Senate File 305 - Introduced SENATE FILE 305 BY SMITH A BILL FOR An Act relating to school district funding by establishing a 1 district cost per pupil equity budget adjustment funded 2 by interest earned on cash reserve funds and including 3 effective date provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 2605XS (4) 87 md/jh

S.F. 305 Section 1. Section 257.2, subsection 2, Code 2017, is 1 amended by striking the subsection. 2 Sec. 2. NEW SECTION . 257.14A District cost per pupil equity 3 —— budget adjustment. 4 1. The board of directors of a school district with a 5 regular program district cost per pupil that is less than the 6 highest regular program district cost per pupil among all 7 school districts in the state for the same budget year that 8 wishes to receive the budget adjustment under this section may 9 adopt a resolution approving the budget adjustment by May 15 10 preceding the budget year and shall within ten days of adoption 11 of the resolution notify the department of management of the 12 amount of the budget adjustment, subject to the limitations of 13 subsection 2, paragraph “a” . 14 2. a. For budget years beginning on or after July 1, 2017, 15 each school district for which a budget adjustment is approved 16 under subsection 1 shall receive a budget adjustment for that 17 budget year in an amount not to exceed the difference between 18 the school district’s regular program district cost per pupil 19 and the highest regular program district cost per pupil among 20 all school districts in the state multiplied by the district’s 21 weighted enrollment. The resolution adopted under subsection 1 22 may specify a budget adjustment amount that is less than the 23 maximum amount authorized under this paragraph. 24 b. The school district shall fund the budget adjustment by 25 using interest on cash reserve funds earned during the base 26 year. 27 3. A budget adjustment received under this section shall 28 not affect the eligibility for or amount of any other budget 29 adjustment authorized by law for the same budget year. In 30 addition, a budget adjustment under this section shall be 31 limited to the budget year for which the adjustment was 32 authorized and shall not be included in any computation of a 33 school district’s cost for any future budget year. 34 Sec. 3. Section 257.34, Code 2017, is amended to read as 35 -1- LSB 2605XS (4) 87 md/jh 1/ 4

S.F. 305 follows: 1 257.34 Cash reserve information. 2 1. If a school district receives less state school 3 foundation aid under section 257.1 than is due under that 4 section for a base year and the school district uses funds 5 from its cash reserve during the base year to make up for 6 the amount of state aid not paid, the board of directors of 7 the school district shall include in its general fund budget 8 document information about the amount of the cash reserve used 9 to replace state school foundation aid not paid. 10 2. If a school district uses interest earned on its cash 11 reserve funds during the base year to fund a budget adjustment 12 under section 257.14A, the board of directors of the school 13 district shall include in its general fund budget document 14 information about the amount of the interest used for such 15 purpose. 16 Sec. 4. Section 298A.2, Code 2017, is amended to read as 17 follows: 18 298A.2 General fund. 19 1. All moneys received by a school corporation from taxes 20 and other sources must be accounted for in the general fund, 21 except moneys required by law to be accounted for in another 22 fund. 23 2. Interest earned on cash reserve funds during a budget 24 year may be added to the district’s existing cash reserve 25 amount within the general fund or may be designated by the 26 school board to fund a budget adjustment under section 257.14A 27 for the following budget year. Interest amounts designated to 28 be used for a budget adjustment under section 257.14A shall not 29 be included in district cost. 30 Sec. 5. IMPLEMENTATION. Notwithstanding the deadline 31 for adopting a resolution to approve the budget adjustment 32 in section 257.14A, subsection 1, for the school budget 33 year beginning July 1, 2017, the resolution of the board of 34 directors of a school district shall be approved not later than 35 -2- LSB 2605XS (4) 87 md/jh 2/ 4

S.F. 305 June 10, 2017. 1 Sec. 6. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 2 immediate importance, takes effect upon enactment. 3 EXPLANATION 4 The inclusion of this explanation does not constitute agreement with 5 the explanation’s substance by the members of the general assembly. 6 This bill establishes a district cost per pupil equity 7 budget adjustment for school districts with a regular program 8 district cost per pupil that is less than the highest regular 9 program district cost per pupil among all school districts in 10 the state for the same budget year. The school board for each 11 such district may annually adopt a resolution approving the 12 budget adjustment authorized in the bill. Following adoption 13 of the resolution the board of directors must, within 10 days 14 of its adoption, notify the department of management of the 15 amount of the budget adjustment. 16 For budget years beginning on or after July 1, 2017, each 17 school district that has approved a budget adjustment for that 18 budget year shall receive an adjustment in an amount not to 19 exceed the difference between the school district’s regular 20 program district cost per pupil and the highest regular program 21 district cost per pupil among all school districts in the 22 state multiplied by the district’s weighted enrollment. The 23 budget adjustment amount may be less than the maximum amount 24 authorized under the bill. The bill requires the school 25 district to fund the budget adjustment using interest earned by 26 the school district on cash reserve funds. 27 The bill specifies that the budget adjustment received does 28 not affect the eligibility for or amount of any other budget 29 adjustment authorized by law for the same budget year and that 30 the budget adjustment under the bill is limited to the budget 31 year for which the adjustment was authorized and shall not be 32 included in any computation of a school district’s cost for any 33 future budget year. 34 Under the bill, if a school district uses interest earned 35 -3- LSB 2605XS (4) 87 md/jh 3/ 4

S.F. 305 on its cash reserve during the base year to fund a budget 1 adjustment authorized in the bill, the board of directors of 2 the school district shall include in its general fund budget 3 document information about the amount of the cash reserve 4 interest used for such purpose. 5 The bill provides that interest earned on cash reserve 6 funds during a budget year may be added to the district’s 7 existing cash reserve amount within the general fund or may 8 be designated by the school board to be used to fund a budget 9 adjustment authorized in the bill. However, the interest 10 amounts so designated shall not be included in district cost. 11 Notwithstanding the May 15 deadline for adopting a 12 resolution to approve the budget adjustment provided for in the 13 bill, for the school budget year beginning July 1, 2017, the 14 resolution of the board of directors of a school district must 15 be approved not later than June 10, 2017. 16 The bill takes effect upon enactment. 17 -4- LSB 2605XS (4) 87 md/jh 4/ 4