H.F. 565 Section 1. Section 256C.4, subsection 1, paragraph e, Code 1 2017, is amended to read as follows: 2 e. Preschool foundation aid funding shall not be used for 3 the costs of constructing a facility in connection with an 4 approved local program. Preschool foundation aid funding may 5 be used by approved local programs and community providers 6 for professional development for preschool teachers, for 7 instructional equipment, for material and equipment designed 8 to develop pupils’ large and small motor skills, and for other 9 direct costs. Preschool foundation aid funding may be used 10 by approved local programs for the costs of transportation 11 involving children participating in the preschool program. 12 The costs of transporting other children associated with 13 the preschool program or transported as provided in section 14 256C.3, subsection 3 , paragraph “h” , may be prorated by the 15 school district. Preschool foundation aid funding received by 16 an approved local program that remain remains unexpended or 17 and unobligated at the end of a fiscal year beginning on or 18 after July 1, 2017, shall be used to build the approved local 19 program’s preschool program capacity in the next succeeding 20 fiscal year excluding that portion of such unexpended and 21 unobligated funding that the school district authorizes for 22 transfer for deposit in the school district’s flexibility fund 23 established under section 298A.16 . 24 Sec. 2. Section 257.10, subsection 10, paragraph d, Code 25 2017, is amended to read as follows: 26 d. The use of the funds calculated under this subsection 27 and any amount designated for professional development purposes 28 from the school district’s flexibility fund under section 29 298A.16 shall comply with the requirements of chapter 284 . If 30 all professional development requirements of chapter 284 are 31 met and funds received under this subsection remain unexpended 32 and unobligated by the teacher quality committee under section 33 284.4, subsection 1, paragraph “c” , at the end of a fiscal year 34 beginning on or after July 1, 2017, the school district may 35 -1- LSB 2494HV (3) 87 md/sc 1/ 9

H.F. 565 transfer all or a portion of such unexpended and unobligated 1 funds for deposit in the school district’s flexibility fund 2 established under section 298A.16. 3 Sec. 3. Section 257.41, subsection 1, Code 2017, is amended 4 to read as follows: 5 1. Budget. The budget of an approved program for at-risk 6 students, secondary students who attend alternative programs 7 or alternative schools, or returning dropouts and dropout 8 prevention for a school district, after subtracting funds 9 received under section 257.11, subsection 4 , paragraphs “a” 10 through “c” , and from other sources for that purpose, including 11 any previous carryover or amount designated from the school 12 district’s flexibility fund under section 298A.16 , shall be 13 funded annually on a basis of one-fourth or more from the 14 district cost of the school district and up to three-fourths 15 through establishment of a modified supplemental amount. 16 Annually, the department of management shall establish a 17 modified supplemental amount for each such school district 18 equal to the difference between the approved budget for the 19 program for that district and the sum of the amount funded from 20 the district cost of the school district plus funds received 21 under section 257.11, subsection 4 , and from other sources 22 for that purpose, including any previous carryover or amount 23 designated from the school district’s flexibility fund under 24 section 298A.16 . 25 Sec. 4. Section 257.41, Code 2017, is amended by adding the 26 following new subsection: 27 NEW SUBSECTION . 5. Unless otherwise provided by law, all 28 or a portion of the moneys received by a school district from 29 any source for use in at-risk pupils’ programs, alternative 30 programs and alternative school programs, and returning dropout 31 and dropout prevention programs, that remain unexpended and 32 unobligated at the end of a budget year beginning on or after 33 July 1, 2017, may be transferred for deposit in the school 34 district’s flexibility fund established under section 298A.16. 35 -2- LSB 2494HV (3) 87 md/sc 2/ 9

H.F. 565 Sec. 5. Section 257.46, subsection 1, Code 2017, is amended 1 to read as follows: 2 1. The budget of an approved gifted and talented children 3 program for a school district, after subtracting funds 4 received from other sources for that purpose, including any 5 amount designated from the school district’s flexibility fund 6 under section 298A.16, shall be funded annually on a basis 7 of one-fourth or more from the district cost of the school 8 district. 9 Sec. 6. Section 284.6, subsection 9, Code 2017, is amended 10 to read as follows: 11 9. Moneys received pursuant to section 257.10, subsection 12 10 , or section 257.37A, subsection 2 , shall be maintained 13 as a separate listing within a school district’s or area 14 education agency’s budget for funds received and expenditures 15 made pursuant to this subsection . A school district shall 16 certify to the department of education how the school 17 district allocated the funds and that moneys received under 18 this subsection were used to supplement, not supplant, the 19 professional development opportunities the school district 20 would otherwise make available. For budget years beginning 21 on or after July 1, 2017, all or a portion of the moneys 22 received pursuant to section 257.10, subsection 10, that remain 23 unexpended and unobligated at the end of a fiscal year may, 24 pursuant to section 257.10, subsection 10, paragraph “d” , be 25 transferred for deposit in the school district’s flexibility 26 fund established under section 298A.16. 27 Sec. 7. NEW SECTION . 298A.16 School district flexibility 28 fund. 29 1. A flexibility fund shall be established in each school 30 corporation if the school corporation has authorized the 31 transfer of all or a portion of the unexpended and unobligated 32 funds from any of the following sources: 33 a. An approved local program under the statewide preschool 34 program for four-year-old children under chapter 256C. 35 -3- LSB 2494HV (3) 87 md/sc 3/ 9

H.F. 565 b. Professional development funds received under section 1 257.10, subsection 10. 2 c. The home school assistance program under section 299A.12. 3 d. At-risk pupils programs, alternative programs and 4 alternative school programs, and returning dropout and dropout 5 prevention programs under section 257.40. 6 2. In addition to the transfers to the flexibility fund 7 authorized by law, a school district may transfer to the 8 flexibility fund all or a portion of any unexpended and 9 unobligated moneys in any other school district fund if the 10 program, purpose, or requirements for the expenditure of such 11 moneys have been repealed or are no longer in effect. 12 3. Moneys deposited in the flexibility fund may be used 13 by the school district during a budget year beginning in 14 the calendar year following the calendar year in which the 15 moneys were transferred to the flexibility fund for any of the 16 following: 17 a. Start-up costs for an approved local program under the 18 statewide preschool program for four-year-old children under 19 chapter 256C. 20 b. Professional development requirements under chapter 284. 21 c. The home school assistance program under section 299A.12. 22 d. At-risk pupils programs, alternative programs and 23 alternative school programs, and returning dropout and dropout 24 prevention programs under section 257.40. 25 e. Gifted and talented children programs under section 26 257.46. 27 f. Any school district general fund purpose. 28 4. Expenditures from the flexibility fund shall be 29 approved by resolution of the board of directors of the school 30 corporation and shall be included in the budget certified in 31 accordance with chapter 24. Before the board of directors may 32 adopt the resolution approving expenditures from the fund, the 33 board shall hold a public hearing on the proposed resolution. 34 The proposed resolution must state the original source and 35 -4- LSB 2494HV (3) 87 md/sc 4/ 9

H.F. 565 purpose of the funds, the proposed use of such funds, the 1 amount of the proposed expenditure, and the fiscal year from 2 which the transfer of such funds to the flexibility fund 3 occurred. The board shall publish notice of the time and the 4 place of the public hearing in the same manner as required in 5 section 24.9. The department of education shall prescribe the 6 form for public hearing notices. Within ten days following 7 adoption, a copy of the resolution shall be provided to the 8 auditor of state for inclusion in any audit performed under 9 chapter 11. 10 5. a. When exercising authority to carry out an agency 11 action, as defined in section 17A.2, or to perform an activity 12 or make a decision specified in section 17A.2, subsection 13 11, paragraphs “a” through “l” , if applicable, related to the 14 provisions of this section, the department of education, the 15 director of the department of education, and the state board 16 of education shall carry out, perform, or make such agency 17 action, activity, or decision in a manner that gives deference 18 to decisions of school districts’ boards of directors, promotes 19 flexibility for school districts, and minimizes intrusions into 20 school district operations and decision making by boards of 21 directors. 22 b. (1) In addition to paragraph “a” , the department of 23 education, the director of the department of education, and 24 the state board of education shall not issue guidance related 25 to the provisions of this section, that is inconsistent with 26 any statute, rule, or other legal authority or that imposes 27 any legally binding obligations or duties upon any person 28 unless such legally binding obligations or duties are required 29 or reasonably implied by any statute, rule, or other legal 30 authority. Guidance issued in violation of this paragraph “b” 31 shall not be deemed to be legally binding. 32 (2) For the purposes of this paragraph “b” , “guidance” means 33 a document or statement issued by the department of education, 34 the director of the department of education, or the state 35 -5- LSB 2494HV (3) 87 md/sc 5/ 9

H.F. 565 board of education that purports to interpret a law, a rule, 1 or other legal authority and is designed to provide advice 2 or direction to a person regarding the implementation of or 3 compliance with the law, the rule, or the other legal authority 4 being interpreted. “Guidance” does not include any action, 5 activity, or decision governed by paragraph “a” , a document or 6 statement required by federal law or a court, or a document or 7 statement issued in the course of a contested case proceeding, 8 an administrative proceeding, or a judicial proceeding to which 9 the department, the state board, or the director is a party. 10 Sec. 8. Section 299A.12, subsection 1, Code 2017, is amended 11 to read as follows: 12 1. The board of directors of a school district shall expend 13 moneys received pursuant to section 257.6, subsection 1 , 14 paragraph “a” , subparagraph (5), and amounts designated from 15 the school district’s flexibility fund under section 298A.16 16 for purposes of providing a home school assistance program. 17 Sec. 9. Section 299A.12, subsection 2, unnumbered paragraph 18 1, Code 2017, is amended to read as follows: 19 Purposes for which a school district may expend funds 20 received pursuant to section 257.6, subsection 1 , paragraph 21 “a” , subparagraph (5), or amounts designated from the school 22 district’s flexibility fund under section 298A.16 shall include 23 but not be limited to the following: 24 Sec. 10. Section 299A.12, subsection 2, paragraphs c and d, 25 Code 2017, are amended to read as follows: 26 c. Salary and benefits for the supervising teacher of 27 the home school assistance program students. If the teacher 28 is a part-time home school assistance program teacher and a 29 part-time regular classroom teacher, funds received pursuant to 30 section 257.6, subsection 1 , paragraph “a” , subparagraph (5), 31 or amounts designated from the school district’s flexibility 32 fund under section 298A.16 may be used only for the portion of 33 time in which the teacher is a home school assistance program 34 teacher. 35 -6- LSB 2494HV (3) 87 md/sc 6/ 9

H.F. 565 d. Salary and benefits for clerical and office staff of 1 the home school assistance program. If the staff members are 2 shared with other programs or functions within the district, 3 funds received pursuant to section 257.6, subsection 1 , 4 paragraph “a” , subparagraph (5), or amounts designated from the 5 school district’s flexibility fund under section 298A.16 shall 6 only be expended for the portion of time spent providing the 7 home school assistance program services. 8 Sec. 11. Section 299A.12, subsection 3, unnumbered 9 paragraph 1, Code 2017, is amended to read as follows: 10 Purposes for which a school district shall not expend funds 11 received pursuant to section 257.6, subsection 1 , paragraph 12 “a” , subparagraph (5), or amounts designated from the school 13 district’s flexibility fund under section 298A.16 include but 14 are not limited to the following: 15 Sec. 12. Section 299A.12, Code 2017, is amended by adding 16 the following new subsection: 17 NEW SUBSECTION . 4. Unless otherwise prohibited by law, 18 all or a portion of the moneys received by a school district 19 pursuant to section 257.6, subsection 1, paragraph “a” , 20 subparagraph (5), that remain unexpended and unobligated at the 21 end of a budget year beginning on or after July 1, 2017, may be 22 transferred for deposit in the school district’s flexibility 23 fund established under section 298A.16. 24 EXPLANATION 25 The inclusion of this explanation does not constitute agreement with 26 the explanation’s substance by the members of the general assembly. 27 This bill relates to public school funding by authorizing 28 the establishment of school district flexibility funds and 29 authorizing the transfer and expenditure of certain unexpended 30 and unobligated funds of the school district. 31 The bill requires a flexibility fund to be established 32 in each school corporation if the school corporation has 33 authorized the transfer of all or a portion of unexpended or 34 unobligated funds from the school district’s preschool program 35 -7- LSB 2494HV (3) 87 md/sc 7/ 9

H.F. 565 under Code chapter 256C, professional development supplement 1 categorical funding, home school assistance program, at-risk 2 pupils program, alternative programs, returning dropout and 3 dropout prevention programs, or from certain professional 4 development funds. 5 The bill also provides that a school district may transfer 6 to the flexibility fund any unexpended and unobligated moneys 7 in any other school district fund if the program, purpose, or 8 requirements for expenditure of such moneys have been repealed 9 or are no longer in effect. 10 The bill provides that moneys deposited in the flexibility 11 fund may be used by the school district during a budget year 12 beginning in the calendar year following the calendar year in 13 which the moneys were deposited in the flexibility fund for 14 start-up costs for the school district’s preschool program, 15 professional development costs, as specified in the bill, home 16 school assistance program, at-risk pupils program, alternative 17 programs, returning dropout and dropout prevention programs, 18 gifted and talented children program, or any school district 19 general fund purpose. 20 Expenditures from the flexibility fund are required to be 21 approved by resolution of the school board following a public 22 hearing and must be included in the school district’s certified 23 budget. 24 The bill provides that when exercising authority to carry 25 out an agency action or to perform an activity or make a 26 decision related to the provisions of the bill establishing 27 authority for school district flexibility funds, the department 28 of education, the director of the department of education, 29 and the state board of education shall carry out, perform, or 30 make such agency action, activity, or decision in a manner 31 that gives deference to decisions of school districts’ boards 32 of directors, promotes flexibility for school districts, 33 and minimizes intrusions into school district operations 34 and decision making by boards of directors. The bill also 35 -8- LSB 2494HV (3) 87 md/sc 8/ 9

H.F. 565 provides that the department of education, the director of the 1 department of education, and the state board of education shall 2 not issue guidance that is inconsistent with any statute, rule, 3 or other legal authority or that imposes any legally binding 4 obligations or duties upon any person unless such legally 5 binding obligations or duties are required or reasonably 6 implied by any statute, rule, or other legal authority. 7 Guidance issued in violation of the bill shall not be deemed 8 to be legally binding. 9 The bill makes corresponding changes to the provisions 10 of law governing preschool programs under Code chapter 256C, 11 professional development supplement categorical funding, 12 home school assistance programs, at-risk pupils programs, 13 alternative programs, and returning dropout and dropout 14 prevention programs to authorize the transfer of unexpended and 15 unobligated funds from those programs to the flexibility fund 16 and to authorize the expenditure of moneys from the flexibility 17 fund for those purposes authorized in the bill. 18 -9- LSB 2494HV (3) 87 md/sc 9/ 9