Senator Deidre M. Henderson proposes the following substitute bill:


1     
GOVERNMENTAL NONPROFIT CORPORATION ACT

2     
AMENDMENTS

3     
2019 GENERAL SESSION

4     
STATE OF UTAH

5     
Chief Sponsor: Deidre M. Henderson

6     
House Sponsor: Craig Hall

7     

8     LONG TITLE
9     General Description:
10          This bill amends definitions and provides for certain training relating to governmental
11     nonprofit corporations.
12     Highlighted Provisions:
13          This bill:
14          ▸     requires the state auditor to:
15               •     develop a training or other informational resource regarding best practices for
16     financial controls and board governance;
17               •     distribute the training or other informational resource to certain state and local
18     entities and governmental nonprofit corporations; and
19               •     issue notices of noncompliance to certain boards of directors of governmental
20     nonprofit corporations and board members;
21          ▸     requires each member of a board of directors of a governmental nonprofit
22     corporation to complete the training that the state auditor provides regarding best
23     practices for financial controls and board governance;
24          ▸     provides for the disqualification of a board member who fails to complete the
25     required training within certain time periods;

26          ▸     amends an informational requirement for the local government and limited purpose
27     entity registry; and
28          ▸     makes technical and conforming changes.
29     Money Appropriated in this Bill:
30          None
31     Other Special Clauses:
32          None
33     Utah Code Sections Affected:
34     AMENDS:
35          67-1a-15, as enacted by Laws of Utah 2018, Chapter 256
36     ENACTS:
37          11-13a-106, Utah Code Annotated 1953
38     

39     Be it enacted by the Legislature of the state of Utah:
40          Section 1. Section 11-13a-106 is enacted to read:
41          11-13a-106. Training for board members.
42          (1) (a) (i) Each member of a board of directors of a governmental nonprofit corporation
43     shall complete the training described in Subsection (2)(a):
44          (A) within six months after the day on which the member becomes a board member; or
45          (B) for a member already in the position of board member on May 14, 2019, before
46     November 14, 2019.
47          (ii) If a board member fails to complete the training described in Subsection (2)(a)
48     within the time period specified in Subsection (1)(a)(i):
49          (A) the state auditor shall issue a notice of noncompliance to the board member and the
50     relevant board of directors; and
51          (B) if the board member fails to complete the training described in Subsection (2)(a)
52     within 30 calendar days after the date of the auditor's notice of noncompliance, the board
53     member is disqualified and may not act as a board member.
54          (b) For the purposes of Subsection (1)(a), a member of a board of directors of a
55     governmental nonprofit corporation takes office each time the member is elected or appointed
56     to a new term.

57          (2) The state auditor shall:
58          (a) develop a training or other informational resource to aid a governmental nonprofit
59     corporation in implementing best practices for financial controls and board governance;
60          (b) provide the training or other informational resource described in Subsection (2)(a)
61     to each of the following entities that provides any required budgeting, expenditure, or financial
62     report to the state auditor:
63          (i) a governmental nonprofit corporation; and
64          (ii) a state agency or political subdivision of the state that wholly controls or has a
65     controlling interest in a governmental nonprofit corporation, as described in Section
66     11-13a-102;
67          (c) ensure that the training described in Subsection (2)(a) complies with Title 63G,
68     Chapter 22, State Training and Certification Requirements; and
69          (d) issue a certificate of completion to each board member that completes the training
70     described in Subsection (2)(a).
71          Section 2. Section 67-1a-15 is amended to read:
72          67-1a-15. Local government and limited purpose entity registry.
73          (1) As used in this section:
74          (a) "Entity" means a limited purpose entity or a local government entity.
75          (b) (i) "Limited purpose entity" means a legal entity that:
76          (A) performs a single governmental function or limited governmental functions; and
77          (B) is not a state executive branch agency, a state legislative office, or within the
78     judicial branch.
79          (ii) "Limited purpose entity" includes:
80          (A) area agencies, area agencies on aging, and area agencies on high risk adults, as
81     those terms are defined in Section 62A-3-101;
82          (B) charter schools created under Title 53G, Chapter 5, Charter Schools;
83          (C) community reinvestment agencies, as that term is defined in Section 17C-1-102;
84          (D) conservation districts, as that term is defined in Section 17D-3-102;
85          (E) governmental nonprofit corporations, as that term is defined in Section 11-13a-102;
86          (F) housing authorities, as that term is defined in Section 35A-8-401;
87          (G) independent entities and independent state agencies, as those terms are defined in

88     Section 63E-1-102;
89          (H) interlocal entities, as that term is defined in Section 11-13-103;
90          (I) local building authorities, as that term is defined in Section 17D-2-102;
91          (J) local districts, as that term is defined in Section 17B-1-102;
92          (K) local health departments, as that term is defined in Section 26A-1-102;
93          (L) local mental health authorities, as that term is defined in Section 62A-15-102;
94          (M) nonprofit corporations that receive an amount of money requiring an accounting
95     report under Section 51-2a-201.5;
96          (N) school districts under Title 53G, Chapter 3, School District Creation and Change;
97          (O) special service districts, as that term is defined in Section 17D-1-102; and
98          (P) substance abuse authorities, as that term is defined in Section 62A-15-102.
99          (c) "Local government and limited purpose entity registry" or "registry" means the
100     registry of local government entities and limited purpose entities created under this section.
101          (d) "Local government entity" means:
102          (i) a county, as that term is defined in Section 17-50-101; and
103          (ii) a municipality, as that term is defined in Section 10-1-104.
104          (e) "Notice of failure to register" means the notice the lieutenant governor sends, in
105     accordance with Subsection (7)(a), to an entity that does not register.
106          (f) "Notice of failure to renew" means the notice the lieutenant governor sends to a
107     registered entity, in accordance with Subsection (7)(b).
108          (g) "Notice of noncompliance" means the notice the lieutenant governor sends to a
109     registered entity, in accordance with Subsection (6)(c).
110          (h) "Notice of non-registration" means the notice the lieutenant governor sends to an
111     entity and the state auditor, in accordance with Subsection (9).
112          (i) "Notice of registration or renewal" means the notice the lieutenant governor sends,
113     in accordance with Subsection (6)(b)(i).
114          (j) "Registered entity" means an entity with a valid registration as described in
115     Subsection (8).
116          (2) The lieutenant governor shall:
117          (a) create a registry of each local government entity and limited purpose entity within
118     the state that:

119          (i) contains the information described in Subsection (4); and
120          (ii) is accessible on the lieutenant governor's website or otherwise publicly available;
121     and
122          (b) establish fees for registration and renewal, in accordance with Section 63J-1-504,
123     based on and to directly offset the cost of creating, administering, and maintaining the registry.
124          (3) Each local government entity and limited purpose entity shall:
125          (a) on or before July 1, 2019, register with the lieutenant governor as described in
126     Subsection (4);
127          (b) on or before one year after the day on which the lieutenant governor issues the
128     notice of registration or renewal, annually renew the entity's registration in accordance with
129     Subsection (5); and
130          (c) within 30 days after the day on which any of the information described in
131     Subsection (4) changes, send notice of the changes to the lieutenant governor.
132          (4) Each entity shall include the following information in the entity's registration
133     submission:
134          (a) the resolution or other legal or formal document creating the entity or, if the
135     resolution or other legal or formal document creating the entity cannot be located, conclusive
136     proof of the entity's lawful creation;
137          (b) if the entity has geographic boundaries, a map or plat establishing the geographic
138     boundaries of the entity, or if it is impossible or unreasonably expensive to create a map or plat,
139     a metes and bounds description, or another legal description that identifies the boundaries of
140     the entity, [conclusive] reasonable proof of the entity's geographic boundaries;
141          (c) the entity's name;
142          (d) the entity's type of local government entity or limited purpose entity;
143          (e) the entity's governmental function;
144          (f) the entity's website, physical address, and phone number, including the name and
145     contact information of an individual whom the entity designates as the primary contact for the
146     entity;
147          (g) names of the members of the entity's governing board or commission, managing
148     officers, or other similar managers and the method by which the members or officers are
149     appointed, elected, or otherwise designated;

150          (h) the entity's sources of revenue; and
151          (i) if the entity has created an assessment area, as that term is defined in Section
152     11-42-102, information regarding the creation, purpose, and boundaries of the assessment area.
153          (5) Each entity shall include the following information in the entity's renewal
154     submission:
155          (a) identify and update any incorrect or outdated information the entity previously
156     submitted during registration under Subsection (4); or
157          (b) certify that the information the entity previously submitted during registration under
158     Subsection (4) is correct without change.
159          (6) Within 30 days of receiving an entity's registration or renewal submission, the
160     lieutenant governor shall:
161          (a) review the submission to determine compliance with Subsection (4) or (5);
162          (b) if the lieutenant governor determines that the entity's submission complies with
163     Subsection (4) or (5):
164          (i) send a notice of registration or renewal that includes the information that the entity
165     submitted under Subsection (4) or (5) to:
166          (A) the registering or renewing entity;
167          (B) each county in which the entity operates, either in whole or in part, or where the
168     entity's geographic boundaries overlap or are contained within the boundaries of the county;
169          (C) the Division of Archives and Records Service; and
170          (D) the Office of the Utah State Auditor; and
171          (ii) publish the information from the submission on the registry; and
172          (c) if the lieutenant governor determines that the entity's submission does not comply
173     with Subsection (4) or (5) or is otherwise inaccurate or deficient, send a notice of
174     noncompliance to the registering or renewing entity that:
175          (i) identifies each deficiency in the entity's submission with the corresponding statutory
176     requirement;
177          (ii) establishes a deadline to cure the entity's noncompliance that is the first business
178     day that is at least 30 calendar days after the day on which the lieutenant governor sends the
179     notice of noncompliance; and
180          (iii) states that failure to comply by the deadline the lieutenant governor establishes

181     under Subsection (6)(c)(ii) will result in the lieutenant governor sending a notice of
182     non-registration to the Office of the Utah State Auditor, in accordance with Subsection (9).
183          (7) (a) If the lieutenant governor identifies an entity that does not make a registration
184     submission in accordance with Subsection (4) by the deadline described in Subsection (3), the
185     lieutenant governor shall send a notice of failure to register to the registered entity that:
186          (i) identifies the statutorily required registration deadline described in Subsection (3)
187     that the entity did not meet;
188          (ii) establishes a deadline to cure the entity's failure to register that is the first business
189     day that is at least 10 calendar days after the day on which the lieutenant governor sends the
190     notice of failure to register; and
191          (iii) states that failure to comply by the deadline the lieutenant governor establishes
192     under Subsection (7)(a)(ii) will result in the lieutenant governor sending a notice of
193     non-registration to the Office of the Utah State Auditor, in accordance with Subsection (9).
194          (b) If a registered entity does not make a renewal submission in accordance with
195     Subsection (5) by the deadline described in Subsection (3), the lieutenant governor shall send a
196     notice of failure to renew to the registered entity that:
197          (i) identifies the renewal deadline described in Subsection (3) that the entity did not
198     meet;
199          (ii) establishes a deadline to cure the entity's failure to renew that is the first business
200     day that is at least 30 calendar days after the day on which the lieutenant governor sends the
201     notice of failure to renew; and
202          (iii) states that failure to comply by the deadline the lieutenant governor establishes
203     under Subsection (7)(b)(ii) will result in the lieutenant governor sending a notice of
204     non-registration to the Office of the Utah State Auditor, in accordance with Subsection (9).
205          (8) An entity's registration is valid:
206          (a) if the entity makes a registration or renewal submission in accordance with the
207     deadlines described in Subsection (3);
208          (b) during the period the lieutenant governor establishes in the notice of
209     noncompliance or notice of failure to renew during which the entity may cure the identified
210     registration deficiencies; and
211          (c) for one year beginning on the day the lieutenant governor issues the notice of

212     registration or renewal.
213          (9) (a) The lieutenant governor shall send a notice of non-registration to the Office of
214     the Utah State Auditor if an entity fails to:
215          (i) cure the entity's noncompliance by the deadline the lieutenant governor establishes
216     in the notice of noncompliance;
217          (ii) register by the deadline the lieutenant governor establishes in the notice of failure
218     to register; or
219          (iii) cure the entity's failure to renew by the deadline the lieutenant governor establishes
220     in the notice of failure to renew.
221          (b) The lieutenant governor shall ensure that the notice of non-registration:
222          (i) includes a copy of the notice of noncompliance, the notice of failure to register, or
223     the notice of failure to renew; and
224          (ii) requests that the state auditor withhold state allocated funds or the disbursement of
225     property taxes and prohibit the entity from accessing money held by the state or money held in
226     an account of a financial institution, in accordance with Subsections 67-3-1(7)(i) and
227     67-3-1(10).
228          (10) The lieutenant governor may extend a deadline under this section if an entity
229     notifies the lieutenant governor, before the deadline to be extended, of the existence of an
230     extenuating circumstance that is outside the control of the entity.