H.F. 227 Section 1. Section 11.6, subsection 1, paragraph a, 1 subparagraph (1), Code 2013, is amended to read as follows: 2 (1) Except for entities organized under chapter 28E having 3 gross receipts of one hundred thousand dollars or less in 4 a fiscal year, the financial condition and transactions of 5 all government subdivisions shall be audited at least once 6 each year, except that cities having a population of seven 7 hundred or more but less than two thousand shall be examined 8 at least once every four years, and cities having a population 9 of less than seven hundred may be examined as otherwise 10 provided in this section . The audit of school districts shall 11 include an audit of all school funds including categorical 12 funding provided by the state, the certified annual financial 13 report, the certified enrollment as provided in section 257.6 , 14 supplementary weighting as provided in section 257.11 , and the 15 revenues and expenditures of any nonprofit school organization 16 established pursuant to section 279.62 , and entrepreneurial 17 education accounts established pursuant to section 298A.8A . 18 Differences in certified enrollment shall be reported to the 19 department of management. The audit of school districts shall 20 include at a minimum a determination that the laws of the 21 state are being followed, that categorical funding is not 22 used to supplant other funding except as otherwise provided, 23 that supplementary weighting is pursuant to an eligible 24 sharing condition, and that postsecondary courses provided in 25 accordance with section 257.11 and chapter 261E supplement, 26 rather than supplant, school district courses. The audit of 27 a city that owns or operates a municipal utility providing 28 local exchange services pursuant to chapter 476 shall include 29 performing tests of the city’s compliance with section 388.10 . 30 The audit of a city that owns or operates a municipal utility 31 providing telecommunications services pursuant to section 32 388.10 shall include performing tests of the city’s compliance 33 with section 388.10 . 34 Sec. 2. Section 12B.10, subsection 6, Code 2013, is amended 35 -1- LSB 2042YH (3) 85 je/sc 1/ 6

H.F. 227 by adding the following new paragraph: 1 NEW PARAGRAPH . m. Investments by a student organization 2 or club of moneys from an entrepreneurial education account 3 governed by section 298A.8A. 4 Sec. 3. Section 298A.8, Code 2013, is amended to read as 5 follows: 6 298A.8 Student activity fund. 7 The student activity fund is a special revenue fund. A 8 student activity fund must be established in any school 9 corporation receiving money from student-related activities 10 such as admissions, activity fees, student dues, student 11 fund-raising events, or other student-related cocurricular or 12 extracurricular activities. Moneys in this fund , other than 13 moneys in an entrepreneurial education account established 14 under section 298A.8A, shall be used to support only the 15 cocurricular program defined in department of education 16 administrative rules. 17 Sec. 4. NEW SECTION . 298A.8A Entrepreneurial education 18 accounts. 19 1. Accounts established —— purposes. For the purposes 20 of enhancing student learning by encouraging students to 21 develop and practice entrepreneurial skills at an early age 22 and of fostering a business-ready workforce in this state, 23 a school corporation shall establish an entrepreneurial 24 education account within a student activity fund at the 25 request of a student organization or club. An entrepreneurial 26 education account shall consist only of moneys earned through 27 entrepreneurial activities or returns on investments made for 28 entrepreneurial purposes by the student organization or club, 29 and any interest earned on such moneys, that are deposited 30 in the account. Such moneys shall be held in trust by the 31 school corporation for the members of the student organization 32 or club. Moneys in the account shall be used only by the 33 student organization or club and shall be used only for 34 investments made for entrepreneurial purposes in accordance 35 -2- LSB 2042YH (3) 85 je/sc 2/ 6

H.F. 227 with this section. The student organization or club may 1 designate an entrepreneurial purpose for the use of moneys 2 in the account in accordance with this section. A school 3 corporation shall release moneys in the account for use by the 4 student organization or club upon approval of the designated 5 entrepreneurial purpose by the board of directors of the school 6 district by resolution. A school organization or club shall 7 deposit any return on an investment made with moneys from the 8 account in either the school corporation’s student activity 9 fund or in the student organization’s or club’s account within 10 the student activity fund. 11 2. Funds segregated. Upon request of a student organization 12 or club, a school corporation shall segregate moneys in 13 a student activity fund established under section 298A.8, 14 for deposit by the student organization or club in an 15 entrepreneurial education account. However, a school 16 corporation shall not segregate such moneys unless the moneys 17 are attributable through appropriate documentation to the 18 specific student organization or club and unless the student 19 organization or club shows through appropriate documentation 20 that the student organization or club earned the moneys 21 through entrepreneurial activities as defined in subsection 4, 22 paragraph “a” . 23 3. Conflicts of interest prohibited. A student organization 24 or club shall not invest moneys from an entrepreneurial 25 education account for an entrepreneurial purpose in which a 26 member of the student organization or club, an advisor or 27 supervisor of the student organization or club, or an immediate 28 family member of such persons, has a financial interest. 29 4. Definitions. For purposes of this section: 30 a. “Entrepreneurial activities” means starting, maintaining, 31 or expanding a business venture, including a seasonal business 32 venture. 33 b. “Entrepreneurial purpose” means investing in a start-up 34 company, early-stage company, or existing company developing a 35 -3- LSB 2042YH (3) 85 je/sc 3/ 6

H.F. 227 new product or new technology if the investment is in keeping 1 with the education program of the school corporation; if 2 the student organization or club or its members will, as a 3 stated condition of the investment, take an active role in the 4 company which active role directly relates to and furthers the 5 educational purposes for which the student organization or club 6 is established; and if a reasonable return upon the investment 7 is expected. 8 c. “Immediate family member” means a spouse; natural or 9 adoptive parent, child, or sibling; or stepparent, stepchild, 10 or stepsibling. 11 Sec. 5. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 12 immediate importance, takes effect upon enactment. 13 Sec. 6. APPLICABILITY. This Act applies to moneys in a 14 student activity fund established under section 298A.8, on 15 the effective date of this Act, that are attributable through 16 appropriate documentation to a specific student organization or 17 club and that were earned by the student organization or club 18 through entrepreneurial activities as defined in section 19 298A.8A, subsection 4, paragraph “a”. 20 EXPLANATION 21 This bill requires a school corporation, at the request of a 22 student organization or club, to establish an entrepreneurial 23 education account within a student activity fund established 24 under Code section 298A.8 for the purposes of enhancing student 25 learning by encouraging students to develop and practice 26 entrepreneurial skills at an early age and of fostering a 27 business-ready workforce in Iowa. The bill provides that an 28 entrepreneurial education account can consist only of moneys 29 earned through entrepreneurial activities or returns on 30 investments made for entrepreneurial purposes by the student 31 organization or club, and any interest earned on such moneys, 32 that are deposited in the account. The bill provides that such 33 moneys must be held in trust by the school corporation for the 34 members of the student organization or club. The bill provides 35 -4- LSB 2042YH (3) 85 je/sc 4/ 6

H.F. 227 that moneys in the account can only be used by the student 1 organization or club and can only be used for investments made 2 for entrepreneurial purposes in accordance with the bill. 3 The bill provides that the student organization or club may 4 designate an entrepreneurial purpose for the use of moneys in 5 the entrepreneurial education account in accordance with the 6 bill. The bill requires a school corporation to release moneys 7 in the account for use by the student organization or club 8 upon approval of the designated entrepreneurial purpose by the 9 board of directors of the school district by resolution. The 10 bill requires the school organization or club to deposit any 11 return on an investment made with moneys from the account in 12 either the school corporation’s student activity fund or in 13 the student organization’s or club’s entrepreneurial education 14 account within the student activity fund. 15 The bill requires a school corporation, upon request of 16 a student organization or club, to segregate moneys in a 17 student activity fund for deposit by the student organization 18 or club in an entrepreneurial education account. However, 19 the bill prohibits a school corporation from segregating such 20 moneys unless the moneys are attributable through appropriate 21 documentation to the specific student organization or club 22 and unless the student organization or club shows through 23 appropriate documentation that the student organization or club 24 earned the moneys through entrepreneurial activities. 25 The bill prohibits a student organization or club from 26 investing moneys from an entrepreneurial education account for 27 an entrepreneurial purpose in which a member of the student 28 organization or club, an advisor or supervisor of the student 29 organization or club, or an immediate family member of such 30 persons, has a financial interest. 31 The bill defines “entrepreneurial activities” as starting, 32 maintaining, or expanding a business venture, including a 33 seasonal business venture. The bill defines “entrepreneurial 34 purpose” as investing in a start-up company, early-stage 35 -5- LSB 2042YH (3) 85 je/sc 5/ 6

H.F. 227 company, or existing company developing a new product or new 1 technology if the investment is in keeping with the education 2 program of the school corporation; if the student organization 3 or club or its members will, as a stated condition of the 4 investment, take an active role in the company which directly 5 relates to and furthers the educational purposes for which 6 the student organization or club is established; and if a 7 reasonable return upon the investment is expected. 8 The bill specifies that entrepreneurial education accounts 9 are subject to the annual auditing requirements applicable to 10 government subdivisions including school districts in Code 11 section 11.6. 12 The bill excludes investments of moneys from entrepreneurial 13 education accounts from the limitations on the investment of 14 public funds in Code section 12B.10. 15 The bill excludes moneys in an entrepreneurial education 16 account from the requirement in Code section 298A.8 that moneys 17 in a student activity fund must be used only to support a 18 school corporation’s cocurricular program. 19 The bill takes effect upon enactment. 20 The bill applies to moneys in a student activity fund on 21 the effective date of the bill that are attributable through 22 appropriate documentation to a specific student organization or 23 club, and that were earned by the student organization or club 24 through entrepreneurial activities. 25 -6- LSB 2042YH (3) 85 je/sc 6/ 6