ADMINISTRATIVE RULES REVIEW COMMITTEE Rules Digest -- September 1998 Scheduled for committee review - November 10th, 1998 - Room #118 For further information, please contact Joe Royce, Legal Counsel, Administrative Rules Review Committee

HIGHLIGHTS IN THIS ISSUE:

ECONOMIC DEVELOPMENT DEPARTMENT Enterprise zone revisions

EDUCATION DEPARTMENT School to career

EDUCATION DEPARTMENT Drinking drivers course

EDUCATION DEPARTMENT National Board Certification

EDUCATION DEPARTMENT Community college funding

EDUCATION DEPARTMENT School bus standards

ENVIRONMENTAL QUALITY DIVISION Environmental self audits

HUMAN SERVICES DEPARTMENT Medicaid payments for male impotence drugs

PUBLIC HEALTH DEPARTMENT Mandatory aids testing

PUBLIC HEALTH DEPARTMENT Funding public health services

RACING & GAMING COMMISSION Charitable contributions

REVENUE DEPARTMENT Transfer of business assets

TREASURER Iowa Educational Savings Plan

1997 legislation {House File 724} authorized counties and cities of more than 24,000 to create "enterprise zones", lasting up to ten years. Benefits for businesses located within a zone include such things as new jobs credit from withholding; sales, services, and use tax refund; investment tax credit and research activities credit. The jurisdiction may exempt from all property taxation for a period of up to ten years all or a portion of the value added to the property upon which an eligible business locates or expands in an enterprise. Enterprise zones may be established either in a city or a county. Once the zone is established a business located in the zone are eligible for special incentives if the business:

• Is not a retail business.
• Does not involve closing a business in one area of the state and moving that operation into the zone.
• Pays at least eighty percent of the cost of a standard medical and dental insurance plan for all full-time employees.
• Pays an average wage that is not less that $7.50 per hour and is at or greater than ninety percent of the lesser of the average county wage or average regional wage, as determined by the department.
• Creates at least ten full-time positions and maintains them for at least ten years. In smaller jurisdictions, the level is five jobs for five years.
• Makes a capital investment of at least five hundred thousand dollars, half of which may be met by the value of the property occupied.

This program has now been amended by House Files 2164, 2395 and 2538. House File 2164 contained a number of minor amendments relating to health care, boundaries of the zone and make-up of the governing commission. The most significant change allows certain businesses outside the designated zone to obtain those same benefits. A business outside the zone is eligible to receive incentives and assistance if the business has not simply relocated an existing business into a location which qualifies the business and:

• Would otherwise meet the eligibility requirements set out above;
• Is or will be located in a city with a population between eight thousand and twenty-four thousand;
• Is or will be located in a city which is not more than thirty-five miles from an existing enterprise zone in Iowa or an equivalent zone in an adjacent state;
• Pays not less than $11 per hour (1993 base) or 130% of the average county wage;
• Is located in a "distressed area".

House Files 2395 and 2538 relate to qualified housing businesses and the approval process. An eligible housing business includes a housing developer or housing contractor that builds or rehabilitates a minimum of four single-family homes or one apartment building with three or more units with a value, after completion of the building or rehabilitation, not exceeding one hundred twenty thousand dollars for each home or apartment unit located in a designated enterprise zone. The single-family homes and apartments which are rehabilitated or constructed by the eligible housing business must be modest homes or units but shall include the necessary amenities. The single-family homes and apartment must meet the United States department of housing and urban development's housing quality standards and local safety standards. The eligible housing business shall complete its building or rehabilitation within two years from the time the business begins construction on the single-family homes and apartments. An eligible housing business may receive up to a ten percent income of the new investment tax credit and may receive a sales and use tax refund for taxable materials and services utilized in the project.

When this provision initially appeared under notice in August, some committee members expressed concern over the departments implementation of the restriction against closing a plant in one area of the state and re-opening it within the zone. The department interprets this as prohibiting movement from one city into the enterprise zone of another city. Committee members contend that the prohibition includes movement into the zone from the same city; stressing that the intention of the legislation was to prevent existing businesses from moving from outside the zone into the zone in order to gain the tax benefits. {August ARRC minutes} The department has not changed this definition.

The proposed rules implement a new program created in Senate File 2296. The Certified School to Career Program is a federally-authorized program designed to provide a workplace context for classroom training at the post-secondary level by bringing educators and employers together to design an educational program that includes classroom training that is reinforced with on-the-job training; resulting in a diploma, associate's degree, or other credential and utilizing paid work site internships in partnership with an employer to prepare students for specific employment. These rules complement similar provisions proposed by the Department of Economic Development. This particular set deals with the approval process for the program itself. To be approved a district program must show:

• A two-year secondary program combined with a post-secondary program of at least one year in the career field.
• Participation of a public or private secondary school, postsecondary institution, and one or more employers.
• An identified need for the program.
• A description of skills and knowledge needed for entry into the career field.
• A description of the courses and their length.
• A description of program evaluation component.
• Evidence of instruction in health and safety related to the career field.
• A description of the recruitment strategies that will encourage full participation.
• A description of the supportive services offered.

Iowa Code Chapter 321J call for a mandatory drinking drivers course for persons convicted of drunken driving. The department amends the current rules---largely to be more descriptive. When reviewed in August members puzzled over the addition of a 28 hour course to the existing 12 hour course. The 28 hour course is designed for those offenders who are serving jail time as part of their sentence. Committee members also questioned the professional level of this program. Course instructors are required to complete a detailed education process prior to conducting the class. The class itself comes complete with study materials and a curriculum requiring the offender to confront his or her own behavior.

These emergency rules establish two incentive programs for teachers seeking to attain national board certification. Senate File 2366, section five establishes a national board for professional teaching standards certification fund with the treasurer state and administered by the department.

Teachers may receive a partial registration award of one-half of the registration by applying to the department within one year of registration. Teachers may receive the remaining registration fee by attaining national certification within three years. If funds are unavailable to cover every eligible registration, a lottery will be held to select among the eligible recipients.

If sufficient funds are appropriated by the legislature, each eligible NBC teacher can qualify for an annual award of $10,000 per year for a maximum, nonrenewable period of five years of certification.

Individuals eligible for the annual award must be nationally certified Iowa teachers.

The Department completes action on a distribution plan, commencing July 1, 1999, for state aid funds appropriated to the community colleges. Distribution is based on a three factor formula:

• The base year funding level,
• plus an annual adjustment for inflation,
• plus proportional share of enrollment.

The inflation adjustment will be not less than two percent--meaning that if state aid funds are available each community college will be guaranteed an increase of two percent. This rule also sets the maximum number of credit hours for an associate degree in either applied science or applied arts--both are set at 86 hours.

The department completes action on a general update of the technical standards required for Iowa's school bus fleet. The rules themselves are not controversial, but they do provide an opportunity to discuss a mandate from the federal Department of Transportation. This mandate provides that vans rated for more than ten passengers cannot be used for school transportation_even for extra-curricular activities. Pursuant to Iowa Code §321.1(69) nine passenger vans used for extra-curricular activities are legally not considered a school bus and when used for transportation to and from school already have special regulations in Chapter 44.

Aside from the cost this requirement might impose, these provisions should be adopted as administrative rules and inserted in Chapter 44. This policy is distilled from state and federal law and is detailed through am Iowa Department of Education memorandum and a Federal Department of Transportation letter and fact sheet. Aside from the fact that the policy falls within the statutory definition of a rule (§17A.2), it should be formally adopted into chapter 44 to insure an opportunity for public comment on this requirement and to properly publish and disseminate the policy itself.

House File 681 created the "Environmental Audit Privilege and Immunity Act," providing for voluntary evaluations of facilities to determine compliance or noncompliance with environmental regulations. The Act provides the owners or operators of those facilities some protection that the information derived cannot be used against them in subsequent legal proceedings. Material included in an environmental audit report is privileged and confidential and is not discoverable or admissible as evidence in any civil or administrative proceeding, except if:

• an owner or operator has been found in a legal proceeding to have committed serious violations in this state amounting to a pattern of continuous or repeated violations of environmental laws and policies:
• an owner or operator is classified as a habitual violator.
• If a violation results in a substantial economic benefit which gives the violator a clear advantage over its business competitors.

This notice of intended action establishes procedural rules necessary to administer the Act, related to notice of audit, request for extension, and disclosure of violation.

An "Environmental audit" is a voluntary evaluation of a facility or operation, relating to its compliance with state or federal environmental laws, rules or permit conditions. The audit is conducted by the owner, operator, or an independent contractor. The Act does not require that the department be given prior notice before an audit is performed; but the legal protections afforded by the Act may not apply if a violation is independently discovered prior to completion of the audit. The audit is designed to identify historical or current noncompliance with environmental laws and other requirements, and to discover environmental contamination or hazards, remedy noncompliance or improve compliance with environmental laws, or improve an environmental management system.

An owner or operator is protected by the immunity provisions of the Act if the individual makes a prompt voluntary disclosure regarding an environmental violation which is discovered during an environmental audit. A disclosure is voluntary if:

• The disclosure results from an environmental audit and relates to information considered privileged under the Act;
• The disclosure is not otherwise required by federal or state law, rule, permit condition, or an order issued by the department;
• If the department has not been notified of the audit, the disclosure is made prior to a violation being independently detected by the department;
• The violation is identified and disclosed to the department before there is private litigation or a legal complaint filed by a third party; or reported by any non-involved person;
• The violation does not involve intentional violation of state or federal law, rule, or permit condition resulting in substantial actual injury or imminent and substantial risk of injury to persons, property, or the environment; and
• The owner or operator making the disclosure uses reasonable efforts to pursue compliance and to correct the noncompliance within a reasonable period of time after completion of the audit.

Euphemistically referred to as "quality of life drugs" the department proposes Medicaid funding for so-called "male-impotence" drugs {e.g.: Viagra}. Prior approval will be required, based on a physicians documentation of a need for the drug. Following approval and the appropriate physician's diagnosis, payment will be allowed for four doses in a thirty day period.

In response to House Files 2369 and 2527 the department re-writes the procedures used to force rapists to be tested for AIDS; obtaining the test requires a court order. House File 2369 has expanded mandatory testing to include alleged rapists as well as convicted ones. Under the Act if the accused has not yet been convicted, the county attorney, if requested by the victim, must make application to the court for the issuance of a search warrant to require the person to submit to an HIV-related test. In support of this application the victim must state that "sufficient contact" occurred shown that a significant exposure exists. In addition it must be show that the accused refused to voluntarily provide the sample. A closed hearing will be held before the court The court order may order periodic re-testing during the offenders incarceration.

The offender is entitled to confidentiality of the HIV results, except for the disclosure allowed by law. Violation of this confidentiality may result in a $1000 fine.

Senate File 2280 provides $11,683,924 for grants to counties for public health nursing, home care aide/chore, and senior health programs. The local board of health and local board of supervisors shall jointly determine which one shall be a contractor for these funds in a single contract beginning July 1, 1998.

A public health nurse is an R.N. who is licensed by the Iowa board of nursing and who has a baccalaureate degree in nursing or related health or human service area (plus a course in community health nursing) or has completed a community health nursing course from a baccalaureate program in an accredited college or university. The primary functions of the public health nurse are to provide "core public health functions":

• Assessment: regular collection, analysis, interpretation, and communication of information about health conditions, risks, and assets in a community.
• Policy: development, implementation, and evaluation of plans and policies, for public health in general and priority health needs in particular, in a manner that incorporates scientific information and community values and in accordance with state public health policy.
• Assurance: ensuring by encouragement, regulation, or direct action that programs and interventions that maintain and improve health are carried out.

One-fourth of the total funds for public health nursing will be divided so that an equal amount is available for use in each county in the state. Three-fourths of the total amount to be allocated will be divided so that the share available for use in each county is proportionate to the number of elderly and low-income persons living in that county in relation to the total number of elderly and low-income persons living in the state.

The home health aide provides a range of housekeeping and personal care services; the rules set out a number of courses the aide must complete prior to service. The appropriation to each county is determined by the following formula. Fifteen percent of the total allocation is divided equally among the counties. Of the remaining 85%: 60% according to the number of elderly persons living in the county, 20% according to the number of persons below the poverty level living in the county, and 20% according to the number of substantiated cases of child abuse in the county.

The senior health program provides health assessments, screenings and education to Older Iowans. The appropriation to each county is determined by the following formula. Each county electing to participate will receive the same base amount. Seventy-five percent of the remaining funds will be allocated based on the percent of the county's population aged 55 and older and the remaining 25 percent based on the percent of county population that is low-income. A local match is required, either in cash or in kind.

Item 1 requires recipients of nonprofit distributions to explain how their receipt of this money would benefit residents of Iowa. Item 2 requires the qualified sponsoring organization, before funding a request, to consider how it would benefit residents of Iowa. It also does not allow the qualified sponsoring organization to distribute to an organization that has an employee, officer or director who is a member of the Commission.

These two items, amending existing subrule 20.11(6), implement Iowa Code §99F.6(4)"a". That Iowa Code provision states in part:

"_A qualified sponsoring organization licensed to operate gambling games under this chapter shall distribute the receipts of all gambling games, less reasonable expenses, charges, taxes, fees, and deductions allowed under this chapter, as winnings to players or participants or shall distribute the receipts for educational, civic, public, charitable, patriotic, or religious uses as defined in section 99B.7, subsection 3, paragraph "b"_."

Note this statutory provision does not give the commission authority to restrict donations to Iowa-based charities; nor do the rule changes attempt such a requirement. Instead, they require the recipient of a donation to detail, in writing, how the use of the proceeds will benefit the residents of Iowa. The first issue for the committee is whether the commission has authority for this filing. As detailed above the recipients of gambling proceeds are specified in statute; there is no limit placed on out-of-state donations---there is no statutory requirement that all donations benefit Iowans. For that reason it is debatable whether the commission has authority to require information on how a donation might benefit Iowa when the statute itself makes no such requirement.

The second issue for the committee is whether it is reasonable for the commission to demand such information; does it serve a legitimate state purpose? The change is vigorously opposed by border communities that benefit from out-of-state casino patrons. They contend the amendments that border cities have a community of interest with out-of-state neighbors that make it appropriate to share gambling proceeds. Opponents contend that since the commission does not have authority to restrict out-of-state donations, the reporting requirement accomplish little more than making needless work for the recipients.

Iowa Code §422.7(21)"a" relates to exemptions from capital gains tax. As amended by House File 2513 the provision states in part:

"The sale of a business means the sale of all or substantially all of the tangible personal property or service of the business. However, where the business is sold to individuals who are all lineal descendants of the taxpayer, the taxpayer does not have to have materially participated in the business in order for the net capital gain from the sale to be excluded from taxation."

This new chapter establishes guidelines regarding eligibility and procedures for participants and beneficiaries in the Iowa Educational Savings Plan. As provided in House File 2119 a trust investment program is established with the Treasurer allowing Iowans to pool savings for future college expenses. Under the Act participants sign "participation agreements" investing a specific amount not to exceed $2000 per beneficiary per year (adjusted in response to inflation), in the trust for a specific period of time for the benefit of a specific beneficiary.

Participants are allowed to pay installments monthly of at least $25. The program administrator actuarially determines an account balance limit applicable to all accounts of beneficiaries with the same expected year of enrollment. No additional payments may be made on behalf of a beneficiary if the account balances of all accounts held for the beneficiary exceed the limit.

1998 Iowa Acts, House File 2119, section 3, subsection 3, provides that payment of benefits provided under participation agreements must begin not later than the first full academic quarter or semester at an institution of higher education following the beneficiary's twenty-second birthday or high school graduation, whichever is later. These provisions establish the procedures for the payment of benefits. The participant is to select the maximum to pay each period of enrollment; this amount will be used until the benefits are exhausted or until changed by the participant.

The participant may elect distribution of an allotment based on the number of periods in the recipients field of study. The amount must relate to the expenses incurred in that period. The actual benefits will be paid in one of two ways. They can be paid directly to the institution of higher education. Benefits can be paid to the participant or the beneficiary upon proper documentation of expenses; failure to provide documentation will result in the denial of the request for reimbursement. Each distribution of benefits will be comprised partly of contributions and partly of earnings, based upon the same proportion that contributions and earnings make up the participant's account. Participants may suspend the distribution of benefits until the beneficiary's twenty-seventh birthday. Distribution begins after receipt by the administrator of the form "Notice to Use Benefits" and continues throughout the beneficiary's period of enrollment at an institution of higher education or until the account balance has been exhausted, whichever occurs first.

OTHER INFORMATION FOR THIS COMMITTEE:

| Members | Staff | Bulletin | Agenda |

Comments about this site or page? webmaster@legis.iowa.gov

Please remember that the person listed above does not vote on bills. Direct all comments concerning legislation to State Legislators.

© 1995 Cornell College and League of Women Voters of Iowa

Last update: MON Nov 9 1998
sw/sam