Chief Sponsor: LaVar Christensen

Senate Sponsor: ____________


9     General Description:
10          This bill amends provisions related to the Education Fund.
11     Highlighted Provisions:
12          This bill:
13          ▸     provides that an annual allocation from the Education Fund for K-12 education as a
14     minimum funding level assurance of at least 90%; and
15          ▸     makes technical and conforming changes.
16     Money Appropriated in this Bill:
17          None
18     Other Special Clauses:
19          This bill provides a special effective date.
20     Utah Code Sections Affected:
21     AMENDS:
22          51-5-4, as last amended by Laws of Utah 2013, Chapter 400

24     Be it enacted by the Legislature of the state of Utah:
25          Section 1. Section 51-5-4 is amended to read:
26          51-5-4. Funds established -- Titles of funds -- Fund functions.
27          (1) (a) (i) The funds enumerated in this section are established as major fund types.

28          (ii) All resources and financial transactions of Utah state government shall be
29     accounted for within one of these major fund types.
30          (b) (i) All funds or subfunds shall be consolidated into one of the state's major fund
31     types.
32          (ii) Where a specific statute requires that a fund or account be established, that fund or
33     account shall be accounted for as an individual fund, subfund, or account within the major fund
34     type to meet generally accepted accounting principles.
35          (iii) Existing and new activities of state government authorized by the Legislature shall
36     be accounted for within the framework of the major fund types established in this section.
37          (c) The Division of Finance shall determine the accounting classification that complies
38     with generally accepted accounting principles for all funds, subfunds, or accounts created by
39     the Legislature.
40          (d) (i) Major fund types shall be added by amending this chapter.
41          (ii) Whenever a new act creates or establishes a fund, subfund, or account without
42     amending this chapter, the reference to a fund, subfund, or account in the new act shall be
43     classified within one of the major fund types established by this section.
44          (2) Major Fund Type Titles:
45          (a) General Fund;
46          (b) Special Revenue Funds;
47          (c) Capital Projects Funds;
48          (d) Debt Service Funds;
49          (e) Permanent Funds;
50          (f) Enterprise Funds;
51          (g) Internal Service Funds;
52          (h) Trust and Agency Funds; and
53          (i) Discrete Component Unit Funds.
54          (3) The General Fund shall receive all revenues and account for all expenditures not
55     otherwise provided for by law in any other fund.
56          (4) Special Revenue Funds are used to account for and report proceeds of specific
57     revenue sources that are restricted or committed to be expended for a specified purpose.
58          (a) (i) The Education Fund is a Special Revenue Fund that:

59          [(i)] (A) receives all revenues from taxes on intangible property or from a tax on
60     income; and
61          [(ii)] (B) subject to Subsection (4)(a)(ii), is designated for public and higher education.
62          (ii) The annual allocation of the revenue described in Subsection (4)(a)(i)(A) between
63     K-12 education and higher education:
64          (A) shall include a minimum funding level assurance of at least 90% for K-12 public
65     education; and
66          (B) the remaining Education Fund balance shall be allocated between K-12 public
67     education and higher education as determined by the Legislature.
68          (iii) The state income tax since its inception has been intended to:
69          (A) provide a dedicated, reliable, and ongoing source of funding for K-12 public
70     education;
71          (B) achieve the state's commitment to the college, career, and civic readiness of Utah's
72     children; and
73          (C) support the dedicated teachers and education professionals of the state.
74          (iv) The provisions of Subsection (4)(a)(ii) do not take effect until July 1, 2019, in
75     order to provide time to identify and assemble additional offsetting funding sources for higher
76     education as may be necessary.
77          (b) The Transportation Fund is a Special Revenue Fund that accounts for all revenues
78     that are required by law to be expended for highway purposes.
79          (c) (i) An Expendable Special Revenue Fund is a Special Revenue Fund created by
80     legislation or contractual relationship with parties external to the state that:
81          (A) identifies specific revenues collected from fees, taxes, dedicated credits, donations,
82     federal funds, or other sources;
83          (B) defines the use of the money in the fund for a specific function of government or
84     program within an agency; and
85          (C) delegates spending authority or authorization to use the fund's assets to a governing
86     board, administrative department, or other officials as defined in the enabling legislation or
87     contract establishing the fund.
88          (ii) An Expendable Special Revenue Fund may only be created by contractual
89     relationship with external parties when the sources of revenue for the fund are donated

90     revenues or federal revenues.
91          (iii) Expendable Special Revenue Funds are subject to annual legislative review by the
92     appropriate legislative appropriations subcommittee.
93          (5) (a) Capital Projects Funds account for financial resources to be expended for the
94     acquisition or construction of capital outlays, including the acquisition or construction of a
95     capital facility and other capital assets. Capital Projects Funds exclude those types of
96     capital-related outflows financed by proprietary funds or for assets that will be held in trust for
97     individuals, private organizations, or other governments.
98          (b) The Transportation Investment Fund of 2005 is a Capital Projects Fund that
99     accounts for revenues that are required by law to be expended for the maintenance,
100     construction, reconstruction, or renovation of certain state and federal highways.
101          (6) Debt Service Funds account for the accumulation of resources for, and the payment
102     of, the principal and interest on general long-term obligations.
103          (7) Permanent Funds account for assets that are legally restricted to the extent that only
104     earnings, and not principal, may be used for a specific purpose.
105          (8) Enterprise Funds are designated to account for the following:
106          (a) operations, financed and operated in a manner similar to private business
107     enterprises, where the Legislature intends that the costs of providing goods or services to the
108     public are financed or recovered primarily through user charges;
109          (b) operations where the Legislature requires periodic determination of revenues
110     earned, expenses incurred, and net income;
111          (c) operations for which a fee is charged to external users for goods or services; or
112          (d) operations that are financed with debt that is secured solely by a pledge of the net
113     revenues from fees and charges of the operations.
114          (9) Internal Service Funds account for the financing of goods or services provided by
115     one department, division, or agency to other departments, divisions, or agencies of the state, or
116     to other governmental units, on a cost-reimbursement basis.
117          (10) (a) Trust and Agency Funds account for assets held by the state as trustee or agent
118     for individuals, private organizations, or other governmental units.
119          (b) Pension Trust Funds, Investment Trust Funds, Private-Purpose Trust Funds, and
120     Agency Funds are Trust and Agency Funds.

121          (11) Discrete Component Unit Funds account for the financial resources used to
122     operate the state's colleges and universities and other discrete component units.
123          Section 2. Effective date.
124          This bill takes effect on July 1, 2019.

Legislative Review Note
Office of Legislative Research and General Counsel