H.F. 533 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 funds established pursuant to section 298A.15 . 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 2042HV (5) 85 je/sc 1/ 6

H.F. 533 by adding the following new paragraph: 1 NEW PARAGRAPH . m. Investments by a student organization or 2 club of moneys from an entrepreneurial education fund governed 3 by section 298A.15. 4 Sec. 3. NEW SECTION . 298A.15 Entrepreneurial education 5 funds. 6 1. Funds established —— purposes. For the purposes of 7 enhancing student learning by encouraging students to develop 8 and practice entrepreneurial skills at an early age and of 9 fostering a business-ready workforce in this state, a school 10 corporation may establish an entrepreneurial education fund at 11 the request of a student organization or club and upon approval 12 by the school board. An entrepreneurial education fund is a 13 special revenue fund and shall consist only of moneys earned 14 through entrepreneurial activities or returns on investments 15 made for entrepreneurial purposes by the student organization 16 or club, private donations and private contributions, and any 17 interest earned on such moneys, that are deposited in the 18 fund. Moneys in the fund shall be used only for investments 19 made, or activities undertaken, for entrepreneurial purposes 20 in accordance with this section. The student organization 21 or club may designate an entrepreneurial purpose for the use 22 of moneys in the fund in accordance with this section. A 23 school corporation may expend moneys in the fund for use by the 24 student organization or club in accordance with this section 25 upon approval of the designated entrepreneurial purpose by the 26 school board. A school organization or club shall deposit 27 any return on an investment made with moneys from the fund 28 in the school corporation’s entrepreneurial education fund. 29 The school corporation shall not transfer or contribute to 30 the fund any other moneys that are not moneys earned through 31 entrepreneurial activities or returns on investments made for 32 entrepreneurial purposes by the student organization or club. 33 2. Funds transferred. At the request of a student 34 organization or club and upon approval by the school board, a 35 -2- LSB 2042HV (5) 85 je/sc 2/ 6

H.F. 533 school corporation shall transfer moneys in a student activity 1 fund established under section 298A.8, for deposit by the 2 student organization or club in an entrepreneurial education 3 fund. However, a school corporation shall not transfer such 4 moneys unless the moneys are attributable through appropriate 5 documentation to the specific student organization or club 6 and unless the student organization or club shows through 7 appropriate documentation that the student organization or club 8 earned the moneys through entrepreneurial activities as defined 9 in subsection 4, paragraph “a” . 10 3. Conflicts of interest prohibited. A student organization 11 or club shall not invest moneys from an entrepreneurial 12 education fund for an entrepreneurial purpose in which a member 13 of the student organization or club, an advisor or supervisor 14 of the student organization or club, or an immediate family 15 member of such persons, has a financial interest. Sections 16 279.7A and 301.28 apply to this section. 17 4. Definitions. For purposes of this section: 18 a. “Entrepreneurial activities” means starting, maintaining, 19 or expanding a business venture, including a seasonal business 20 venture. 21 b. “Entrepreneurial purpose” means establishing or investing 22 in a start-up company, early-stage company, or existing 23 company developing a new product or new technology if the 24 investment is in keeping with the education program of the 25 school corporation; if the student organization or club or its 26 members will, as a stated condition of the investment, take an 27 active role in the company which active role directly relates 28 to and furthers the educational purposes for which the student 29 organization or club is established; and if a reasonable return 30 upon the investment is expected. 31 c. “Immediate family member” means a spouse; natural or 32 adoptive parent, child, or sibling; or stepparent, stepchild, 33 or stepsibling. 34 Sec. 4. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 35 -3- LSB 2042HV (5) 85 je/sc 3/ 6

H.F. 533 immediate importance, takes effect upon enactment. 1 Sec. 5. APPLICABILITY. Section 298A.15, subsection 2, as 2 enacted in this Act, applies to moneys in a student activity 3 fund established under section 298A.8, on and after the 4 effective date of this Act, that are attributable through 5 appropriate documentation to a specific student organization 6 or club and that were earned by the student organization or 7 club through entrepreneurial activities as defined in section 8 298A.15, subsection 4, paragraph “a”. 9 EXPLANATION 10 This bill permits a school corporation, at the request of a 11 student organization or club and upon approval of the school 12 board, to establish an entrepreneurial education fund for the 13 purposes of enhancing student learning by encouraging students 14 to develop and practice entrepreneurial skills at an early age 15 and of fostering a business-ready workforce in Iowa. The bill 16 provides that an entrepreneurial education fund is a special 17 revenue fund and can consist only of moneys earned through 18 entrepreneurial activities or returns on investments made for 19 entrepreneurial purposes by the student organization or club, 20 private donations and private contributions, and any interest 21 earned on such moneys, that are deposited in the fund. The 22 bill provides that moneys in the fund can only be used for 23 investments made or activities undertaken for entrepreneurial 24 purposes in accordance with the bill. 25 The bill provides that the student organization or club may 26 designate an entrepreneurial purpose for the use of moneys in 27 the entrepreneurial education fund in accordance with the bill. 28 The bill permits a school corporation to expend moneys in the 29 fund for use by the student organization or club in accordance 30 with the bill upon approval of the designated entrepreneurial 31 purpose by the school board. The bill requires the school 32 organization or club to deposit any return on an investment 33 made with moneys from the fund in the fund. The bill prohibits 34 a school corporation from transferring or contributing to 35 -4- LSB 2042HV (5) 85 je/sc 4/ 6

H.F. 533 the fund any other moneys that are not moneys earned through 1 entrepreneurial activities or returns on investments made for 2 entrepreneurial purposes by the student organization or club. 3 The bill requires a school corporation, upon request 4 of a student organization or club and upon approval by 5 the school board, to transfer moneys in a student activity 6 fund for deposit by the student organization or club in an 7 entrepreneurial education fund. However, the bill prohibits 8 a school corporation from transferring such moneys unless the 9 moneys are attributable through appropriate documentation 10 to the specific student organization or club and unless 11 the student organization or club shows through appropriate 12 documentation that the student organization or club earned the 13 moneys through entrepreneurial activities. 14 The bill prohibits a student organization or club from 15 investing moneys from an entrepreneurial education fund for 16 an entrepreneurial purpose in which a member of the student 17 organization or club, an advisor or supervisor of the student 18 organization or club, or an immediate family member of such 19 persons, has a financial interest. The bill applies other 20 prohibitions of conflicts of interest to entrepreneurial 21 education funds. 22 The bill defines “entrepreneurial activities” as starting, 23 maintaining, or expanding a business venture, including a 24 seasonal business venture. The bill defines “entrepreneurial 25 purpose” as establishing or investing in a start-up company, 26 early-stage company, or existing company developing a new 27 product or new technology if the investment is in keeping with 28 the education program of the school corporation; if the student 29 organization or club or its members will, as a stated condition 30 of the investment, take an active role in the company which 31 directly relates to and furthers the educational purposes for 32 which the student organization or club is established; and if a 33 reasonable return upon the investment is expected. 34 The bill specifies that entrepreneurial education funds 35 -5- LSB 2042HV (5) 85 je/sc 5/ 6

H.F. 533 are subject to the annual auditing requirements applicable to 1 government subdivisions including school districts in Code 2 section 11.6. 3 The bill excludes investments of moneys from entrepreneurial 4 education funds from the limitations on the investment of 5 public funds in Code section 12B.10. 6 The bill takes effect upon enactment. 7 The bill applies to moneys in a student activity fund on 8 and after the effective date of the bill that are attributable 9 through appropriate documentation to a specific student 10 organization or club, and that were earned by the student 11 organization or club through entrepreneurial activities. 12 -6- LSB 2042HV (5) 85 je/sc 6/ 6