House File 2 - Introduced HOUSE FILE 2 BY SANDS , PAULSEN , UPMEYER , S. OLSON , SODERBERG , HEATON , BRANDENBURG , DRAKE , GARRETT , L. MILLER , RAYHONS , SHEETS , FORRISTALL , BYRNES , HIGHFILL , HUSEMAN , LOFGREN , ALONS , PETTENGILL , HAGENOW , SALMON , FISHER , BACON , KOESTER , LANDON , HESS , SCHULTZ , SHAW , BALTIMORE , VANDER LINDEN , STANERSON , FRY , HEIN , COSTELLO , ROGERS , J. SMITH , HEARTSILL , GASSMAN , GRASSLEY , R. TAYLOR , WORTHAN , DEYOE , WATTS , JORGENSEN , HANUSA , BAUDLER , DOLECHECK , COWNIE , MAXWELL , KLEIN , KAUFMANN , and WINDSCHITL A BILL FOR An Act increasing the regular program foundation base 1 percentage for purposes of the school funding formula. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 1496YH (3) 85 md/sc

H.F. 2 Section 1. Section 257.1, subsection 2, paragraph b, Code 1 2013, is amended by striking the paragraph and inserting in 2 lieu thereof the following: 3 b. (1) The regular program foundation base per pupil is the 4 following: 5 (a) For the budget year commencing July 1, 2012, the 6 regular program foundation base per pupil is eighty-seven and 7 five-tenths percent of the regular program state cost per 8 pupil. 9 (b) For the budget year commencing July 1, 2013, the regular 10 program foundation base per pupil is ninety percent of the 11 regular program state cost per pupil. 12 (c) For the budget year commencing July 1, 2014, the regular 13 program foundation base per pupil is ninety-two and five-tenths 14 percent of the regular program state cost per pupil. 15 (d) For the budget year commencing July 1, 2015, the regular 16 program foundation base per pupil is ninety-five percent of the 17 regular program state cost per pupil. 18 (e) For the budget year commencing July 1, 2016, the 19 regular program foundation base per pupil is ninety-seven and 20 five-tenths percent of the regular program state cost per 21 pupil. 22 (f) For the budget year commencing July 1, 2017, and 23 succeeding budget years, the regular program foundation base 24 per pupil is one hundred percent of the regular program state 25 cost per pupil. 26 (2) For each budget year, the special education support 27 services foundation base is seventy-nine percent of the special 28 education support services state cost per pupil. The combined 29 foundation base is the sum of the regular program foundation 30 base, the special education support services foundation base, 31 the total teacher salary supplement district cost, the total 32 professional development supplement district cost, the total 33 early intervention supplement district cost, the total area 34 education agency teacher salary supplement district cost, 35 -1- LSB 1496YH (3) 85 md/sc 1/ 6

H.F. 2 and the total area education agency professional development 1 supplement district cost. 2 Sec. 2. Section 257.4, subsection 1, paragraph b, Code 2013, 3 is amended to read as follows: 4 b. For the budget year beginning July 1, 2008, and 5 succeeding budget years beginning before July 1, 2017 , the 6 department of management shall annually determine an adjusted 7 additional property tax levy and a statewide maximum adjusted 8 additional property tax levy rate, not to exceed the statewide 9 average additional property tax levy rate, calculated by 10 dividing the total adjusted additional property tax levy 11 dollars statewide by the statewide total net taxable valuation. 12 For purposes of this paragraph, the adjusted additional 13 property tax levy shall be that portion of the additional 14 property tax levy corresponding to the state cost per pupil 15 multiplied by a school district’s weighted enrollment, and then 16 multiplied by one hundred percent less the regular program 17 foundation base per pupil percentage pursuant to section 18 257.1 . The For budget years beginning before July 1, 2017, the 19 district shall receive adjusted additional property tax levy 20 aid in an amount equal to the difference between the adjusted 21 additional property tax levy rate and the statewide maximum 22 adjusted additional property tax levy rate, as applied per 23 thousand dollars of assessed valuation on all taxable property 24 in the district. The statewide maximum adjusted additional 25 property tax levy rate shall be annually determined by the 26 department taking into account amounts allocated pursuant to 27 section 257.15, subsection 4 . The For budget years beginning 28 before July 1, 2017, the statewide maximum adjusted additional 29 property tax levy rate shall be annually determined by the 30 department taking into account amounts allocated pursuant to 31 section 257.15, subsection 4 , and the balance of the property 32 tax equity and relief fund created in section 257.16A at the 33 end of the calendar year. 34 Sec. 3. Section 257.15, subsection 4, Code 2013, is amended 35 -2- LSB 1496YH (3) 85 md/sc 2/ 6

H.F. 2 to read as follows: 1 4. a. Allocations for maximum adjusted additional property 2 tax levy rate calculation and adjusted additional property 3 tax levy aid. The For fiscal years beginning before July 1, 4 2017, the department of management shall allocate from amounts 5 appropriated pursuant to section 257.16, subsection 1 , and from 6 funds appropriated from the property tax equity and relief 7 fund created in section 257.16A for the purpose of calculating 8 the statewide maximum adjusted additional property tax levy 9 rate and providing adjusted additional property tax levy aid 10 as provided in section 257.4, subsection 1 , paragraph “b” , 11 an amount equal to the sum of subparagraphs (1) and (2) as 12 follows: 13 (1) From the amount appropriated from the general fund of 14 the state pursuant to section 257.16, subsection 1 , equal to 15 the following: 16 (a) For the budget year beginning July 1, 2006, six million 17 dollars. 18 (b) For the budget year beginning July 1, 2007, twelve 19 million dollars. 20 (c) For the budget year beginning July 1, 2008, eighteen 21 million dollars. 22 (d) For the budget year beginning July 1, 2009, and 23 succeeding budget years beginning before July 1, 2017 , 24 twenty-four million dollars. 25 (2) From the amount appropriated from the property tax 26 equity and relief fund created in section 257.16A . 27 b. After lowering all school district additional property 28 tax levy rates to the statewide maximum adjusted additional 29 property tax levy rate under paragraph “a” , the department of 30 management shall use any remaining funds at the end of the 31 calendar year to further lower additional property taxes by 32 increasing for the budget year beginning the following July 33 1, the state foundation base percentage. If, however, the 34 state foundation base percentage is one hundred percent, the 35 -3- LSB 1496YH (3) 85 md/sc 3/ 6

H.F. 2 department of management shall deposit those remaining funds 1 in the taxpayers trust fund created in section 8.57E. Moneys 2 used pursuant to this paragraph shall supplant an equal amount 3 of the appropriation made from the general fund of the state 4 pursuant to section 257.16 that represents the increase in 5 state foundation aid. 6 Sec. 4. Section 257.16A, subsections 2 and 3, Code 2013, are 7 amended to read as follows: 8 2. There For fiscal years beginning before July 1, 2017, 9 there is appropriated annually all moneys in the fund to the 10 department of management for purposes of section 257.15, 11 subsection 4 . 12 3. Notwithstanding Except as provided in subsection 4, 13 and notwithstanding section 8.33 , any moneys remaining in the 14 property tax equity and relief fund at the end of a fiscal year 15 shall not revert to any other fund but shall remain in the 16 property tax equity and relief fund for use as provided in this 17 section for the following fiscal year. 18 Sec. 5. Section 257.16A, Code 2013, is amended by adding the 19 following new subsection: 20 NEW SUBSECTION . 4. Any moneys in the property tax equity 21 and relief fund on June 30, 2017, shall be deposited by the 22 department of management in the taxpayers trust fund created 23 in section 8.57E. 24 Sec. 6. Section 423F.2, subsection 3, Code 2013, is amended 25 to read as follows: 26 3. The moneys available in a fiscal year in the secure an 27 advanced vision for education fund shall be distributed by the 28 department of revenue to each school district in an amount 29 equal to the amount the school district would have received 30 pursuant to the formula in section 423E.4 as if the local 31 sales and services tax for school infrastructure purposes was 32 imposed. Moneys collected in a fiscal year beginning before 33 July 1, 2015, that are in excess of that needed to provide each 34 school district with its formula amount shall be distributed 35 -4- LSB 1496YH (3) 85 md/sc 4/ 6

H.F. 2 and credited to the property tax equity and relief fund 1 created in section 257.16A . Moneys collected in a fiscal year 2 beginning on or after July 1, 2015, that are in excess of that 3 amount needed to provide each school district with its formula 4 amount shall be deposited in the taxpayers trust fund created 5 in section 8.57E. 6 EXPLANATION 7 This bill provides for an increase in the regular program 8 foundation base under the state school foundation program. The 9 regular program foundation base is the specified percentage 10 of the regular state program cost per pupil calculation which 11 is paid as state aid to school districts, above and beyond 12 the uniform property tax levy imposed in Code section 257.3. 13 Beginning with the budget year commencing July 1, 2013, the 14 increase is phased in over a five-year period in equal annual 15 increments of two and five-tenths percentage points, from the 16 current regular program foundation base level of 87.5 percent 17 of the regular program state cost per pupil to the level of 100 18 percent in the fifth year. 19 The bill provides that the department of management’s 20 determination of an adjusted additional property tax levy and a 21 statewide maximum adjusted additional property tax levy rate 22 only applies to budget years beginning before July 1, 2017. 23 The bill also provides that adjusted additional property tax 24 levy aid to school districts is only provided for budget years 25 beginning before July 1, 2017. The elimination of adjusted 26 additional property tax levy aid is the result of the regular 27 program foundation base percentage reaching 100 percent. 28 The bill sunsets the annual appropriation of $24 million for 29 adjusted additional property tax levy aid under Code section 30 257.15(4) for the fiscal year beginning July 1, 2017, and 31 thereafter, and provides that if the regular program foundation 32 base percentage is 100 percent, the department of management 33 shall deposit in the taxpayers trust fund those remaining funds 34 allocated for adjusted additional property tax levy aid. 35 -5- LSB 1496YH (3) 85 md/sc 5/ 6

H.F. 2 The bill specifies that any moneys in the property tax equity 1 and relief fund established under Code section 257.16A on June 2 30, 2017, shall be deposited by the department of management in 3 the taxpayers trust fund. 4 The bill provides that moneys in the secure an advanced 5 vision for education fund (SAVE) and collected in a fiscal 6 year beginning before July 1, 2015, that are in excess of that 7 needed to provide each school district with its formula amount 8 continue, as under current law, to be distributed and credited 9 to the property tax equity and relief fund created in Code 10 section 257.16A. The bill provides that such excess moneys 11 collected in a fiscal year beginning on or after July 1, 2015, 12 shall be deposited in the taxpayers trust fund. 13 -6- LSB 1496YH (3) 85 md/sc 6/ 6