Senate Study Bill 1020 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON CHAPMAN) A BILL FOR An Act relating to the special employment security contingency 1 fund and funding of an insurance fraud bureau special fund, 2 and including effective date and retroactive applicability 3 provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1383XC (2) 88 ko/tm

S.F. _____ Section 1. Section 96.13, subsection 3, paragraph a, 1 subparagraph (1), Code 2019, is amended to read as follows: 2 (1) There is created in the state treasury a special fund 3 to be known as the special employment security contingency 4 fund. All interest, fines, and penalties, regardless of when 5 they become payable, collected from employers under section 6 96.14 shall be paid into the fund. The moneys in the fund 7 shall not be expended or available for expenditure in any 8 manner which would permit their substitution for federal funds 9 which would in the absence of the moneys be available to 10 finance expenditures for the administration of the department. 11 However, the moneys may be used as a revolving fund to 12 cover expenditures for which federal funds have been duly 13 requested but not yet received, subject to the charging of the 14 expenditures against the funds when received. The moneys may 15 be used for the payment of costs of administration which are 16 found not to have been properly and validly chargeable against 17 federal grants or other funds, received for the department. 18 The moneys in the fund are specifically made available to 19 replace, within a reasonable time, any moneys received by 20 this state in the form of grants from the federal government 21 for administrative expenses which because of any action or 22 contingency have been expended for purposes other than, or in 23 excess of, those necessary for the proper administration of 24 the department. All moneys in the fund shall be deposited, 25 administered, and disbursed in the same manner and under the 26 same conditions and requirements as are provided by law for 27 other special funds in the state treasury. Interest earned 28 upon moneys in the fund shall be deposited in and credited to 29 the fund. 30 Sec. 2. NEW SECTION . 96.13A Insurance fraud bureau special 31 fund. 32 1. There is created in the state treasury a special fund 33 to be known as the insurance fraud bureau special fund. All 34 interest, fines, and penalties, regardless of when they become 35 -1- LSB 1383XC (2) 88 ko/tm 1/ 3

S.F. _____ payable, collected by the department of workforce development 1 from employers pursuant to section 96.14 shall be paid into the 2 fund. Moneys in the fund are appropriated each fiscal year 3 to the insurance division within the department of commerce 4 to be used for the support and maintenance of the insurance 5 fraud bureau created pursuant to section 507E.2. Moneys in the 6 fund are deposited, administered, and disbursed in the same 7 manner and under the same conditions and requirements as are 8 provided by law for other special funds in the state treasury. 9 Notwithstanding section 12C.7, subsection 2, interest earned 10 on moneys in the fund shall be deposited in and credited to the 11 fund. 12 2. The treasurer of state shall be the custodian of the 13 fund and shall give a separate and additional bond conditioned 14 upon the faithful performance of the treasurer’s duties in 15 connection with the fund in an amount and with sureties as 16 shall be fixed and approved by the governor. The premium for 17 the bond shall be paid from the moneys in the fund. All sums 18 recovered on the bond for losses sustained by the fund shall be 19 deposited in the fund. Refunds of interest and penalties shall 20 be paid only from the fund. 21 3. Notwithstanding section 8.33, moneys remaining in the 22 fund at the end of each fiscal year shall not revert to any fund 23 and shall remain in the fund. 24 Sec. 3. 2017 Iowa Acts, chapter 169, section 27, subsection 25 2, as amended by 2018 Iowa Acts, chapter 1169, section 10, is 26 amended by striking the subsection. 27 Sec. 4. RETROACTIVE APPLICABILITY. This Act applies 28 retroactively to July 1, 2018. 29 Sec. 5. EFFECTIVE DATE. This Act, being deemed of immediate 30 importance, takes effect upon enactment. 31 EXPLANATION 32 The inclusion of this explanation does not constitute agreement with 33 the explanation’s substance by the members of the general assembly. 34 This bill relates to the creation and funding of the 35 -2- LSB 1383XC (2) 88 ko/tm 2/ 3

S.F. _____ insurance fraud bureau special fund and to the special 1 employment security contingency fund. 2 Currently, the law requires the department of workforce 3 development (IWD) to collect and deposit into the special 4 employment security contingency fund (special fund) all 5 interest, fines, and penalties collected from employers due to 6 their failure to comply with unemployment compensation fund 7 contribution requirements. Some of the moneys in the special 8 fund are allocated to the IWD, some are available to the IWD 9 subject to restrictions, and some are available for use at the 10 discretion of the IWD. 11 The bill still requires the IWD to collect the interest, 12 fines, and penalties; however, the bill provides that the IWD 13 is to deposit such moneys in a newly created insurance fraud 14 bureau special fund. The bill further provides that all moneys 15 deposited are appropriated each fiscal year to the insurance 16 division to be used for the support and maintenance of the 17 insurance fraud bureau. The bill also removes IWD’s authority 18 for discretionary spending of moneys in the special fund for 19 fiscal year 2018-2019. 20 The bill applies retroactively to July 1, 2018. The bill 21 takes effect upon enactment. 22 -3- LSB 1383XC (2) 88 ko/tm 3/ 3