H.B. 283 Enrolled





Chief Sponsor: Ronda Rudd Menlove

Senate Sponsor: Curtis S. Bramble

             7      LONG TITLE
             8      General Description:
             9          This bill addresses nonprofit entity receipt of state money.
             10      Highlighted Provisions:
             11          This bill:
             12          .    defines terms;
             13          .    addresses audits of nonprofit entities;
             14          .    requires written agreements for grants to nonprofit entities;
             15          .    enacts the Nonprofit Entity Receipt of State Money Act, including:
             16              .    defining terms;
             17              .    imposing requirements on a nonprofit entity's receipt of state money; and
             18              .    authorizing a state entity to seek return of state money if the nonprofit entity
             19      fails to comply with the requirements; and
             20          .    makes technical changes.
             21      Money Appropriated in this Bill:
             22          None
             23      Other Special Clauses:
             24          None
             25      Utah Code Sections Affected:
             26      AMENDS:
             27           51-2a-102 , as last amended by Laws of Utah 2007, Chapter 170
             28      ENACTS:
             29           51-2a-204 , Utah Code Annotated 1953

             30           63J-9-101 , Utah Code Annotated 1953
             31           63J-9-102 , Utah Code Annotated 1953
             32           63J-9-201 , Utah Code Annotated 1953
             33           63J-9-202 , Utah Code Annotated 1953
             35      Be it enacted by the Legislature of the state of Utah:
             36          Section 1. Section 51-2a-102 is amended to read:
             37           51-2a-102. Definitions.
             38          As used in this chapter:
             39          (1) "Accounting reports" means an audit, a review, a compilation, or a fiscal report.
             40          (2) "Audit" means an examination that:
             41          (a) analyzes the accounts of all officers of the entity having responsibility for the care,
             42      management, collection, or disbursement of money belonging to it or appropriated by law or
             43      otherwise acquired for its use or benefit;
             44          (b) is performed in accordance with generally accepted government auditing standards,
             45      or for nonprofit corporations described in Subsection (6)(f), in accordance with generally
             46      accepted auditing standards; and
             47          (c) conforms to the uniform classification of accounts established or approved by the
             48      state auditor or any other classification of accounts established by any federal government
             49      agency.
             50          (3) "Audit report" means:
             51          (a) the financial statements presented in conformity with generally accepted accounting
             52      principles;
             53          (b) the auditor's opinion on the financial statements;
             54          (c) a statement by the auditor expressing positive assurance of compliance with state
             55      fiscal laws identified by the state auditor;
             56          (d) a copy of the auditor's letter to management that identifies any material weakness in
             57      internal controls discovered by the auditor and other financial issues related to the expenditure

             58      of funds received from federal, state, or local governments to be considered by management;
             59      and
             60          (e) management's response to the specific recommendations.
             61          (4) "Compilation" means information presented in the form of financial statements
             62      presented in conformity with generally accepted accounting principles that are the
             63      representation of management without the accountant undertaking to express any assurances on
             64      the statements.
             65          (5) "Fiscal report" means providing information detailing revenues and expenditures of
             66      all funds using forms provided by the state auditor.
             67          (6) "Governing board" means:
             68          (a) the governing board of each political subdivision;
             69          (b) the governing board of each interlocal organization having the power to tax or to
             70      expend public funds;
             71          (c) the governing board of any local mental health authority established under the
             72      authority of Title 62A, Chapter 15, Substance Abuse and Mental Health Act;
             73          (d) the governing board of any substance abuse authority established under the
             74      authority of Title 62A, Chapter 15, Substance Abuse and Mental Health Act;
             75          (e) the governing board of any area agency established under the authority of Title
             76      62A, Chapter 3, Aging and Adult Services;
             77          (f) the governing board of any nonprofit corporation that receives:
             78          (i) at least 50% of its funds from federal, state, and local government entities through
             79      contracts; or
             80          (ii) an amount from state entities that is equal to or exceeds the amount specified in
             81      Subsection 51-2a-201 (1) that would require an audit to be made by a competent certified public
             82      accountant;
             83          (g) the governing board of any other entity established by a local governmental unit
             84      that receives tax exempt status for bonding or taxing purposes; and
             85          (h) in municipalities organized under an optional form of municipal government, the

             86      municipal legislative body.
             87          (7) "Review" means performing inquiry and analytical procedures that provide the
             88      accountant with a reasonable basis for expressing limited assurance that there are no material
             89      modifications that should be made to the financial statements for them to be in conformity with
             90      generally accepted accounting principles.
             91          (8) "State entity" means a department, commission, board, council, agency, institution,
             92      officer, corporation, fund, division, office, committee, authority, laboratory, library, unit,
             93      bureau, panel, or other administrative unit of the state.
             94          Section 2. Section 51-2a-204 is enacted to read:
             95          51-2a-204. Grants to nonprofit corporations -- Reporting to the state auditor.
             96          (1) A state entity that grants money to a nonprofit corporation shall enter into a written
             97      agreement with the nonprofit corporation that requires the nonprofit corporation to:
             98          (a) disclose whether:
             99          (i) it met or exceeded the requirements listed in Subsection 51-2a-102 (6)(f) in the
             100      previous fiscal year of the nonprofit corporation; and
             101          (ii) it anticipates meeting or exceeding the requirements listed in Subsection
             102      51-2a-102 (6)(f) in the fiscal year the grant is issued; and
             103          (b) comply with the requirements of Title 63J, Chapter 9, Nonprofit Entity Receipt of
             104      State Money Act.
             105          (2) If the nonprofit corporation discloses to the state entity that it meets or exceeds the
             106      requirements listed in Subsection 51-2a-102 (6)(f) as described in Subsection (1), the state
             107      entity shall notify the state auditor.
             108          Section 3. Section 63J-9-101 is enacted to read:

Part 1. General Provisions

             111          63J-9-101. Title.
             112          This chapter is known as the "Nonprofit Entity Receipt of State Money Act."
             113          Section 4. Section 63J-9-102 is enacted to read:

             114          63J-9-102. Definitions.
             115          As used in this chapter:
             116          (1) "Bylaws" means the one or more codes of rules, other than the articles of
             117      incorporation, adopted for the regulation or management of the affairs of a nonprofit entity
             118      irrespective of the one or more names by which the codes of rules are designated.
             119          (2) (a) "Grant" means the furnishing by a state entity of state money to a nonprofit
             120      entity.
             121          (b) "Grant" does not include a contract between a state entity and a nonprofit entity to
             122      purchase goods or services from the nonprofit entity that was subject to the state procurement
             123      process provided in Title 63G, Chapter 6a, Utah Procurement Code.
             124          (3) "Nonprofit entity" means an entity that:
             125          (a) is operated primarily for a scientific purpose, educational purpose, religious
             126      purpose, charitable purpose, or similar purpose in the public interest;
             127          (b) is not organized primarily for profit; and
             128          (c) no part of the net earnings of which inures to the benefit of any private shareholder
             129      or individual holding an interest in the entity.
             130          (4) "State entity" means a department, commission, board, council, agency, institution,
             131      officer, corporation, fund, division, office, committee, authority, laboratory, library, unit,
             132      bureau, panel, or other administrative unit of the state.
             133          (5) (a) "State money" means money that is owned, held, or administered by a state
             134      entity and derived from state fee or tax revenues.
             135          (b) "State money" does not include contributions or donations received by a state
             136      entity.
             137          Section 5. Section 63J-9-201 is enacted to read:
Part 2. Provision of State Money

             139          63J-9-201. Conditions for providing state grant money to a nonprofit entity.
             140          A state entity may not provide a nonprofit entity state money through a grant, including
             141      a pass-through funding grant, unless:

             142          (1) the state entity enters into a written agreement with the nonprofit entity;
             143          (2) the written agreement described in Subsection (1) requires the nonprofit entity to
             144      provide the state entity an itemized report at least annually detailing the expenditure of the state
             145      money; and
             146          (3) at the time of receipt of the state money the nonprofit entity has:
             147          (a) bylaws that provide for:
             148          (i) the financial oversight of the state money; and
             149          (ii) compliance with state laws related to the state money;
             150          (b) procedures for the governing board of the nonprofit entity to designate an
             151      administrator who manages the state money; and
             152          (c) procedures for the governing board to dismiss the administrator described by
             153      Subsection (3)(b).
             154          Section 6. Section 63J-9-202 is enacted to read:
             155          63J-9-202. Nonprofit entity's return of state money.
             156          The state entity that provides a nonprofit entity state money in accordance with Section
             157      63J-9-201 may require the nonprofit entity to return to the state entity an amount of money that
             158      is equal to the state money that is expended in violation of Section 63J-9-201 if the nonprofit
             159      entity fails to comply with the written agreement, bylaws, and procedures required by Section
             160      63J-9-201 during the time period that the nonprofit entity holds or expends the state money.

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