SF 304 (LSB 1684XS (4) 87)

SENATE FILE 304

BY  SMITH

A BILL FOR

An Act relating to school district funding by establishing a district cost per pupil equity budget adjustment, modifying limitations on the cash reserves, and including effective date provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 257.2, subsection 2, Code 2017, is amended by striking the subsection.
    Sec. 2.  NEW SECTION.  257.14A  District cost per pupil equity —— budget adjustment.
   1.  The board of directors of a school district with a regular program district cost per pupil that is less than the highest regular program district cost per pupil among all school districts in the state for the same budget year that wishes to receive the budget adjustment under this section may adopt a resolution requesting the budget adjustment by May 15 preceding the budget year and shall within ten days of adoption of the resolution notify the department of management of the amount of the budget adjustment requested, subject to the limitations of subsection 2, paragraph “a”. The department of management shall approve the budget adjustment for an amount not to exceed the maximum budget adjustment amount authorized under subsection 2, paragraph “a”.
   2.  a.  For budget years beginning on or after July 1, 2017, each school district for which a budget adjustment is approved under subsection 1 shall be eligible for a budget adjustment for that budget year in an amount not to exceed the lesser of the difference between the school district’s regular program district cost per pupil and the highest regular program district cost per pupil among all school districts in the state multiplied by the district’s budget enrollment and the difference between the school district’s cash reserve limitation under section 298.10, subsection 3, and fifteen percent of the school district’s general fund expenditures for the year previous to the base year minus the unexpended fund balance for the year previous to the base year. The resolution adopted under subsection 1 may specify a budget adjustment amount that is less than the maximum amount authorized under this paragraph.
   b.  The school district shall fund the budget adjustment by using cash reserve funds, interest on cash reserve funds earned during the base year, or both. If, however, the school district funds the budget adjustment solely with interest on cash reserve funds earned during the base year, the amount of the budget adjustment shall not reduce the school district’s cash reserve limitation determined under section 298.10, subsection 3, paragraph “b”.
   3.  A budget adjustment received under this section shall not affect the eligibility for or amount of any other budget adjustment authorized by law for the same budget year. In addition, a budget adjustment under this section shall be limited to the budget year for which the adjustment was authorized and shall not be included in any computation of a school district’s cost for any future budget year.
    Sec. 3.  Section 257.34, Code 2017, is amended to read as follows:
   257.34  Cash reserve information.
   1.  If a school district receives less state school foundation aid under section 257.1 than is due under that section for a base year and the school district uses funds from its cash reserve during the base year to make up for the amount of state aid not paid, the board of directors of the school district shall include in its general fund budget document information about the amount of the cash reserve used to replace state school foundation aid not paid.
   2.  If a school district uses funds from its cash reserve, including interest earned on such funds, during the base year to fund a budget adjustment under section 257.14A, the board of directors of the school district shall include in its general fund budget document information about the amount of the cash reserve used for such purpose.
    Sec. 4.  Section 298.10, subsection 3, Code 2017, is amended to read as follows:
   3.  a.  For Except as provided in paragraph “b”, for fiscal years beginning on or after July 1, 2012, the cash reserve levy for a budget year shall not exceed twenty percent of the general fund expenditures for the year previous to the base year minus the unexpended fund balance, as defined in section 257.2, for the year previous to the base year.
   b.  For fiscal years beginning on or after July 1, 2018, the cash reserve levy for a school district that received a budget adjustment under section 257.14A, shall not exceed the amount determined under paragraph “a” minus the sum of all budget adjustments received by the district under section 257.14A for all previous budget years, excluding those budget years for which the budget adjustment was funded solely with interest earned on cash reserve funds.
    Sec. 5.  Section 298A.2, Code 2017, is amended to read as follows:
   298A.2  General fund.
   1.  All moneys received by a school corporation from taxes and other sources must be accounted for in the general fund, except moneys required by law to be accounted for in another fund.
   2.  Interest earned on cash reserve funds during a budget year may be added to the district’s existing cash reserve amount within the general fund or may be designated by the school board to fund a budget adjustment under section 257.14A for the following budget year. Interest amounts designated to be used for a budget adjustment under section 257.14A shall not be included in district cost.
    Sec. 6.  IMPLEMENTATION.  Notwithstanding the deadline for adopting a resolution to approve the budget adjustment in section 257.14A, subsection 1, for the school budget year beginning July 1, 2017, the resolution of the board of directors of a school district shall be approved not later than June 10, 2017.
    Sec. 7.  EFFECTIVE UPON ENACTMENT.  This Act, being deemed of immediate importance, takes effect upon enactment.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill establishes a district cost per pupil equity budget adjustment and modifies limitations on the amount of allowable school district cash reserves. The board of directors of a school district with a regular program district cost per pupil that is less than the highest regular program district cost per pupil among all school districts in the state for the same budget year may annually adopt a resolution requesting to receive the budget adjustment authorized in the bill. Following adoption of the resolution the board of directors must, within 10 days of its adoption, notify the department of management of the amount of the budget adjustment requested. The department of management shall approve the budget adjustment for an amount not to exceed the maximum budget adjustment amount authorized in the bill.
   For budget years beginning on or after July 1, 2017, each approved school district is eligible for a budget adjustment for that budget year in an amount not to exceed the lesser of the difference between the school district’s regular program district cost per pupil and the highest regular program district cost per pupil among all school districts in the state multiplied by the district’s budget enrollment and the difference between the school district’s cash reserve limitation under Code section 298.10, subsection 3, and 15 percent of the school district’s general fund expenditures for the year previous to the base year minus the unexpended fund balance for the year previous to the base year. The budget adjustment amount may be less than the maximum amount authorized under the bill. The bill requires the school district to fund the budget adjustment using cash reserve funds, interest earned on cash reserve funds, or both. If, however, the school district funds the budget adjustment solely with interest earned on cash reserve funds during the base year, the amount of the budget adjustment shall not reduce the school district’s cash reserve limitation provided for in the bill.
   The bill specifies that the budget adjustment received does not affect the eligibility for or amount of any other budget adjustment authorized by law for the same budget year and that the budget adjustment under the bill is limited to the budget year for which the adjustment was authorized and shall not be included in any computation of a school district’s cost for any future budget year.
   Under the bill, if a school district uses funds from its cash reserve, including interest earned on such funds, during the base year to fund a budget adjustment authorized in the bill, the board of directors of the school district shall include in its general fund budget document information about the amount of the cash reserve used for such purpose.
    The bill provides that interest earned on cash reserve funds during a budget year may be added to the district’s existing cash reserve amount within the general fund or may be designated by the school board to be used to fund a budget adjustment authorized in the bill. However, the interest amounts so designated shall not be included in district cost.
   Currently, Code section 298.10 directs the department of management to limit the school district’s cash reserve levy to a level that is not in excess of 20 percent of the general fund expenditures for the year previous to the base year minus the unexpended fund balance for the year previous to the base year. The bill provides that for fiscal years beginning on or after July 1, 2018, the cash reserve levy for a school district that received a budget adjustment under the bill shall not exceed the amount determined under the current law limitation minus the sum of all budget adjustments received by the district under the bill for all previous budget years, excluding those budget years for which the budget adjustment was funded solely with interest earned on cash reserve funds.
   Notwithstanding the May 15 deadline for adopting a resolution to approve the budget adjustment provided for in the bill, for the school budget year beginning July 1, 2017, the resolution of the board of directors of a school district must be approved not later than June 10, 2017.
   The bill takes effect upon enactment.