This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h0925a.EQS
DATE: 3/22/2023
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 925 District School Board Direct-support Organizations
SPONSOR(S): McClain
TIED BILLS: None IDEN./SIM. BILLS: SB 1040
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Education Quality Subcommittee 17 Y, 0 N McDaniel Sanchez
2) Ethics, Elections & Open Government
Subcommittee
3) Education & Employment Committee
SUMMARY ANALYSIS
The bill authorizes district school boards to contract with a direct-support organization (DSO) for personal
services or operations. The bill revises the threshold of expenditures and expenses that requires a DSO to
provide for a financial audit. Additionally, the bill authorizes district school boards to contract with a vendor for
an annual financial audit of a DSO.
The bill has no impact on state revenues or expenditures.
The bill is effective July 1, 2023.
STORAGE NAME: h0925a.EQS PAGE: 2
DATE: 3/22/2023
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Present Situation
Citizen Support Organizations and Direct-Support Organizations
Citizen support organizations (CSOs) and direct-support organizations (DSOs) are statutorily created
private entities that are generally required to be non-profit corporations, and are authorized to carry out
specific tasks in support of public entities or public causes. The functions and purpose of a CSO or
DSO are prescribed by its enacting statute and, for most, by a written contract with the agency the CSO
or DSO was created to support.
CSO and DSO Transparency and Reporting Requirements
In 2014, the Legislature created s. 20.058, F.S., establishing a comprehensive set of transparency and
reporting requirements for CSOs and DSOs that are created or authorized pursuant to law or executive
order and created, approved, or administered by a state agency.
1
Specifically, the law requires each
CSO and DSO to annually submit, by August 1, the following information related to its organization,
mission, and finances to the agency it supports:
2
the name, mailing address, telephone number, and website address of the organization;
the statutory authority or executive order that created the organization;
a brief description of the mission of, and results obtained by, the organization;
a brief description of the organization’s plans for the next three fiscal years;
a copy of the organization’s code of ethics;
and
a copy of the organization’s most recent federal Internal Revenue Service (IRS) Return of
Organization Exempt from Income Tax form (Form 990).
3
Each agency receiving the above information must make the information available to the public through
the agency’s website. If the CSO or DSO maintains a website, the agency’s website must provide a link
to the website of the CSO or DSO.
4
Additionally, any contract between an agency and a CSO or DSO
must be contingent upon the CSO or DSO submitting and posting the information.
5
If a CSO or DSO
fails to submit the required information for two consecutive years, the agency must terminate the
contract with the CSO or DSO.
6
The contract must also include a provision for ending operations and
returning state-issued funds to the state if the authorizing statute is repealed, the contract is terminated,
or the organization is dissolved.
7
By August 15 of each year, the agency must report to the Governor, the President of the Senate, the
Speaker of the House of Representatives, and the Office of Program Policy Analysis and Government
Accountability (OPPAGA) the information provided by the CSO or DSO. The report must also include a
recommendation by the agency, with supporting rationale, to continue, terminate, or modify the
agency’s association with each CSO or DSO.
8
1
Section 3, ch. 2014-96, L.O.F.
2
Section 20.058(1), F.S.
3
The IRS Form 990 is an annual information return required to be filed with the IRS by most organizations exempt from federal
income tax under 26 U.S.C. 501.
4
Section 20.058(2), F.S.
5
Section 20.058(4), F.S.
6
Id.
7
Id.
8
Section 20.058(3), F.S. STORAGE NAME: h0925a.EQS PAGE: 3
DATE: 3/22/2023
Finally, a law creating or authorizing the creation of a CSO or DSO must state that the creation or
authorization for the CSO or DSO is repealed on October 1 of the fifth year after enactment, unless
reviewed and saved from repeal by the Legislature.
9
CSO and DSO Audit Requirements
Section 215.981, F.S., requires each CSO and DSO created or authorized pursuant to law with annual
expenditures in excess of $100,000 to provide for an annual financial audit of its accounts and
records.
10
The audit must be conducted by an independent certified public accountant in accordance
with rules adopted by the Auditor General and the state agency that created, approved, or administers
the CSO or DSO. The audit report must be submitted within nine months after the end of the fiscal year
to the Auditor General and to the state agency the CSO or DSO supports.
Additionally, the Auditor General may conduct audits or other engagements of the accounts and
records of the CSO or DSO, pursuant to his or her own authority, or at the direction of the Legislative
Auditing Committee.
11
The Auditor General is authorized to require and receive any records from the
CSO or DSO, or its independent auditor.
12
District School Board Direct-Support Organization
A district school board DSO is an organization that:
13
is approved by the district school board;
is a Florida not-for-profit corporation; and
is organized and operated exclusively to receive, hold, invest, and administer property and to
make expenditures to or for the benefit of public kindergarten through grade 12 education and
adult career and community education programs in this state.
The board of directors of the DSO must be approved by the district school board.
14
Use of Property by the District School Board DSO
Section 1001.453, F.S., sets forth limitations on the use of district property by the DSO. DSOs are
authorized to use the property, facilities, and personal services
15
of the district. The district school board
must adopt rules in coordination with the Florida Department of Education (DOE) that govern the DSO’s
use of the district property, facilities, or personal services, and provide for budget and audit review and
oversight by the district school board and the DOE.
However, the DSO is not permitted to use the property, facilities, or personal services if the DSO does
not provide equal employment opportunities to all persons, regardless of race, color, religion, sex, age,
or national origin.
9
Section 20.058(5), F.S
10
The independent audit requirement does not apply to a CSO or DSO for a university, district board of trustees of a community
college, or district school board. Additionally, the expenditure threshold for an independent audit is $300,000 for a CSO or DSO for
the Department of Environmental Protection and the Department of Agriculture and Consumer Services.
11
Section 11.45(3)(d), F.S.
12
Id.
13
Section 1001.453, F.S.
14
Section 1001.453(3), F.S.
15
Section 1001.453(1)(b), F.S. Personal services includes full-time or part-time personnel, as well as payroll processing. Id. STORAGE NAME: h0925a.EQS PAGE: 4
DATE: 3/22/2023
District School Board DSO Audit Requirements
Each district school board DSO with more than $100,000 in expenditures or expenses is required to
provide for an annual financial audit of its accounts and records.
16
The audit must be conducted by an
independent certified public accountant in accordance with the rules adopted by the Auditor General
17
and the Commissioner of Education.
18
The annual audit report must be submitted within nine months
after the fiscal year’s end to the district school board and the Auditor General. The Commissioner of
Education, the Auditor General, and the Office of Program Policy Analysis and Government
Accountability have the authority to require and receive from the organization or the district auditor any
records relative to the operation of the organization.
19
Effect of Proposed Changes
The bill authorizes district school boards to contract with a DSO for personal services or operations. To
reduce the burden of costs associated with annual audits for smaller DSO’s,
20
the bill increases from
$100,000 to $250,000 the threshold of expenditures and expenses to require a DSO provide for a
financial audit. Additionally, the bill authorizes district school boards to contract with a vendor for an
annual financial audit of a DSO.
B. SECTION DIRECTORY:
Section 1. Amending s. 1001.453, F.S., authorizing district school boards to contract with direct-
support organizations for personal services or operations; revising the amount of
expenditures and expenses a direct-support organization must have to be required to
provide for an annual financial audit; authorizing district school boards to contract with a
vendor for such audits.
Section 2. Provides an effective date.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
16
Section 1001.453(4), F.S.
17
Section 11.45(8), F.S.
18
Section 1001.453(4), F.S.
19
Section 1001.453(4), F.S.
20
National Council of Nonprofits, What is an independent audit? https://www.councilofnonprofits.org/running-nonprofit/nonprofit-
audit-guidec/what-independent-audit (last visited Mar. 13, 2023); 501(c) Services, Does your nonprofit really need an annual audit?
Here are the alternatives, https://www.501c.com/does-your-nonprofit-really-need-an-annual-audit-here-are-the-
alternatives/#:~:text=Audits%20are%20time%20consuming%20and,the%20National%20Council%20of%20Nonprofits (last visited
Mar. 13, 2023). STORAGE NAME: h0925a.EQS PAGE: 5
DATE: 3/22/2023
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
None.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
None.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
None.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
None.