1     
SCHOOL TRUST FUND MODIFICATIONS

2     
2019 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Jefferson Moss

5     
Senate Sponsor: Ann Millner

6     

7     LONG TITLE
8     General Description:
9          This bill amends provisions related to school and institutional trust fund management,
10     advocacy, and distribution of funds.
11     Highlighted Provisions:
12          This bill:
13          ▸     defines terms;
14          ▸     amends provisions related to board meetings and funding the office operations of
15     the School and Institutional Trust Fund Office;
16          ▸     amends provisions related to funding the office operations of the Land Trusts
17     Protection and Advocacy Office;
18          ▸     amends provisions related to the Trust Distribution Account;
19          ▸     amends provisions related to the School LAND Trust Program;
20          ▸     repeals outdated provisions; and
21          ▸     makes technical and conforming changes.
22     Money Appropriated in this Bill:
23          None
24     Other Special Clauses:
25          None
26     Utah Code Sections Affected:
27     AMENDS:
28          53D-1-203, as enacted by Laws of Utah 2014, Chapter 426
29          53D-1-304, as last amended by Laws of Utah 2018, Chapter 448
30          53D-2-204, as enacted by Laws of Utah 2018, Chapter 448
31          53F-2-404, as last amended by Laws of Utah 2018, Chapter 448 and renumbered and
32     amended by Laws of Utah 2018, Chapter 2
33          53F-9-201, as last amended by Laws of Utah 2018, Chapter 448 and renumbered and
34     amended by Laws of Utah 2018, Chapter 2
35     

36     Be it enacted by the Legislature of the state of Utah:
37          Section 1. Section 53D-1-203 is amended to read:
38          53D-1-203. Funding of office operations.
39          (1) As used in this section, "trust fund earnings" includes any of the following that is in
40     excess of the trust fund corpus:
41          (a) realized or unrealized gains;
42          (b) interest;
43          (c) dividends;
44          (d) other income; or
45          (e) other sources of revenue.
46          [(1)] (2) There is created an enterprise fund known as the School and Institutional
47     Trust Fund Management Account.
48          [(2)] (3) The account is funded by money deposited into the account as provided in
49     Subsection [(3)] (4).
50          [(3)] (4) [The] Except as provided in Subsection (5)(b), the director shall deposit into
51     the account an amount of money from the [earnings from] trust fund [assets] earnings equal to
52     the annual appropriation that the Legislature makes to the office, to pay for the office's
53     operating costs.
54          [(4)] (5) (a) The office may use money in the account to pay for the office's operating
55     costs.
56          (b) If the amount of money deposited into the account under Subsection [(3)] (4) in any
57     fiscal year exceeds the amount required by the office during that fiscal year to fund [its] the
58     office's operations, the office [shall distribute that excess money proportionately to the various
59     funds established for the beneficiaries of land grants under the enabling act, based on the
60     balances of those funds as of June 30] shall, in the following fiscal year, reduce the amount
61     deposited into the account under Subsection (4) by the amount of the unspent appropriation.
62          [(5)] (6) (a) [Before distributing earnings from trust fund assets, the] The office may
63     deduct from trust fund earnings:
64          (i) the cost for any audit, risk management, consulting, equipment, legal[, and
65     custodial costs and management] services, software, research, or custodial services; or
66          (ii) manager fees incurred in managing the trust fund assets.
67          (b) The costs and fees described in Subsection [(5)] (6)(a) are separate from and in
68     addition to the office's operating costs that are paid from the account.
69          Section 2. Section 53D-1-304 is amended to read:
70          53D-1-304. Board meetings.
71          (1) The board shall hold at least six meetings per year to conduct business.
72          (2) The board chair or two board members:
73          (a) may call a board meeting; and
74          (b) if calling a board meeting, shall provide as much advance notice as is reasonable
75     under the circumstances to all board members, the director, and the advocacy office director.
76          (3) Any board member may place an item on a board meeting agenda.
77          (4) The board shall [annually] adopt a set of parliamentary procedures to govern board
78     meetings.
79          (5) The board may establish an attendance policy to govern the attendance of board
80     members at board meetings.
81          Section 3. Section 53D-2-204 is amended to read:
82          53D-2-204. Land Trusts Protection and Advocacy Account -- Funding of
83     advocacy office operations.
84          (1) As used in this section:
85          (a) "Account" means the Land Trusts Protection and Advocacy Account created in this
86     section.
87          (b) "School and Institutional Trust Fund Office director" or "SITFO director" means
88     the director of the School and Institutional Trust Fund Office, appointed under Section
89     53D-1-401.
90          (c) "Trust fund" means the same as that term is defined in Section 53D-1-102.
91          (d) "Trust fund earnings" means the same as that term is defined in Section 53D-1-203.
92          (2) There is created an enterprise fund known as the Land Trusts Protection and
93     Advocacy Account.
94          (3) The account is funded by money deposited into the account as provided in
95     Subsection (4).
96          (4) (a) [During a fiscal year] Except as provided in Subsection (4)(c), the SITFO
97     director shall deposit into the account a total amount of money, taken proportionately from
98     trust fund [assets] earnings according to the value of the various funds established for the trust
99     beneficiaries, that is equal to the annual appropriation that the Legislature makes to the
100     advocacy office.
101          (b) The advocacy office may use money in the account to pay for the advocacy office's
102     operating costs.
103          (c) If the amount of money deposited into the account under Subsection (4)(a) in any
104     fiscal year exceeds the amount required by the advocacy office during that fiscal year to fund
105     advocacy office operations, the SITFO director [shall distribute the excess money
106     proportionately to the various funds established for the trust beneficiaries, based on the
107     balances of those funds as of June 30] shall, in the following fiscal year, reduce the amount
108     deposited into the account under Subsection (4)(a) by the amount of the unspent appropriation.
109          Section 4. Section 53F-2-404 is amended to read:
110          53F-2-404. School LAND Trust Program distribution of funds.
111          [(1) (a) The School LAND Trust Program, established in Section 53G-7-1206, shall be
112     funded each fiscal year:]
113          [(i) from the Trust Distribution Account created in Section 53F-9-201; and]
114          [(ii) in the amount of the sum of the following:]
115          [(A) on or about July 15 each year, out of the distributions from the investment of
116     money in the permanent State School Fund deposited to the Trust Distribution Account; and]
117          [(B) interest accrued on the Trust Distribution Account in the immediately preceding
118     fiscal year.]
119          (1) (a) By appropriation the Legislature shall fund the School LAND Trust Program,
120     established in Section 53G-7-1206, on or before July 31 of each fiscal year:
121          (i) from the Trust Distribution Account, created in Section 53F-9-201; and
122          (ii) except as provided in Subsection (1)(b), in the total amount of the quarterly
123     deposits made to the Trust Distribution Account for the School LAND Trust Program during
124     the prior fiscal year.
125          (b) [The program shall be funded as provided in Subsection (1)(a) up to an] The
126     amount described in Subsection (1)(a)(ii) may not exceed an amount equal to 3% of the funds
127     provided for the Minimum School Program, [pursuant to] in accordance with this chapter , each
128     fiscal year.
129          [(c) The Legislature shall annually allocate, through an appropriation to the State Board
130     of Education, a portion of the Trust Distribution Account created in Section 53F-9-201 to be
131     used for the administration of the School LAND Trust Program .]
132          (c) Independently from the appropriation for the School LAND Trust Program
133     described in Subsection (1)(a), the Legislature shall make an annual appropriation to the state
134     board from the Trust Distribution Account, created in Section 53F-9-201, for the
135     administration of the School LAND Trust Program.
136          (d) Any unused balance remaining from an amount appropriated under Subsection
137     (1)(c) shall be deposited [in] into the Trust Distribution Account [for distribution to schools in
138     the School LAND Trust Program].
139          (2) (a) The State Board of Education shall allocate the money referred to in Subsection
140     (1)(a) annually as follows:
141          (i) the Utah Schools for the Deaf and the Blind shall receive funding equal to the
142     product of:
143          (A) enrollment on October 1 in the prior year at the Utah Schools for the Deaf and the
144     Blind divided by enrollment on October 1 in the prior year in public schools statewide; and
145          (B) the total amount available for distribution under Subsection (1)(a);
146          (ii) charter schools shall receive funding equal to the product of:
147          (A) charter school enrollment on October 1 in the prior year, divided by enrollment on
148     October 1 in the prior year in public schools statewide; and
149          (B) the total amount available for distribution under Subsection (1)(a); and
150          (iii) of the funds available for distribution under Subsection (1)(a) after the allocation
151     of funds for the Utah Schools for the Deaf and the Blind and charter schools:
152          (A) school districts shall receive 10% of the funds on an equal basis; and
153          (B) the remaining 90% of the funds shall be distributed to school districts on a per
154     student basis.
155          (b) (i) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act,
156     the State Board of Education shall make rules specifying a formula to distribute the amount
157     allocated under Subsection (2)(a)(ii) to charter schools.
158          (ii) In making rules under Subsection (2)(b)(i), the State Board of Education shall:
159          (A) consult with the State Charter School Board; and
160          (B) ensure that the rules include a provision that allows a charter school in the charter
161     school's first year of operations to receive funding based on projected enrollment, to be
162     adjusted in future years based on actual enrollment.
163          (c) A school district shall distribute its allocation under Subsection (2)(a)(iii) to each
164     school within the school district on an equal per student basis.
165          (d) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
166     State Board of Education may make rules regarding the time and manner in which the student
167     count shall be made for allocation of the money under Subsection (2)(a)(iii).
168          [(3) If the amount of money prescribed for funding the School LAND Trust Program
169     under this section is less than or greater than the money appropriated for the School LAND
170     Trust Program, the appropriation shall be equal to the amount of money prescribed for funding
171     the School LAND Trust Program in this section, up to a maximum of an amount equal to 3%
172     of the funds provided for the Minimum School Program.]
173          [(4) The State Board of Education shall distribute the money appropriated in
174     Subsection (3) in accordance with this section and rules established by the board in accordance
175     with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.]
176          Section 5. Section 53F-9-201 is amended to read:
177          53F-9-201. Uniform School Fund -- Contents -- Trust Distribution Account.
178          (1) As used in this section:
179          (a) "Annual distribution calculation" means, for a given fiscal year, the average of:
180          (i) 4% of the average market value of the State School Fund for that fiscal year; and
181          (ii) the distribution amount for the prior fiscal year, multiplied by the sum of:
182          (A) one;
183          (B) the percent change in student enrollment from the school year two years prior to
184     the prior school year; and
185          (C) the actual total percent change of the consumer price index during the last 12
186     months as measured in June of the prior fiscal year.
187          (b) "Average market value of the State School Fund" means the results of a calculation
188     completed by the SITFO director each fiscal year that averages the value of the State School
189     Fund for the past 12 consecutive quarters ending in the prior fiscal year.
190          (c) "Consumer price index" means the Consumer Price Index for All Urban
191     Consumers: All Items Less Food & Energy, as published by the Bureau of Labor Statistics of
192     the United States Department of Labor.
193          (d) "SITFO director" means the director of the School and Institutional Trust Fund
194     Office appointed under Section 53D-1-401.
195          (e) "State School Fund investment earnings distribution amount" or "distribution
196     amount" means, for a fiscal year, the lesser of:
197          (i) the annual distribution calculation; or
198          (ii) 4% of the average market value of the State School Fund.
199          [(1)] (2) The Uniform School Fund, a special revenue fund within the Education Fund,
200     established by Utah Constitution, Article X, Section 5, consists of:
201          (a) distributions derived from the investment of money in the permanent State School
202     Fund established by Utah Constitution, Article X, Section 5;
203          (b) money transferred to the fund pursuant to Title 67, Chapter 4a, Revised Uniform
204     Unclaimed Property Act; and
205          (c) all other constitutional or legislative allocations to the fund, including revenues
206     received by donation.
207          [(2)] (3) (a) There is created within the Uniform School Fund a restricted account
208     known as the Trust Distribution Account.
209          [(b) The Trust Distribution Account consists of the average of:]
210          [(i) 4% of the average market value of the permanent State School Fund based on an
211     annual review each July of the past 12 consecutive quarters; and]
212          [(ii) the prior year's distribution from the Trust Distribution Account as described in
213     Section 53F-2-404, increased by prior year changes in the percentage of student enrollment
214     growth and in the consumer price index.]
215          [(3) Notwithstanding Subsection (2)(b), the distribution may not exceed 4% of the
216     average market value of the permanent State School Fund over the past 12 consecutive
217     quarters.]
218          (b) The Trust Distribution Account consists of:
219          (i) in accordance with Subsection (4), quarterly deposits of the State School Fund
220     investment earnings distribution amount from the prior fiscal year;
221          (ii) all interest earned on the Trust Distribution Account in the prior fiscal year; and
222          (iii) any unused appropriation for the administration of the School LAND Trust
223     Program, as described in Subsection 53F-2-404(1)(c).
224          (4) If, at the end of a fiscal year, the Trust Distribution Account has a balance
225     remaining after subtracting the appropriation amount described in Subsection 53F-2-404(1)(a)
226     for the next fiscal year, the SITFO director shall, during the next fiscal year, apply the amount
227     of the remaining balance from the prior fiscal year toward the current fiscal year's distribution
228     amount by reducing a quarterly deposit to the Trust Distribution Account by the amount of the
229     remaining balance from the prior fiscal year.
230          (5) On or before October 1 of each year, the SITFO director shall:
231          (a) in accordance with this section, determine the distribution amount for the following
232     fiscal year; and
233          (b) report the amount described in Subsection (5)(a) as the funding amount, described
234     in Subsection 53F-2-404(1)(c), for the School LAND Trust Program, to:
235          (i) the State Treasurer;
236          (ii) the Legislative Fiscal Analyst;
237          (iii) the Division of Finance;
238          (iv) the director of the Land Trusts Protection and Advocacy Office, appointed under
239     Section 53D-2-203;
240          (v) the School and Institutional Trust Lands Administration created in Section
241     53C-1-201;
242          (vi) the State Board of Education; and
243          (vii) the Governor's Office of Management and Budget.
244          [(4)] (6) The School and Institutional Trust Fund Board of Trustees created in Section
245     53D-1-301 shall:
246          (a) annually review [distribution of the Trust Distribution Account] the distribution
247     amount; and
248          (b) make recommendations, if necessary, to the Legislature for changes to the formula
249     [described in Subsection (2)(b)] for calculating the distribution amount.
250          [(5) (a)] (7) Upon appropriation by the Legislature, the SITFO director [of the School
251     and Institutional Trust Fund Office created in Section 53D-1-201] shall place in the Trust
252     Distribution Account funds for[: (i) the administration of] the School LAND Trust Program as
253     described in [Sections ] Subsections 53F-2-404(1)(a) and [53G-7-1206;] (c).
254          [(ii) the School and Institutional Trust Fund Office; and]
255          [(iii) the School and Institutional Trust Fund Board of Trustees created in Section
256     53D-1-301.]
257          [(b) The Legislature may appropriate any remaining balance for the support of the
258     public education system.]