Members of the Iowa House advanced a bill Thursday to implement an annual tax on the value of endowments at “certain Iowa colleges and universities.”

House Study Bill 544 would impose an annual tax with a rate set at 15 percent on endowments.

According to The Council of Nonprofits, endowments are assets that grow over time resulting from income earned from interest on the underlying invested funds.

Iowa Board of Regents State Relations Officer Jillian Carlson said the regents were undecided on the legislation, but brought up some concerns to lawmakers, saying 80 percent of their endowment funds go toward student scholarships.

She said the bill would deplete funds for the three regent institutions in 10 to 15 years by $250 million, the threshold cited in the bill.

“Right now, as the name implies, those scholarships are endowed, and so they go on in perpetuity, allowing us to fund those scholarships that we have set up year over year for our students,” Carlson said.

Frank Chiodo, a lobbyist with the Iowa Association of Independent Colleges and Universities, said all private universities in Iowa are registered opposed to the bill, echoing Carlson’s concern with the proposed 15 percent tax.

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Rep. Timi Brown-Powers, D-Waterloo, said the bill is too broad and will create problems for people wanting to donate to the endowment if they know their money is going to be taxed.

“It looks like we’re just stealing from Peter to pay Paul,” she said. “I don’t know if that’s the best philosophy, and it’s not typically like that we want to add taxes.”

Rep. Taylor Collins, R-Des Moines, said the bill will be amended before moving to committee and lawmakers are raising the act from $250 million to a $500 million threshold.

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House Study Bill 550 also advanced, a measure that would require Iowa’s public universities governed by the Board of Regents to pursue accreditation from the newly created Commission for Public Higher Education.

This would shift oversight from traditional national accreditors to a state-linked accrediting body.

Carlson said the Iowa Board of Regents is undecided on the bill but said issues will emerge as the commission is not yet established and is still seeking approval from the U.S. Department of Education.