House Study Bill 528 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON EDUCATION BILL BY CHAIRPERSON WENDT) A BILL FOR An Act requiring a school district to spend down its unexpended 1 general fund balance prior to levying additional property 2 taxes. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5686YC (1) 83 ak/sc

H.F. _____ Section 1. Section 257.2, Code 2009, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 13. “Unexpended fund balance” means a 3 school district’s fund balance in the general fund not expended 4 during the budget year, as such unexpended fund balance is 5 reported on the certified annual report pursuant to section 6 291.10. 7 Sec. 2. Section 257.30, subsection 1, Code Supplement 2009, 8 is amended to read as follows: 9 1. A school budget review committee is established in 10 the department of education and consists of the director 11 of the department of education in an ex officio, nonvoting 12 capacity , the director of the department of management, and 13 three five members who are knowledgeable in the areas of 14 Iowa school finance or public finance issues appointed by 15 the governor to represent the public. At least one of the 16 public members shall possess a master’s or doctoral degree in 17 which areas of school finance, economics, or statistics are 18 an integral component, or shall have equivalent experience in 19 an executive administrative or senior research position in 20 the education or public administration field. The members 21 appointed by the governor shall serve staggered three-year 22 terms beginning and ending as provided in section 69.19 and are 23 subject to senate confirmation as provided in section 2.32. 24 The committee shall meet and hold hearings each year and shall 25 continue in session until it has reviewed budgets of school 26 districts, as provided in section 257.31. The committee may 27 call in school board members and employees as necessary for 28 the hearings. The committee’s scheduled hearing agendas and 29 the minutes of such hearings shall be posted on the department 30 of education’s internet website site . Legislators shall be 31 notified of hearings concerning school districts in their 32 legislative districts. 33 Sec. 3. Section 257.31, subsection 5, unnumbered paragraph 34 1, Code Supplement 2009, is amended to read as follows: 35 -1- LSB 5686YC (1) 83 ak/sc 1/ 4

H.F. _____ If a district has unusual circumstances, creating an unusual 1 need for additional funds, including but not limited to the 2 following circumstances enumerated in paragraphs “a” through 3 “n” , the committee may grant supplemental aid to the district 4 from any funds appropriated to the department of education 5 for the use of the school budget review committee for the 6 purposes of this subsection , and such . The school budget 7 review committee shall review a school district’s unexpended 8 fund balance prior to any decision regarding unusual finance 9 circumstances. Such aid shall be miscellaneous income and 10 shall not be included in district cost , or . In addition 11 to or as an alternative to granting supplemental aid the 12 committee may establish a modified allowable growth for the 13 district by increasing its allowable growth , or both: . 14 Sec. 4. Section 257.31, subsection 7, paragraph a, 15 unnumbered paragraph 1, Code Supplement 2009, is amended to 16 read as follows: 17 The committee may authorize a district to spend a reasonable 18 and specified amount from its unexpended cash fund balance for 19 the following purposes: 20 Sec. 5. Section 257.31, subsection 7, paragraph b, Code 21 Supplement 2009, is amended to read as follows: 22 b. Other expenditures, including but not limited to 23 expenditures for salaries or recurring costs, are not 24 authorized under this subsection. Expenditures authorized 25 under this subsection shall not be included in allowable 26 growth or district cost, and the portion of the unexpended 27 cash fund balance which is authorized to be spent shall be 28 regarded as if it were miscellaneous income. Any part of 29 the amount not actually spent for the authorized purpose 30 shall revert to its former status as part of the unexpended 31 cash fund balance. 32 Sec. 6. Section 257.31, subsection 14, paragraph b, 33 subparagraph (3), Code Supplement 2009, is amended to read as 34 follows: 35 -2- LSB 5686YC (1) 83 ak/sc 2/ 4

H.F. _____ (3) A school district is only eligible to receive 1 supplemental aid payments during the budget year if the school 2 district certifies to the school budget review committee 3 that for the year following the budget year it will notify 4 the school budget review committee to instruct the director 5 of the department of management to increase the district’s 6 allowable growth and will fund the allowable growth increase 7 either by using moneys from its unexpended cash fund balance 8 to reduce the district’s property tax levy or by using cash 9 reserve moneys to equal the amount of the deficit that would 10 have been property taxes and any part of the state aid portion 11 of the deficit not received as supplemental aid under this 12 subsection. The director of the department of management shall 13 make the necessary adjustments to the school district’s budget 14 to provide the modified allowable growth and shall make the 15 supplemental aid payments. 16 Sec. 7. Section 298.10, subsection 2, Code Supplement 2009, 17 is amended to read as follows: 18 2. For fiscal years beginning on or after July 1, 2012, 19 the cash reserve levy for a budget year shall not exceed 20 twenty percent of the general fund expenditures for the year 21 previous to the base year minus the general fund unexpended 22 fund balance for the year previous to the base year 2010, 23 a school district’s unexpended fund balance, as defined in 24 section 257.2, shall not be an excessive amount as determined 25 by the school budget review committee. If the school budget 26 review committee determines that a school district’s unexpended 27 fund balance is an amount in excess of the amount necessary for 28 operations, the school budget review committee shall direct the 29 school district to use the unexpended fund balance in lieu of 30 levying additional property taxes . 31 EXPLANATION 32 This bill requires that a school district spend down its 33 unexpended fund balance to a level determined by the school 34 board review committee before levying additional property taxes 35 -3- LSB 5686YC (1) 83 ak/sc 3/ 4

H.F. _____ to raise funds. 1 The bill defines “unexpended fund balance” in Code section 2 257.2. References to “unexpended cash balance” are changed to 3 “unexpended fund balance” in Code chapter 257. 4 The number of members on the school budget review committee 5 (SBRC) who are knowledgeable in the areas of Iowa school 6 finance or public finance issues is increased from three to 7 five and the director of the department of education is made an 8 ex officio, nonvoting member in Code section 257.30. 9 The bill amends Code sections 257.31 and 298.10 to provide 10 that the SBRC shall review a school district’s unexpended 11 fund balance upon a school district’s request for additional 12 funds due to an unusual financial circumstance. If the SBRC 13 determines the school district’s unexpended fund balance is 14 excessive, the school district must use those funds prior to 15 levying additional property taxes. 16 -4- LSB 5686YC (1) 83 ak/sc 4/ 4