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First Substitute H.B. 232
Representative Sheryl L. Allen proposes to substitute the following bill:
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PUBLIC EDUCATION FOUNDATION AMENDMENTS
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1999 GENERAL SESSION
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STATE OF UTAH
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Sponsor: Sheryl L. Allen
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Lloyd W. Frandsen
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Ron Bigelow
David L. Hogue
A. Lamont Tyler
Afton B. Bradshaw
Judy Ann Buffmire
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AN ACT RELATING TO EDUCATION FOUNDATIONS; EXPANDING THE POWERS OF
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PUBLIC EDUCATION FOUNDATIONS; REQUIRING THE FOUNDATIONS TO COMPLY
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WITH THE STATE MONEY MANAGEMENT ACT; AND ALLOWING THE FOUNDATIONS
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TO PARTICIPATE IN THE RISK MANAGEMENT FUND.
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This act affects sections of Utah Code Annotated 1953 as follows:
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AMENDS:
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51-7-11, as last amended by Chapter 375, Laws of Utah 1997
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51-7-13, as last amended by Chapter 169, Laws of Utah 1997
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53A-4-205, as enacted by Chapter 2, Laws of Utah 1988
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63A-4-204, as last amended by Chapter 55, Laws of Utah 1997
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Be it enacted by the Legislature of the state of Utah:
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Section 1.
Section
51-7-11
is amended to read:
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51-7-11. Authorized deposits or investments of public funds.
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(1) A public treasurer may conduct investment transactions only through qualified
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depositories, certified dealers, or directly with issuers of the investment securities.
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(2) The remaining term to maturity of the investment may not exceed the period of
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availability of the funds to be invested.
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(3) Except as provided in Subsection (4), all public funds may be deposited or invested
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only in the following assets that meet the criteria of Section
51-7-17
:
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(a) negotiable or nonnegotiable deposits of qualified depositories;
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(b) qualifying or nonqualifying repurchase agreements and reverse repurchase agreements
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with qualified depositories using collateral consisting of:
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(i) Government National Mortgage Association mortgage pools;
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(ii) Federal Home Loan Mortgage Corporation mortgage pools;
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(iii) Federal National Mortgage Corporation mortgage pools;
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(iv) Small Business Administration loan pools;
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(v) Federal Agriculture Mortgage Corporation pools; or
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(vi) other investments authorized by this section;
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(c) qualifying repurchase agreements and reverse repurchase agreements with certified
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dealers, permitted depositories, or qualified depositories using collateral consisting of:
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(i) Government National Mortgage Association mortgage pools;
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(ii) Federal Home Loan Mortgage Corporation mortgage pools;
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(iii) Federal National Mortgage Corporation mortgage pools;
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(iv) Small Business Administration loan pools; or
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(v) other investments authorized by this section;
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(d) commercial paper that is classified as "first tier" by two nationally recognized statistical
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rating organizations, one of which must be Moody's Investors Service or Standard and Poor's,
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which has a remaining term to maturity of 270 days or less;
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(e) bankers' acceptances that:
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(i) are eligible for discount at a Federal Reserve bank; and
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(ii) have a remaining term to maturity of 270 days or less;
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(f) fixed rate negotiable deposits issued by a permitted depository that have a remaining
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term to maturity of 365 days or less;
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(g) obligations of the United States Treasury, including United States Treasury bills,
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United States Treasury notes, and United States Treasury bonds;
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(h) obligations other than mortgage pools and other mortgage derivative products issued
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by, or fully guaranteed as to principal and interest by, the following agencies or instrumentalities
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of the United States in which a market is made by a primary reporting government securities
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dealer:
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(i) Federal Farm Credit banks;
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(ii) Federal Home Loan banks;
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(iii) Federal National Mortgage Association;
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(iv) Student Loan Marketing Association;
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(v) Federal Home Loan Mortgage Corporation;
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(vi) Federal Agriculture Mortgage Corporation; and
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(vii) Tennessee Valley Authority;
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(i) fixed rate corporate obligations that:
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(i) are rated "A" or higher or the equivalent of "A" or higher by two nationally recognized
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statistical rating organizations, one of which must be by Moody's Investors Service or Standard
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and Poor's;
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(ii) are publicly traded; and
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(iii) have a remaining term to final maturity of 365 days or less or is subject to a hard put
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at par value or better, within 365 days;
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(j) tax anticipation notes and general obligation bonds of the state or of any county,
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incorporated city or town, school district, or other political subdivision of this state, including
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bonds offered on a when-issued basis without regard to the limitation in Subsection (7);
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(k) bonds, notes, or other evidence of indebtedness of any county, incorporated city or
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town, school district, or other political subdivision of the state that are payable from assessments
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or from revenues or earnings specifically pledged for payment of the principal and interest on these
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obligations, including bonds offered on a when-issued basis without regard to the limitation in
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Subsection (7);
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(l) shares or certificates in a money market mutual fund as defined in Section
51-7-3
;
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(m) variable rate negotiable deposits that:
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(i) are issued by a qualified depository or a permitted depository;
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(ii) are repriced at least semiannually; and
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(iii) have a remaining term to final maturity not to exceed two years;
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(n) variable rate securities that:
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(i) (A) are rated "A" or higher or the equivalent of "A" or higher by two nationally
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recognized statistical rating organizations, one of which must be by Moody's Investors Service or
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Standard and Poor's;
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(B) are publicly traded;
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(C) are repriced at least semiannually; and
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(D) have a remaining term to final maturity not to exceed two years or are subject to a hard
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put at par value or better, within 365 days;
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(ii) are not mortgages, mortgage-backed securities, mortgage derivative products, or any
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security making unscheduled periodic principal payments other than optional redemptions.
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(4) The following public funds are exempt from the requirements of Subsection (3):
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(a) funds of the permanent land grant trust funds established pursuant to the Utah Enabling
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Act and the Utah Constitution;
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(b) funds of member institutions of the state system of higher education and funds of
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public education foundations acquired by:
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(i) gift, devise, or bequest; or
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(ii) federal or private grant;
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(c) the corpus of funds functioning as endowments of member institutions of the state
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system of higher education and the corpus of funds functioning as endowments of public education
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foundations;
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(d) the Employers' Reinsurance Fund created in Section
34A-2-702
; and
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(e) the Uninsured Employers' Fund created in Section
34A-2-704
.
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(5) If any of the deposits authorized by Subsection (3)(a) are negotiable or nonnegotiable
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large time deposits issued in amounts of $100,000 or more, the interest shall be calculated on the
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basis of the actual number of days divided by 360 days.
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(6) A public treasurer may maintain fully-insured deposits in demand accounts in a
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federally insured nonqualified depository only if a qualified depository is not reasonably
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convenient to the entity's geographic location.
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(7) The public treasurer shall ensure that all purchases and sales of securities are settled
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within 15 days of the trade date.
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Section 2.
Section
51-7-13
is amended to read:
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51-7-13. Funds of member institutions of state system of higher education and public
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education foundations -- Authorized deposits or investments -- Release of restrictions on
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gifts.
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(1) The provisions of this section apply to all funds of member institutions of the state
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system of higher education that are not transferred to the state treasurer under Section
51-7-4
and
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all funds of public education foundations established under Section
53A-4-205
.
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(2) (a) (i) Except as provided in Subsection (ii), the following funds shall be invested
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according to rules established by the council:
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(A) all funds acquired by gift, devise, or bequest or by federal or private grant; and
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(B) the corpus of funds functioning as endowments.
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(ii) Notwithstanding Subsection (2)(a)(i), if the terms of a gift or grant require particular
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investments, the funds shall be invested according to those terms.
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(b) Proceeds of general obligation bond issues and all funds pledged or otherwise
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dedicated to the payment of interest and principal of general obligation bonds issued by or for the
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benefit of the institution shall be invested according to the requirements of:
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(i) Section
51-7-11
and the rules of the council; or
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(ii) the terms of the borrowing instruments applicable to those bonds and funds if those
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terms are more restrictive than Section
51-7-11
.
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(c) (i) The public treasurer shall invest the proceeds of bonds other than general obligation
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bonds issued by or for the benefit of the institution and all funds pledged or otherwise dedicated
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to the payment of interest and principal of bonds other than general obligation bonds according to
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the terms of the borrowing instruments applicable to those bonds.
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(ii) If no provisions governing investment of bond proceeds or pledged or dedicated funds
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are contained in the borrowing instruments applicable to those bonds or funds, the public treasurer
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shall comply with the requirements of Section
51-7-11
in investing those proceeds and funds.
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(d) All other funds in the custody or control of any of those institutions or public education
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foundations shall be invested as provided in Section
51-7-11
and the rules of the council.
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(3) (a) Each institution shall make monthly reports detailing the deposit and investment
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of funds in its custody or control to its institutional council and the State Board of Regents.
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(b) The state auditor may conduct or cause to be conducted an annual audit of the
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investment program of each institution.
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(c) The State Board of Regents shall:
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(i) require whatever internal controls and supervision are necessary to ensure the
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appropriate safekeeping, investment, and accounting for all funds of these institutions; and
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(ii) submit annually to the governor and the Legislature a summary report of all
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investments by institutions under its jurisdiction.
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(4) (a) The State Board of Regents may release, in whole or in part, a restriction imposed
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by the applicable gift instrument on the investment of a fund held by a member institution by
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obtaining the written consent of the donor.
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(b) (i) If written consent of the donor cannot be obtained because the donor is dead,
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disabled, unavailable, or cannot be identified, the State Board of Regents may apply in the name
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of the institution to the district court of the district in which the institution is located for a release
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from the restriction.
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(ii) If, after notice and opportunity to be heard, the court finds that the restriction is
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obsolete, inappropriate, or impracticable, it may by order release the restriction in whole or in part.
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Section 3.
Section
53A-4-205
is amended to read:
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53A-4-205. Establishment of public education foundations -- Powers and duties --
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Tax exempt status.
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(1) [School districts] State and local school boards may establish foundations to:
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(a) assist in the development and implementation of the programs authorized under this
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part to promote educational excellence; and
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(b) assist in the accomplishment of other education-related objectives.
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(2) A foundation established under Subsection (1):
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(a) may solicit and receive contributions from private enterprises for the purpose of this
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part;
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(b) shall comply with Title 51, Chapter 7, State Money Management Act, and rules made
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under the act;
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[(b)] (c) has no power or authority to incur contractual obligations or liabilities that
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constitute a claim against public funds except as provided in this section;
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[(c)] (d) may not exercise executive, administrative, or rulemaking authority over the
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programs referred to in this part, except to the extent specifically authorized by the [local]
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responsible school board; [and]
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[(d)] (e) is exempt from all taxes levied by the state or any of its political subdivisions with
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respect to activities conducted under this part; and
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(f) may participate in the Risk Management Fund under Section
63A-4-204
.
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Section 4.
Section
63A-4-204
is amended to read:
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63A-4-204. School district participation in Risk Management Fund.
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(1) (a) For the purpose of this section, action by a public school district shall be taken upon
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resolution by a majority of the members of its board of education.
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(b) (i) Upon [the] approval [of] by the state risk manager and the board of education of the
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school district, a public school district may participate in the Risk Management Fund and may
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permit a foundation established under Section
53A-4-205
to participate in the Risk Management
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Fund.
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(ii) Upon approval by the state risk manager and the State Board of Education, a state
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public education foundation may participate in the Risk Management Fund.
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(c) Subject to any cancellation or other applicable coverage provisions, either the state risk
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manager or the public school district may terminate participation in the fund.
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(2) The state risk manager shall contract for all insurance, legal, loss adjustment,
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consulting, loss control, safety, and other related services necessary to support the insurance
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program provided to a participating public school district, except that all supporting legal services
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are subject to the prior approval of the state attorney general.
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(3) (a) The state risk manager shall treat each participating public school district as a state
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agency when participating in the Risk Management Fund.
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(b) Each public school district participating in the fund shall comply with the provisions
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of this part that affect state agencies.
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(4) (a) The risk manager shall at least annually:
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(i) prepare information summarizing the coverage provided to school teachers by the Risk
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Management Fund; and
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(ii) provide that information to participating school districts.
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(b) Each participating school district shall provide the coverage information to each school
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teacher.
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