S.F. _____ Section 1. NEW SECTION . 272C.2B Continuing education 1 minimum requirements —— mortuary science. 2 1. The board of mortuary science, created pursuant to 3 chapter 147, shall require, as a condition of license renewal, 4 a minimum of twenty-four hours of continuing education in the 5 two years immediately prior to a licensee’s license renewal. 6 The board of mortuary science may notify funeral director 7 licensees on a quarterly basis regarding continuing education 8 opportunities. 9 2. A person licensed to practice mortuary science in this 10 state shall be deemed to have complied with the continuing 11 education requirements of this state during periods that 12 the person serves honorably on active duty in the military 13 services, or for periods that the person is a government 14 employee working in the person’s licensed specialty and 15 assigned to duty outside of the United States, or for other 16 periods of active practice and absence from the state approved 17 by the board of mortuary science. 18 Sec. 2. Section 523A.201, subsections 2, 3, 5, and 8, Code 19 2009, are amended to read as follows: 20 2. If a seller agrees to furnish cemetery merchandise, 21 funeral merchandise, funeral services, or a combination thereof 22 and performance or delivery may be more than one hundred twenty 23 days following the initial payment on the account, a minimum 24 of eighty percent of all payments made under the purchase 25 agreement shall be placed and remain in trust until the person 26 for whose benefit the funds were paid dies. 27 3. If a purchase agreement for cemetery merchandise, 28 funeral merchandise, funeral services, or a combination 29 thereof provides that payments are to be made in installments, 30 the seller shall deposit eighty percent of each payment all 31 payments made under the purchase agreement in the trust fund 32 until the full amount required to be placed in trust has been 33 deposited. If the purchase agreement is financed with or sold 34 to a financial institution, the purchase agreement shall be 35 -1- LSB 5226XC (12) 83 av/sc 1/ 6

S.F. _____ considered paid in full and the trust requirements shall be 1 satisfied within fifteen days after the seller receives funds 2 from the financial institution. 3 5. Unless a seller deposits all of each payment in a 4 trust fund that meets the requirements of this section and 5 section 523A.202 For purchase agreements entered into prior to 6 July 1, 2010, where the seller deposited an amount less than 7 one hundred percent of each payment made under the purchase 8 agreement in trust , the seller shall have a fidelity bond or 9 similar insurance in an amount of not less than fifty thousand 10 dollars to protect against the loss of purchaser payments 11 not placed in trust within the time period required by this 12 section and section 523A.202. The commissioner may require a 13 greater amount as the commissioner determines is necessary. 14 If the seller changes ownership, the fidelity bond or similar 15 insurance shall continue in force for at least one year after 16 the transfer of ownership. 17 8. Interest or income earned on amounts deposited in trust 18 shall remain in trust under the same terms and conditions 19 as payments made under the purchase agreement , except that 20 a limited liability corporation that was formed in 2002 for 21 the purpose of purchasing a cemetery from a foreign entity 22 reorganizing under bankruptcy and such corporation is comprised 23 of six establishments all located within the same county may 24 withdraw so much of the interest or income as represents the 25 difference between the amount needed to adjust the trust 26 funds for inflation as set by the commissioner based on the 27 consumer price index and the interest or income earned during 28 the preceding year not to exceed fifty percent of the total 29 interest or income on a calendar-year basis . The early 30 withdrawal of interest or income under this provision does 31 not affect the purchaser’s right to a credit of such interest 32 or income in the event of a nonguaranteed price agreement, 33 cancellation, or nonperformance by such limited liability 34 corporation. 35 -2- LSB 5226XC (12) 83 av/sc 2/ 6

S.F. _____ Sec. 3. Section 523A.202, subsections 1 and 4, Code 1 Supplement 2009, are amended to read as follows: 2 1. All funds held in trust pursuant to section 523A.201 3 shall be deposited in a financial institution located in this 4 state within fifteen days following receipt of the funds. The 5 financial institution shall hold the funds for the designated 6 beneficiary until released. 7 4. This section does not prohibit moving trust funds from 8 one financial institution to another financial institution 9 located in this state if the commissioner is notified of the 10 change within thirty days of the transfer of the trust funds. 11 Sec. 4. Section 523A.207, Code 2009, is amended to read as 12 follows: 13 523A.207 Audits by certified public accountants —— penalties . 14 A purchase agreement shall not be sold or transferred, as 15 part of the sale of a business or the assets of a business, 16 until an audit has been performed by a certified public 17 accountant and filed with the commissioner that expresses the 18 auditor’s opinion of the adequacy of funding related to the 19 purchase agreements to be sold or transferred. If the buyer of 20 a purchase agreement sold or transferred as part of the sale 21 of a business or the assets of a business, fails to file such 22 an audit, the commissioner shall suspend the preneed seller’s 23 license of the buyer and the preneed sales license of any sales 24 agent in the employ of the buyer until the audit is filed. In 25 addition, the commissioner shall assess a penalty against the 26 buyer in an amount up to one hundred dollars for each day that 27 the audit remains unfiled. 28 Sec. 5. Section 523A.405, subsection 8, Code 2009, is 29 amended to read as follows: 30 8. The amount of the surety bond shall equal eighty 31 percent the amount of the payments received pursuant to 32 purchase agreements, or the applicable portion thereof, for 33 cemetery merchandise, funeral merchandise, funeral services, 34 or a combination thereof, and the amount needed to adjust 35 -3- LSB 5226XC (12) 83 av/sc 3/ 6

S.F. _____ the amount of the surety bond for inflation as set by the 1 commissioner based on the consumer price index. The seller 2 shall review the amount of the surety bond no less than 3 annually and shall increase the bond as necessary to reflect 4 additional payments. The amount needed to adjust for inflation 5 shall be added annually to the surety bond during the first 6 quarter of the seller’s fiscal year. 7 Sec. 6. Section 523A.601, subsection 2, paragraph a, Code 8 2009, is amended to read as follows: 9 a. State the percentage of money to that all payments made 10 under the purchase agreement will be placed in trust. 11 Sec. 7. Section 523A.601, subsection 6, paragraph a, Code 12 2009, is amended to read as follows: 13 a. A purchase agreement that is funded by a trust shall 14 include a conspicuous statement in language substantially 15 similar to the following language: 16 “ For your prearranged funeral agreement, we will deposit 17 not less than eighty percent all of your payments in trust at 18 (name of financial institution), (street address), (city), 19 (state) (zip code) within fifteen days following receipt of 20 the funds. For your protection, you will be notified receive 21 notification within sixty days from the date of deposit from 22 the financial institution, if acting as a trustee of trust 23 funds under this chapter, to confirm that the deposit of these 24 funds has been made establishing a trust fund as required by 25 law. If you do not receive this notification, you may contact 26 the Iowa insurance division for assistance by calling the 27 insurance division at (telephone number) or by mail at (street 28 address), (city), Iowa (zip code), or you may contact the 29 financial institution by calling the financial institution at 30 (telephone number) or by mail at the address indicated above. ” 31 EXPLANATION 32 This bill relates to licensing requirements for funeral 33 directors and to certain trust requirements for payments to 34 purchase cemetery and funeral merchandise and funeral services. 35 -4- LSB 5226XC (12) 83 av/sc 4/ 6

S.F. _____ New Code section 272C.2B codifies a requirement currently 1 contained in administrative rules that a funeral director must 2 fulfill a minimum of 24 hours of continuing education in the 3 two years immediately prior to that person’s license renewal. 4 The provision also provides that the requirement is deemed 5 fulfilled for a funeral director during periods of active duty 6 military service, while the funeral director is a government 7 employee working in the person’s specialty and assigned to duty 8 outside the United States, and for other periods of active 9 practice and absence from the state approved by the board of 10 mortuary science. 11 Code section 523A.201 is amended to require that if cemetery 12 merchandise, funeral merchandise, funeral services, or a 13 combination thereof is sold pursuant to a purchase agreement 14 entered into on or after July 1, 2010, for performance or 15 delivery more than 120 days following initial payment, all 16 payments made by the buyer pursuant to that purchase agreement 17 must be placed in trust. Currently, only 80 percent of such 18 payments must be deposited in trust. For purchase agreements 19 entered into prior to July 1, 2010, where the seller deposited 20 less than 100 percent of the payments made under the purchase 21 agreement, the seller is still required to have a fidelity 22 bond or similar insurance of not less than $50,000, or more as 23 determined necessary by the commissioner of insurance. 24 Code section 523A.201 is also amended to delete a provision 25 that allows certain described limited liability corporations to 26 remove interest or income earned on amounts deposited in trust. 27 Code section 523A.202 is amended to provide that funds held 28 in trust pursuant to purchase agreements must be deposited in a 29 financial institution located in the state. 30 Code section 523A.207 is amended to require that if a 31 preneed seller buys purchase agreements as part of the sale of 32 a business or the assets of a business and fails to file an 33 audit by a certified public accountant regarding the adequacy 34 of funding of those purchase agreements, the licenses of 35 -5- LSB 5226XC (12) 83 av/sc 5/ 6

S.F. _____ that preneed seller and sales agents of that preneed seller 1 are suspended until the audit is filed. In addition, the 2 commissioner of insurance is required to assess a penalty 3 against that buyer of up to $100 for each day that the audit 4 remains unfiled. 5 Code section 523A.405 is amended to require that a surety 6 bond filed in lieu of meeting trust requirements for payments 7 made pursuant to a purchase agreement must also equal all, 8 instead of 80 percent, of the amount of the payments made. 9 Code section 523A.601 is amended to coordinate with the 10 other provisions of the bill requiring that all payments made 11 under a purchase agreement must be placed in trust. 12 -6- LSB 5226XC (12) 83 av/sc 6/ 6