Senate Study Bill 3060 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON EDUCATION BILL BY CHAIRPERSON SCHMITZ) A BILL FOR An Act relating to the school budget review committee by 1 modifying its membership and by modifying the committee’s 2 duties related to school district unusual financial 3 circumstances. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 5835XC (3) 83 ak/sc

S.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 four 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 5835XC (3) 83 ak/sc 1/ 4

S.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: . The 14 school budget review committee shall review a school district’s 15 unspent balance prior to any decision to increase modified 16 allowable growth under this subsection. 17 Sec. 4. Section 257.31, subsection 7, paragraph a, 18 unnumbered paragraph 1, Code Supplement 2009, is amended to 19 read as follows: 20 The committee may authorize a district to spend a reasonable 21 and specified amount from its unexpended cash fund balance for 22 the following purposes: 23 Sec. 5. Section 257.31, subsection 7, paragraph b, Code 24 Supplement 2009, is amended to read as follows: 25 b. Other expenditures, including but not limited to 26 expenditures for salaries or recurring costs, are not 27 authorized under this subsection. Expenditures authorized 28 under this subsection shall not be included in allowable 29 growth or district cost, and the portion of the unexpended 30 cash fund balance which is authorized to be spent shall be 31 regarded as if it were miscellaneous income. Any part of 32 the amount not actually spent for the authorized purpose 33 shall revert to its former status as part of the unexpended 34 cash fund balance. 35 -2- LSB 5835XC (3) 83 ak/sc 2/ 4

S.F. _____ Sec. 6. Section 257.31, subsection 14, paragraph b, 1 subparagraph (3), Code Supplement 2009, is amended to read as 2 follows: 3 (3) A school district is only eligible to receive 4 supplemental aid payments during the budget year if the school 5 district certifies to the school budget review committee 6 that for the year following the budget year it will notify 7 the school budget review committee to instruct the director 8 of the department of management to increase the district’s 9 allowable growth and will fund the allowable growth increase 10 either by using moneys from its unexpended cash fund balance 11 to reduce the district’s property tax levy or by using cash 12 reserve moneys to equal the amount of the deficit that would 13 have been property taxes and any part of the state aid portion 14 of the deficit not received as supplemental aid under this 15 subsection. The director of the department of management shall 16 make the necessary adjustments to the school district’s budget 17 to provide the modified allowable growth and shall make the 18 supplemental aid payments. 19 Sec. 7. Section 298.10, Code Supplement 2009, is amended by 20 adding the following new subsection: 21 NEW SUBSECTION . 1A. For fiscal years beginning on or after 22 July 1, 2010, a school district’s unexpended fund balance, as 23 defined in section 257.2, shall not be an excessive amount 24 as determined by the school budget review committee. If 25 the school budget review committee determines that a school 26 district’s unexpended fund balance is an amount in excess 27 of the amount necessary for operations, the school budget 28 review committee shall direct the school district to use the 29 unexpended fund balance in lieu of levying additional property 30 taxes. 31 Sec. 8. Section 298.10, subsection 2, Code Supplement 2009, 32 is amended to read as follows: 33 2. For fiscal years beginning on or after July 1, 2012, the 34 cash reserve levy for a budget year shall not exceed twenty 35 -3- LSB 5835XC (3) 83 ak/sc 3/ 4

S.F. _____ percent of the general fund expenditures for the year previous 1 to the base year minus the general fund unexpended fund 2 balance , as defined in section 257.2, for the year previous to 3 the base year. 4 EXPLANATION 5 This bill may require that a school district spend down its 6 unexpended fund balance to a level determined by the school 7 budget review committee before levying additional property 8 taxes to raise funds. 9 The bill defines “unexpended fund balance” in Code section 10 257.2. References to “unexpended cash balance” are changed to 11 “unexpended fund balance” in Code chapter 257. 12 The number of members on the school budget review committee 13 (SBRC) who are knowledgeable in the areas of Iowa school 14 finance or public finance issues is increased from three to 15 four and the director of the department of education is made an 16 ex officio, nonvoting member in Code section 257.30. 17 The bill amends Code sections 257.31 and 298.10 to provide 18 that the SBRC shall review a school district’s unexpended fund 19 balance upon a school district’s request for supplemental 20 aid due to an unusual financial circumstance. If the SBRC 21 determines the school district’s unexpended fund balance is 22 excessive, the school district may be required to use those 23 funds prior to levying additional property taxes. The bill 24 provides that the SBRC shall also review a school district’s 25 unspent balance before increasing its modified allowable 26 growth. 27 -4- LSB 5835XC (3) 83 ak/sc 4/ 4