House Study Bill 240 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON SANDS) A BILL FOR An Act relating to school district funding by establishing a 1 district cost per pupil equity budget adjustment, modifying 2 limitations on the cash reserve levy, and including 3 effective date provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 2657YC (2) 86 md/sc

H.F. _____ Section 1. Section 257.2, subsection 2, Code 2015, 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 by May 15 preceding the budget year and 10 shall notify the department of management of the adoption of 11 the resolution and the amount of the budget adjustment to be 12 received. 13 2. a. For budget years beginning on or after July 1, 14 2015, each school district that satisfies the requirements of 15 subsection 1 shall be eligible for a budget adjustment for that 16 budget year in an amount not to exceed the difference between 17 the school district’s regular program district cost per pupil 18 and the highest regular program district cost per pupil among 19 all school districts in the state multiplied by the district’s 20 budget enrollment. The resolution adopted under subsection 1 21 may specify a budget adjustment amount that is less than the 22 maximum amount authorized under this paragraph. 23 b. The school district shall fund the budget adjustment 24 increase either by using moneys from its unexpended fund 25 balance or by using cash reserve moneys. 26 3. A budget adjustment received under this section shall 27 not affect the eligibility for or amount of any other budget 28 adjustment authorized by law for the same budget year. In 29 addition, a budget adjustment under this section shall be 30 limited to the budget year for which the adjustment was 31 authorized and shall not be included in any computation of a 32 school district’s cost for any future budget year. 33 Sec. 3. Section 257.34, Code 2015, is amended to read as 34 follows: 35 -1- LSB 2657YC (2) 86 md/sc 1/ 4

H.F. _____ 257.34 Cash reserve information. 1 1. If a school district receives less state school 2 foundation aid under section 257.1 than is due under that 3 section for a base year and the school district uses funds 4 from its cash reserve during the base year to make up for 5 the amount of state aid not paid, the board of directors of 6 the school district shall include in its general fund budget 7 document information about the amount of the cash reserve used 8 to replace state school foundation aid not paid. 9 2. If a school district uses funds from its cash reserve 10 during the base year to fund a budget adjustment under section 11 257.14A, the board of directors of the school district shall 12 include in its general fund budget document information about 13 the amount of the cash reserve used for such purpose. 14 Sec. 4. Section 298.10, subsection 3, Code 2015, is amended 15 to read as follows: 16 3. a. For Except as provided in paragraph “b” , for fiscal 17 years beginning on or after July 1, 2012, the cash reserve 18 levy for a budget year shall not exceed twenty percent of the 19 general fund expenditures for the year previous to the base 20 year minus the unexpended fund balance, as defined in section 21 257.2 , for the year previous to the base year. 22 b. For fiscal years beginning on or after July 1, 2015, 23 the cash reserve levy for a school district that received a 24 budget adjustment under section 257.14A, shall not exceed the 25 lesser of the amount determined under paragraph “a” and the 26 amount levied under this section in the year previous to the 27 base year, excluding any amount levied to fund a modified 28 supplemental amount established under section 257.31. 29 Sec. 5. IMPLEMENTATION. Notwithstanding the deadline 30 for adopting a resolution to approve the budget adjustment 31 in section 257.14A, subsection 1, for the school budget 32 year beginning July 1, 2015, the resolution of the board of 33 directors of a school district shall be approved not later than 34 June 10, 2015. 35 -2- LSB 2657YC (2) 86 md/sc 2/ 4

H.F. _____ Sec. 6. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 1 immediate importance, takes effect upon enactment. 2 EXPLANATION 3 The inclusion of this explanation does not constitute agreement with 4 the explanation’s substance by the members of the general assembly. 5 This bill establishes a district cost per pupil equity 6 budget adjustment. The board of directors of a school district 7 with a regular program district cost per pupil that is less 8 than the highest regular program district cost per pupil among 9 all school districts in the state for the same budget year may 10 annually adopt a resolution to receive the budget adjustment 11 authorized in the bill. Following adoption of the resolution 12 the board of directors must notify the department of management 13 of the adoption of the resolution and the amount of the budget 14 adjustment to be received. 15 For budget years beginning on or after July 1, 2015, each 16 eligible school district is eligible for a budget adjustment 17 for that budget year in an amount equal to the difference 18 between the school district’s regular program district cost 19 per pupil and the highest regular program district cost per 20 pupil among all school districts in the state multiplied by 21 the district’s budget enrollment. The resolution authorizing 22 the budget adjustment may specify a budget adjustment amount 23 that is less than the maximum amount authorized under the 24 bill. The bill requires the school district to fund the budget 25 adjustment increase either by using moneys from its unexpended 26 fund balance or by using cash reserve moneys. 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 funds from its 35 -3- LSB 2657YC (2) 86 md/sc 3/ 4

H.F. _____ cash reserve during the base year to fund a budget adjustment 1 authorized in the bill, the board of directors of the school 2 district shall include in its general fund budget document 3 information about the amount of the cash reserve used for such 4 purpose. 5 Code section 298.10 directs the department of management to 6 limit the school district’s cash reserve levy to a level that 7 is not in excess of 20 percent of the general fund expenditures 8 for the year previous to the base year minus the unexpended 9 fund balance for the year previous to the base year. The bill 10 provides that for fiscal years beginning on or after July 1, 11 2015, the cash reserve levy for a school district that received 12 a budget adjustment under the bill, shall not exceed the lesser 13 of the amount determined under the current law limitation and 14 the amount levied for cash reserve in the year previous to 15 the base year, excluding any amount levied to fund a modified 16 supplemental amount established under Code section 257.31. 17 Notwithstanding the May 15 deadline for adopting a 18 resolution to approve the budget adjustment provided for in the 19 bill, for the school budget year beginning July 1, 2015, the 20 resolution of the board of directors of a school district must 21 be approved not later than June 10, 2015. 22 The bill takes effect upon enactment. 23 -4- LSB 2657YC (2) 86 md/sc 4/ 4