House File 565 - Reprinted HOUSE FILE 565 BY COMMITTEE ON EDUCATION (SUCCESSOR TO HF 446) (As Amended and Passed by the House March 15, 2017 ) A BILL FOR An Act relating to public school funding by authorizing the 1 establishment of school district flexibility fund accounts 2 and authorizing the transfer and expenditure of certain 3 unexpended and unobligated funds. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 HF 565 (4) 87 md/sc/md

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 account 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 account under 29 section 298A.16 shall comply with the requirements of chapter 30 284 . If all professional development requirements of chapter 31 284 are met and funds received under this subsection remain 32 unexpended and unobligated by the teacher quality committee 33 under section 284.4, subsection 1, paragraph “c” , at the end of 34 a fiscal year beginning on or after July 1, 2017, the school 35 -1- HF 565 (4) 87 md/sc/md 1/ 7

H.F. 565 district may transfer all or a portion of such unexpended 1 and unobligated funds for deposit in the school district’s 2 flexibility fund account 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 10 “a” through “c” , and from other sources for that purpose, 11 including any previous carryover or amount designated from 12 the school district’s flexibility fund account under section 13 298A.16 , shall be funded annually on a basis of one-fourth or 14 more from the district cost of the school district and up to 15 three-fourths through establishment of a modified supplemental 16 amount. Annually, the department of management shall establish 17 a 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 account 24 under section 298A.16 . 25 Sec. 4. Section 257.46, subsection 1, Code 2017, is amended 26 to read as follows: 27 1. The budget of an approved gifted and talented children 28 program for a school district, after subtracting funds received 29 from other sources for that purpose, including any amount 30 designated from the school district’s flexibility fund account 31 under section 298A.16, shall be funded annually on a basis 32 of one-fourth or more from the district cost of the school 33 district. 34 Sec. 5. Section 284.6, subsection 9, Code 2017, is amended 35 -2- HF 565 (4) 87 md/sc/md 2/ 7

H.F. 565 to read as follows: 1 9. Moneys received pursuant to section 257.10, subsection 2 10 , or section 257.37A, subsection 2 , shall be maintained 3 as a separate listing within a school district’s or area 4 education agency’s budget for funds received and expenditures 5 made pursuant to this subsection . A school district shall 6 certify to the department of education how the school 7 district allocated the funds and that moneys received under 8 this subsection were used to supplement, not supplant, the 9 professional development opportunities the school district 10 would otherwise make available. For budget years beginning 11 on or after July 1, 2017, all or a portion of the moneys 12 received pursuant to section 257.10, subsection 10, that remain 13 unexpended and unobligated at the end of a fiscal year may, 14 pursuant to section 257.10, subsection 10, paragraph “d” , be 15 transferred for deposit in the school district’s flexibility 16 fund account established under section 298A.16. 17 Sec. 6. NEW SECTION . 298A.16 School district flexibility 18 fund account. 19 1. A flexibility fund account shall be established in 20 the general fund of each school corporation if the school 21 corporation has authorized the transfer of all or a portion 22 of the unexpended and unobligated funds from any of the 23 following sources following a determination that the statutory 24 requirements for such funds are met: 25 a. An approved local program under the statewide preschool 26 program for four-year-old children under chapter 256C. 27 b. Professional development funds received under section 28 257.10, subsection 10. 29 c. The home school assistance program under section 299A.12. 30 2. In addition to the transfers to the flexibility fund 31 account authorized by law, a school district may transfer to 32 the flexibility fund account all or a portion of any unexpended 33 and unobligated moneys in any other school district fund if the 34 program, purpose, or requirements for the expenditure of such 35 -3- HF 565 (4) 87 md/sc/md 3/ 7

H.F. 565 moneys have been repealed or are no longer in effect. 1 3. Moneys deposited in the flexibility fund account may be 2 used by the school district during a budget year beginning in 3 or after the calendar year in which the moneys were transferred 4 to the flexibility fund account for any of the following: 5 a. Start-up costs for an approved local program under the 6 statewide preschool program for four-year-old children under 7 chapter 256C. 8 b. Professional development requirements under chapter 284. 9 c. The home school assistance program under section 299A.12. 10 d. At-risk pupils programs, alternative programs and 11 alternative school programs, and returning dropout and dropout 12 prevention programs under section 257.40. 13 e. Gifted and talented children programs under section 14 257.46. 15 f. Any school district general fund purpose. 16 4. Expenditures from the flexibility fund account shall be 17 approved by resolution of the board of directors of the school 18 corporation and shall be included in the budget certified in 19 accordance with chapter 24. Before the board of directors 20 may adopt the resolution approving expenditures from the 21 flexibility fund account, the board shall hold a public hearing 22 on the proposed resolution. The proposed resolution must state 23 the original source and purpose of the funds, the proposed use 24 of such funds, the amount of the proposed expenditure, and 25 the fiscal year from which the transfer of such funds to the 26 flexibility fund account occurred. The board shall publish 27 notice of the time and the place of the public hearing in the 28 same manner as required in section 24.9. The department of 29 education shall prescribe the form for public hearing notices. 30 Within ten days following adoption, a copy of the resolution 31 shall be provided to the auditor of state for inclusion in any 32 audit performed under chapter 11. 33 5. a. When exercising authority to carry out an agency 34 action, as defined in section 17A.2, or to perform an activity 35 -4- HF 565 (4) 87 md/sc/md 4/ 7

H.F. 565 or make a decision specified in section 17A.2, subsection 1 11, paragraphs “a” through “l” , if applicable, related to the 2 provisions of this section, the department of education, the 3 director of the department of education, and the state board 4 of education shall carry out, perform, or make such agency 5 action, activity, or decision in a manner that gives deference 6 to decisions of school districts’ boards of directors, promotes 7 flexibility for school districts, and minimizes intrusions into 8 school district operations and decision making by boards of 9 directors. 10 b. (1) In addition to paragraph “a” , the department of 11 education, the director of the department of education, and 12 the state board of education shall not issue guidance related 13 to the provisions of this section, that is inconsistent with 14 any statute, rule, or other legal authority or that imposes 15 any legally binding obligations or duties upon any person 16 unless such legally binding obligations or duties are required 17 or reasonably implied by any statute, rule, or other legal 18 authority. Guidance issued in violation of this paragraph “b” 19 shall not be deemed to be legally binding. 20 (2) For the purposes of this paragraph “b” , “guidance” means 21 a document or statement issued by the department of education, 22 the director of the department of education, or the state 23 board of education that purports to interpret a law, a rule, 24 or other legal authority and is designed to provide advice 25 or direction to a person regarding the implementation of or 26 compliance with the law, the rule, or the other legal authority 27 being interpreted. “Guidance” does not include any action, 28 activity, or decision governed by paragraph “a” , a document or 29 statement required by federal law or a court, or a document or 30 statement issued in the course of a contested case proceeding, 31 an administrative proceeding, or a judicial proceeding to which 32 the department, the state board, or the director is a party. 33 Sec. 7. Section 299A.12, subsection 1, Code 2017, is amended 34 to read as follows: 35 -5- HF 565 (4) 87 md/sc/md 5/ 7

H.F. 565 1. The board of directors of a school district shall expend 1 moneys received pursuant to section 257.6, subsection 1 , 2 paragraph “a” , subparagraph (5), and amounts designated from 3 the school district’s flexibility fund account under section 4 298A.16 for purposes of providing a home school assistance 5 program. 6 Sec. 8. Section 299A.12, subsection 2, unnumbered paragraph 7 1, Code 2017, is amended to read as follows: 8 Purposes for which a school district may expend funds 9 received pursuant to section 257.6, subsection 1 , paragraph 10 “a” , subparagraph (5), or amounts designated from the school 11 district’s flexibility fund account under section 298A.16 shall 12 include but not be limited to the following: 13 Sec. 9. Section 299A.12, subsection 2, paragraphs c and d, 14 Code 2017, are amended to read as follows: 15 c. Salary and benefits for the supervising teacher of 16 the home school assistance program students. If the teacher 17 is a part-time home school assistance program teacher and a 18 part-time regular classroom teacher, funds received pursuant to 19 section 257.6, subsection 1 , paragraph “a” , subparagraph (5), 20 or amounts designated from the school district’s flexibility 21 fund account under section 298A.16 may be used only for 22 the portion of time in which the teacher is a home school 23 assistance program teacher. 24 d. Salary and benefits for clerical and office staff of 25 the home school assistance program. If the staff members are 26 shared with other programs or functions within the district, 27 funds received pursuant to section 257.6, subsection 1 , 28 paragraph “a” , subparagraph (5), or amounts designated from 29 the school district’s flexibility fund account under section 30 298A.16 shall only be expended for the portion of time spent 31 providing the home school assistance program services. 32 Sec. 10. Section 299A.12, subsection 3, unnumbered 33 paragraph 1, Code 2017, is amended to read as follows: 34 Purposes for which a school district shall not expend funds 35 -6- HF 565 (4) 87 md/sc/md 6/ 7

H.F. 565 received pursuant to section 257.6, subsection 1 , paragraph 1 “a” , subparagraph (5), or amounts designated from the school 2 district’s flexibility fund account under section 298A.16 3 include but are not limited to the following: 4 Sec. 11. Section 299A.12, Code 2017, is amended by adding 5 the following new subsection: 6 NEW SUBSECTION . 4. Unless otherwise prohibited by law, 7 all or a portion of the moneys received by a school district 8 pursuant to section 257.6, subsection 1, paragraph “a” , 9 subparagraph (5), that remain unexpended and unobligated at the 10 end of a budget year beginning on or after July 1, 2017, may be 11 transferred for deposit in the school district’s flexibility 12 fund account established under section 298A.16. 13 -7- HF 565 (4) 87 md/sc/md 7/ 7