFile Bill No.

252218 February Session, 2022 LCOSubstitute Senate Bill No.

2427252 ReferredSenate, toMarch 30, 2022 The Committee on HIGHERHigher EDUCATIONEducation ANDand EMPLOYMENTEmployment ADVANCEMENTAdvancement Introducedreported by:through SEN.

(HED)SLAP ANof ACTthe ESTABLISHING5th TAXDist., CREDITSChairperson FORof EMPLOYERSthe WHOCommittee MAKEon PAYMENTSthe TOWARDpart TUITIONof COSTSthe OFSenate, EMPLOYEESthat ANDthe DONATEsubstitute TObill ENDOWEDought PROFESSORSHIPS.to pass.

AN ACT ESTABLISHING TAX CREDITS FOR EMPLOYERS WHO MAKE PAYMENTS TOWARD TUITION COSTS OF EMPLOYEES AND FOR TAXPAYERS WHO DONATE TO ENDOWED PROFESSORSHIPS.

(b)sSB252 (1)/ ForFile income years commencing on or after January 1, 2023, an employer that makes a payment to or on behalf of a qualified employee LCO No.

2427218 1 ofsSB252 4File forNo. an eligible tuition cost of such qualified employee may claim a credit against the tax imposed under chapter 207 or 208 of the general statutes.

218 (b) (1) For income years commencing on or after January 1, 2023, an employer that makes a payment to or on behalf of a qualified employee for an eligible tuition cost of such qualified employee may claim a credit against the tax imposed under chapter 207 or 208 of the general statutes.

and (2) "Endowed professorship" means a faculty position at ana public institution of higher education that is permanently paid for with the revenue from an endowment fund that was specifically established for that purpose.

(b) (1) There is established an endowed professorship tax credit programsSB252 whereby/ aFile taxpayer may be allowed a credit against the tax imposed under chapter 207, 208, 212 or 229 of the general statutes, other LCO No.

2427218 2 ofsSB252 4File thanNo. the liability imposed by section 12-707 of the general statutes.

(2)218 Theprogram taxwhereby credita shalltaxpayer may be inallowed ana amountcredit equalagainst to one hundred per cent of the amounttax donatedimposed byunder suchchapter taxpayer207, to208, an212 endowedor professorship229 at an institution of higher education in this state, provided (A) the creditgeneral shallstatutes, notother exceedthan fifty thousand dollars for any taxpayer, and (B) the totalliability amountimposed ofby credits granted to all taxpayers under this section shall12-707 notof exceedthe twogeneral millionstatutes. dollars in any one fiscal year.

(2) The tax credit shall be in an amount equal to one hundred per cent of the amount donated by such taxpayer to an endowed professorship at a public institution of higher education in this state, provided (A) the credit shall not exceed fifty thousand dollars for any taxpayer, and (B) the total amount of credits granted to all taxpayers under this section shall not exceed two million dollars in any one fiscal year.

2 July 1, 2022, and New section applicable to income years and taxable years commencing on or after January 1, 2023 StatementHED ofJoint Purpose:Favorable Subst.

TosSB252 provide/ aFile taxNo. credit to employers that (1) make payments for the tuitioncostsofemployeeswhoattendaninstitutionofhighereducation, and (2) donate to an endowed professorship at an institution of higher education in the state.

LCO218 3 sSB252 File No.

2427218 3The offollowing 4Fiscal [ProposedImpact deletionsStatement and Bill Analysis are enclosedprepared infor brackets.the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose.

ProposedIn additionsgeneral, arefiscal indicatedimpacts byare underline,based exceptupon that when the entire text of a billvariety or resolution or a section of ainformational billsources, orincluding resolutionthe isanalyst’s new,professional itknowledge. is not underlined.] LCO No.

2427Whenever 4applicable, agency data is consulted as part of 4the analysis, however final products do not necessarily reflect an assessment from any specific department.

OFA Fiscal Note State Impact:

Agency Affected Fund-Effect FY 23 $ FY 24 $ Department of Revenue Services GF - Revenue None 115-160 Loss million Department of Revenue Services GF - Cost 110,465 72,703 State Comptroller - Fringe GF - Cost 14,374 29,467 Benefits1 Note:

GF=General Fund Municipal Impact:

None Explanation The bill, which establishes tax credits for tuition reimbursement and endowedprofessorshipdonations,results in:

1)a GeneralFundrevenue loss of $115 million to $160 million annually beginning in FY 24, 2) a one-time cost to the Department of Revenue Services (DRS) of $75,000 in FY 23 only, and 3) an on-going cost to DRS of $49,839 in FY 23 (partial year) and $102,170 in FY 24 for salary and fringe benefit costs associated with one Revenue Examiner.

Section 1 establishes a tax credit under the corporation business and insurance premiums taxes for 50% of tuition reimbursement costs, capped at $2,500 per employee.

Based on a national employer tuition reimbursement market estimated to be between $20 billion and $28 billion annually, this results in a revenue loss of between $113 million The fringe benefit costs for most state employees are budgeted centrally in accounts administered by the Comptroller.

The estimated active employee fringe benefit cost associated with most personnel changes is 40.53% of payroll in FY 23.

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218 4 sSB252 File No.

218 and $158 million each year beginning in FY 24.

2 Section 1 also results in a one-time cost to DRS of $75,000 in FY 23 for updates to the online Taxpayer Service Center and internal CTax integrated tax administration system, as well as an ongoing annualized cost of $102,170 ($72,703 for salary and $29,467 for fringe benefit costs) for one Revenue Examiner for audit and compliance.

Section2allowsataxcreditundervarioustaxes foramountsdonated to an endowed professorship at a Connecticut public higher education institution.

This results in a revenue loss of up to $2 million each year beginning in FY 24.

The Out Years The annualized ongoing fiscal impact identified above would continue into the future subject to inflation.

Sources:

Georgetown University Center on Education and the Workforce International Foundation of Employee Benefit Plans 2Data from the International Foundation of Employee Benefit Plans indicates that the most popular reimbursement amount to employees is $5,000 to $5,999.

For context, there are currently 122 endowed professorships and chairs between UConn and UConn Health.

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218 5 sSB252 File No.

218 OLR Bill Analysis sSB 252 AN ACT ESTABLISHING TAX CREDITS FOR EMPLOYERS WHO MAKE PAYMENTS TOWARD TUITION COSTS OF EMPLOYEES AND FOR TAXPAYERS WHO DONATE TO ENDOWED PROFESSORSHIPS.