SF 2215 (LSB 5736XS (2) 86)

SENATE FILE 2215

BY  SMITH

A BILL FOR

An Act relating to interest earned on school district cash reserves and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 257.34, Code 2016, is amended to read as follows:
   257.34  Cash reserve information.
   1.  If a school district receives less state school foundation aid under section 257.1 than is due under that section for a base year and the school district uses funds from its cash reserve during the base year to make up for the amount of state aid not paid, the board of directors of the school district shall include in its general fund budget document information about the amount of the cash reserve used to replace state school foundation aid not paid.
   2.  If a board of directors of a school district designates the interest earned on cash reserve funds during a budget year as miscellaneous income under section 298A.2, subsection 2, the board of directors of the school district shall include in its general fund budget document information about the amount of interest so designated.
    Sec. 2.  Section 298A.2, Code 2016, is amended to read as follows:
   298A.2  General fund.
   1.  All moneys received by a school corporation from taxes and other sources must be accounted for in the general fund, except moneys required by law to be accounted for in another fund.
   2.  A school district’s cash reserve funds shall be deposited and accounted for in the general fund. Any interest earned on cash reserve funds during a budget year may be added to the district’s existing cash reserve amount within the general fund or may be designated by the school board to be miscellaneous income and used for any general fund purpose during any subsequent budget year. Amounts designated as miscellaneous income shall not be included in district cost.
    Sec. 3.  APPLICABILITY.  This Act applies to school budget years beginning on or after July 1, 2016.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill provides that school districts’ cash reserve funds shall be deposited and accounted for in the school district’s general fund. The bill also provides that any interest earned on cash reserve funds during a budget year may be added to the district’s existing cash reserve amount within the general fund or may be designated by the school board to be miscellaneous income and used for any general fund purpose during any subsequent budget year. However, the amounts designated as miscellaneous income shall not be included in district cost. 
   Under the bill, if a school board designates the interest earned on cash reserve funds during a budget year as miscellaneous income, the board of directors of the school district shall include in its general fund budget document information about the amount of interest so designated.
   A school district’s miscellaneous income may affect the district’s amount of authorized expenditures. Under current Code section 257.7, the authorized expenditures of a school district during a base year shall not exceed the lesser of the certified budget for that year plus any allowable amendments, or the authorized budget which is the sum of the combined district cost for that year, the actual miscellaneous income received for that year, and the actual unspent balance from the preceding year.
   The bill applies to school budget years beginning on or after July 1, 2016.