ADMINISTRATIVE RULES REVIEW COMMITTEE Rules Digest -- August 1997 Scheduled for committee review September 9, 1997, Room 116 For further information, please contact Joe Royce, Legal Counsel, Administrative Rules Review Committee

HIGHLIGHTS IN THIS ISSUE:

INMATE TELEPHONE FUNDS, Corrections Department

CEBA AMENDMENTS, Department of Economic Development

INDUSTRIAL NEW JOBS TRAINING, Department of Economic Development

ICN SUBSIDIES, Department of Education

AREA EDUCATION AGENCY PROGRAMS, Department of Education

ANIMAL FEEDING OPERATIONS, Environmental Quality Commission

BACKGROUND CHECKS IN CARE FACILITIES, Inspections and Appeals Dept.

DEFERRED COMPENSATION, Personnel Department

For security reasons, all calls to corrections inmates are toll calls, and the telephone company rebates a portion of the revenue from those calls back to the department, where the money is put into a fund "for the benefit of inmates". In July the committee reviewed an earlier version of these rules, which was also filed emergency. During that review committee members noted that due to recent contract changes this fund was likely to increase from $1,000,000 to $3,000,000; the members questioned whether this large a sum should be left entirely to the discretion of the director and the staff. Members also questioned whether a portion of the funds could lawfully be disbursed from the central office, noting that Iowa Code section 904.508A, which establishes a telephone fund in each institution, implying the telephone money is to be kept by each institution. Lastly, committee members were particularly concerned by the emergency filing of these changes. Members felt that changes of this significance should have been preceded by a notice and a full opportunity for public comment. A procedural objection was placed on that filing, relating to its implementation without notice and terminating the filing after 180 days.

The department now proposes an alternative version. Like the previous version, the warden has almost unfettered discretion to use the money as the warden deem fits. However, the proposal adds detail to the phrase "for the benefit of inmates", by noting this means educational, vocational or recreational programs. Although not mandated, institutions are encouraged to use the funds to promote the health and welfare of inmates.

Under the proposal 25% of each institutions funds would be held in "reserve". This money would be disbursed by a committee made up of the director, the deputy director and a rotating member, who is to be the warden of one of the institutions; like the earlier version, a representative of the attorney general's office is eliminated from this group. This provision is a re-working of the existing provision, but it remains controversial. The earlier provision had half of this money transferred to the central office for distribution to any institution with the need for additional funds. In this version the money remains within the institution---but this reserve is placed under the jurisdiction of the central office. The basic question remains whether inmate telephone money can properly be transferred between institutions, as need arises, or is each institution entitled to keep and use the revenue it generates.

House File 732 appropriates one million dollars each year to assist communities on a cooperative basis to address the housing development needs in the communities in order to better position the communities for economic development or to meet housing needs resulting from other economic development efforts in the area. Assistance may be either technical or financial as set out in the department's rules. This program differs from the existing CDBG program in that no federal dollars are involved, thus reducing the level of "red tape", and eligibility is not necessarily tied to low income housing. To implement the statutory mandate the department proposes a new chapter 28 "Local Housing Assistance Program".

In essence the program is designed to assist communities deal with unmet housing needs. Basically, virtually any housing-type activity is eligible-new construction, rehabilitation, or demolition to develop a housing site. The housing itself must be non-luxury single family or multiple occupancy. Applicants may be cities, counties housing or economic development organizations; no individual grant may exceed $500,000. The applicant must have a housing needs assessment, completed within the last five years and must identify a financing "gap" that exists after all other financial resources have been identified.

This new program was authorized by House File 655 to provide state assistance to local government in developing improvements to service delivery on the local level. Virtually any unit of local government is eligible for assistance. Assistance can be in the form of technical aid or cash, with cash grants being limited to $50,000. Eligible projects include such things as improving public access to public services or the quality of those services; developing joint projects between public and private agencies to provide service and assessing the existing services and how they meet business and residential needs.

The key element of the Community Economic Betterment Program is the average regional wage used to establish project eligibility. This proposed rulemaking makes a number of changes to this important factor. The average regional wage is defined specifically for each individual county. Each county is considered the center of a larger region and the regional wage is established by calculating the average wage in that county along with the average wages of the surrounding counties. The center county is given a weighting of four while the surrounding counties have a weighting of one. Thus the impact of neighboring counties will be diminished--that impact was the subject of criticism in the previous version of these rules.

Another change relates to the county starting wage. No more than $100,000 can be loaned to a business unless the wage is 85% of the county average or $9.31. That limitation is raised to 90% of either the average regional or county wage, or $9.50, whichever is lowest. No project will be funded that pays below $7.00 for an existing business or $7.50 for a business recruited to Iowa..

Under the Industrial New Jobs Training Program when a new job is created in a community, 7 percent withholding passes to the state, from which 1½ to 3 percent is held aside. Community colleges work with the company to develop a contract for training, and money is provided to fund the training. In February the department proposed rules relating to projects developed by community colleges to provide the training for these new employees. That proposal would have required community colleges to monitor and oversee the performance of the training agreements they enter into with private industry. Those duties would have included creating:

• procedures for handling noncompliance with the agreement;
• a review process to determine whether the business operates within the scope of the law;
• an annual monitoring system to review business compliance;
• an collection system to seek out and recover any misspent funds.

In addition, the department reserved to itself the right to review any project for noncompliance and to take action against either the business or the community college as needed. Community colleges opposed this notice, contending first that the department had no oversight duties under chapter 260E, and second that the rules placed an almost impossible oversight burden on the community colleges.

In response to these concerns the department has now adopted a significantly scaled down version of its proposal. The only portion of the notice that was adopted was the requirement that community colleges monitor business compliance on an annual basis.

House File 730 section two appropriates $2.5 million to subsidize certain ICN services to public and private schools. Under the Act the department must establish by rule a procedure for the ICN to be reimbursed for that portion of the cost of providing interactive video service to nonpublic and public schools for grades kindergarten through twelve and community colleges which is not included in the rates charged to such users for such service. In short, the state will subsidize interactive video for Iowa's K-12 and community college students. Any funds not expended this year will not revert to the general fund; instead they will be available for expenditure during the subsequent fiscal year for the same purpose, and cannot be transferred to any other program.

Area education agencies were created to provide support services to Iowa's school districts; the programs and services provided by these agencies are subject to review by the department. Authority for this process was given to the department in 1997, Iowa Code section 273.10 & .11. As part of the accreditation process a site review team will visit each AEA, made up of department personnel, representatives from local schools and other AEA's, plus other members as deemed necessary. The team will recommend to the department whether the accreditation should be granted or retained.

If an AEA's program does not meet accreditation standards, the department must establish a remediation plan prescribing the procedures that must be taken to correct deficiencies in meeting the program standards, and set a deadline date for correction. If the deficiencies in an AEA program have not been corrected, the state board must then remove accreditation and the AEA must then either merge the deficient program with a program from another accredited area education agency or contract with another AEA or other public educational institution to provide the program.

These proposed rules establish the required accreditation process. AEA programs are required to "provide leadership in the area of school improvement, support proven or emerging educational practices, and are designed to enhance the learning opportunities of students".

These programs and services fall into the following categories: school and community planning involving needs assessments for the students and long range planning to meet these goals; professional development for all school personnel; curriculum development and assessment in the areas of reading, language arts math and science; special education services; instructional media services and school technology. When evaluating these programs and services, the department will use a number of criteria set out in Iowa Code section 273.11:

• The programs and services must address specific student, teacher and school needs;
• The programs and services must assist schools in improving student learning, as shown by increased performance;
• The programs and services must assist schools in improving teaching as shown by the adoption of new practices, strategies or information;
• The programs and services must be cost efficient and timely;
• Levels of use and quality measures are used to determine customer satisfaction.

Each AEA must submit a three-year comprehensive plan to the department as well as an annual budget. The plan has numerous components, but basically it identifies the needs of the various schools, and then details how the AEA can effectively and efficiently meet these needs. The progress of the plan must be detailed in yearly updates.

Portions of this filing were controversial when presented to the committee in June. At issue are the core curriculum services which will be evaluated as part of the approval process. These services are defined as reading, language arts, mathematics and science. A number of educators appeared before the committee to protest the omission of social studies from the approval process. They noted that the position of education department social studies consultant, providing assistance to local districts in developing and implementing had been eliminated, making it all the more important that assistance be provided through the AEAs. Their concern is that if social studies was not part of the accreditation the AEA's may choose to simply drop that service from their program altogether.

Senate File 473, relating generally to the regulation of drainage wells, specifically prohibits the construction of an earthen animal waste storage within an agricultural drainage well area. The issue of drainage wells and manure management and storage is the subject of this latest round of amendments to the commission's animal feeding regulations. Under the rules an agricultural drainage well area is that area which drains directly into a well or drains though a system into a well.

In several categories these rules are set out in the alternative, offering competing versions from the DNR staff and the ACCO committee. Although this is uncommon, it has occasionally been done. Ultimately, following the public comment, the commission will adopt one of the alternatives as the final rule, However, both groups agree on standards for earthen and concrete structures and for the construction of berms. Where there is disagreement, the versions can be summarized as:

• Groundwater table. DNR proposes that in no case shall the top of the liner of the storage structure be below the groundwater table. The ACCO committee recommends that special construction and management standards be applied if the groundwater table is less than two feet below the top of the liner.
• Lowering the groundwater table. The DNR proposal would allow only non-mechanical or gravity tile systems to reduce the groundwater table. The ACCO committee proposal would allow any drainage system as long as adequate information was provided "to confirm the adequacy of the proposed permanent system".

Senate File 523 mandates that care facilities obtain from the Department of Public Safety criminal history and adult abuse checks for care facility employees which are newly hired. Additionally, the facilities may contact the Department of Human Services for a child abuse check. The rules slightly modify the statutory language by defining as an employee only those persons who directly or indirectly perform patient care. The definition excludes maintenance or repair workers, contractors or similar individuals who are in the facility for only a limited time or who do not provide patient care.

A perennial with the training program comes from smaller law enforcement agencies who send new recruits to the academy, only to have that individual leave the position for a larger agency, thus forcing the smaller agency to hire another recruit and pay for his or her training.

The academy completes action on a proposal to decertify officers who fail to reimburse the employing agency for certification training, when the officer leaves for another law enforcement position within four years after training. In essence this provision treats breach of this employment provision as the breach of an ethical standard resulting in disciplinary action, not unlike the actions that could be taken by Iowa' professional licensing boards.This action can only occur if the officer had initially agreed to a reimbursement provision that contained a stipulation concerning the possibility of decertification. This provision is supported by both city and county government organizations.

House File 540 has changed and expanded the choices available to state employees in the area of deferred compensation, by requiring the department to make available to state employees, by September 1, 1997, the option of utilizing mutual funds as an investment alternative to the currently used annuity plans.

This filing does contain significant changes in policy that are not apparent in House File 540 itself. Under the new rules only insurance companies selected by competitive bid may market their fixed or variable annuity. Under the previous program any company with 30 applicants could participate. Currently around forty provide deferred compensation services to state employees; it appears that after September 1st only two providers will have contracts with the state; although the existing providers could continue to serve their existing clients.

The ultimate issue is whether this change is best for state employees, but the immediate issue is whether it was appropriate to make that change on an emergency basis--without public notice or an opportunity for discussion. Note that House File 540 was required to be implemented by September 1st; however, the language of the Act does not appear to mandate a complete revision of the deferred compensation program. Section ten of the Act states:

"At the request of an employee, the governing body or the county board of supervisors shall by contractual acquire an individual or group life insurance contract, annuity contract, interest in a mutual fund, security, or any other deferred payment contract for the purpose of funding a deferred compensation program. A governing body, county board of supervisors or other public entity, to the extent allowed by law, may establish a deferred compensation program under this section. The contributions made on behalf of an who chooses to participate in the program shall be invested the direction of the employee in a life insurance contract, annuity contract, mutual fund, security, or any other deferred payment contract offered as an investment option under the program. The contract acquired for an employee shall be accordance with the plan document and shall be acquired from any a company, or a salesperson for that company, that is authorized to do business in this state, or through an Iowa-licensed salesperson that the employee selects on a group or individual basis. When the state of Iowa acquires an investment product pursuant to the plan document the state does not become a shareholder, stockholder, or owner corporation in violation of Article VIII, section 3, of the Constitution of the State of Iowa or any other provision law".

The is no question the department has great latitude in establishing a deferred compensation plan for state employees; but the current question is whether all the changes should be made on an emergency basis. In my opinion House File 540 mandates only that a mutual fund option be made available by September 1st. Section six of the Act states in part: "The department shall make available to eligible employees by September 1, 1997 the option of utilizing funds as an investment alternative to the state's compensation plan established under section 509A.12". This language says nothing about other changes to the deferred compensation program; for that reason I do not believe the September 1st deadline applies to those amendments applying generally to the deferred compensation program.

In 1994 Congress enacted the Drivers Privacy Protection Act 18 U.S.C. ss2721, protection personal information in drivers licenses and DOT issued identity cards. The federal provisions carry severe penalties: any government agency having rules or policies contravening this statute can be fined up to $5,000 per day; any individual violating this Act can be sued in federal court for not less than $2,500 in damages, assessed punitive damages and assessed court costs and attorney fees. Personal information means information identifies a person, including a person's photograph, security number, driver's license number, name, telephone number, and medical or disability information. It does not include information on accidents, driving violations, and driver's status or a zip code. That provision was adopted into Iowa law by 1996 Iowa Acts Chapter 1102. Additionally, the Iowa law prohibits the disclosure of information to persons who simply submit a license plate number.

In essence the federal Act prohibits a DOT employees from knowingly releasing personal information in a drivers license record. Information can be released for various criminal, civil or administrative matters. The information can continue to be sold to junk mailers as long as that information is used only for surveys, marketing and solicitation--and individuals have the right to prohibit this use of their information.

Under the Act drivers license information can remain freely available "_ [f]or any other use in response to requests for individual motor vehicle records if the motor vehicle department has provided in a clear and conspicuous manner on forms for or renewal of operator's permits, titles, registrations, identification cards, notice that personal information collected by the department may be disclosed to any business or person, and has provided in a clear and conspicuous manner on such forms an opportunity to prohibit such disclosures".

This is the approach taken by the Iowa enabling statute and the department in implementing this provision. Drivers license information remains open; however, the department must give notice in a "clear and conspicuous manner" on forms for issuance or renewal driver's licenses, titles, registrations, or identification cards that personal information collected the department may be disclosed to any person. The notice must then state "in a clear and conspicuous manner" that an individual has the right to prohibit disclosure personal information to the general public.

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