SSB 3060 (LSB 5835XC (3) 83)

SENATE FILE _____

BY  (PROPOSED COMMITTEE ON EDUCATION BILL BY CHAIRPERSON SCHMITZ)

A BILL FOR

An Act relating to the school budget review committee by modifying its membership and by modifying the committee’s duties related to school district unusual financial circumstances.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 257.2, Code 2009, is amended by adding the following new subsection:
   NEW SUBSECTION.  13.  “Unexpended fund balance” means a school district’s fund balance in the general fund not expended during the budget year, as such unexpended fund balance is reported on the certified annual report pursuant to section 291.10.
    Sec. 2.  Section 257.30, subsection 1, Code Supplement 2009, is amended to read as follows:
   1.  A school budget review committee is established in the department of education and consists of the director of the department of education in an ex officio, nonvoting capacity, the director of the department of management, and three four members who are knowledgeable in the areas of Iowa school finance or public finance issues appointed by the governor to represent the public. At least one of the public members shall possess a master’s or doctoral degree in which areas of school finance, economics, or statistics are an integral component, or shall have equivalent experience in an executive administrative or senior research position in the education or public administration field. The members appointed by the governor shall serve staggered three-year terms beginning and ending as provided in section 69.19 and are subject to senate confirmation as provided in section 2.32. The committee shall meet and hold hearings each year and shall continue in session until it has reviewed budgets of school districts, as provided in section 257.31. The committee may call in school board members and employees as necessary for the hearings. The committee’s scheduled hearing agendas and the minutes of such hearings shall be posted on the department of education’s internet website site. Legislators shall be notified of hearings concerning school districts in their legislative districts.
    Sec. 3.  Section 257.31, subsection 5, unnumbered paragraph 1, Code Supplement 2009, is amended to read as follows:
   If a district has unusual circumstances, creating an unusual need for additional funds, including but not limited to the following circumstances enumerated in paragraphs “a” through “n”, the committee may grant supplemental aid to the district from any funds appropriated to the department of education for the use of the school budget review committee for the purposes of this subsection, and such. The school budget review committee shall review a school district’s unexpended fund balance prior to any decision regarding unusual finance circumstances. Such aid shall be miscellaneous income and shall not be included in district cost, or. In addition to or as an alternative to granting supplemental aid the committee may establish a modified allowable growth for the district by increasing its allowable growth, or both:. The school budget review committee shall review a school district’s unspent balance prior to any decision to increase modified allowable growth under this subsection.
    Sec. 4.  Section 257.31, subsection 7, paragraph a, unnumbered paragraph 1, Code Supplement 2009, is amended to read as follows:
   The committee may authorize a district to spend a reasonable and specified amount from its unexpended cash fund balance for the following purposes:
    Sec. 5.  Section 257.31, subsection 7, paragraph b, Code Supplement 2009, is amended to read as follows:
   b.  Other expenditures, including but not limited to expenditures for salaries or recurring costs, are not authorized under this subsection. Expenditures authorized under this subsection shall not be included in allowable growth or district cost, and the portion of the unexpended cash fund balance which is authorized to be spent shall be regarded as if it were miscellaneous income. Any part of the amount not actually spent for the authorized purpose shall revert to its former status as part of the unexpended cash fund balance.
    Sec. 6.  Section 257.31, subsection 14, paragraph b, subparagraph (3), Code Supplement 2009, is amended to read as follows:
   (3)  A school district is only eligible to receive supplemental aid payments during the budget year if the school district certifies to the school budget review committee that for the year following the budget year it will notify the school budget review committee to instruct the director of the department of management to increase the district’s allowable growth and will fund the allowable growth increase either by using moneys from its unexpended cash fund balance to reduce the district’s property tax levy or by using cash reserve moneys to equal the amount of the deficit that would have been property taxes and any part of the state aid portion of the deficit not received as supplemental aid under this subsection. The director of the department of management shall make the necessary adjustments to the school district’s budget to provide the modified allowable growth and shall make the supplemental aid payments.
    Sec. 7.  Section 298.10, Code Supplement 2009, is amended by adding the following new subsection:
   NEW SUBSECTION.  1A.  For fiscal years beginning on or after July 1, 2010, a school district’s unexpended fund balance, as defined in section 257.2, shall not be an excessive amount as determined by the school budget review committee. If the school budget review committee determines that a school district’s unexpended fund balance is an amount in excess of the amount necessary for operations, the school budget review committee shall direct the school district to use the unexpended fund balance in lieu of levying additional property taxes.
    Sec. 8.  Section 298.10, subsection 2, Code Supplement 2009, is amended to read as follows:
   2.  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 general fund unexpended fund balance, as defined in section 257.2, for the year previous to the base year.
EXPLANATION
   This bill may require that a school district spend down its unexpended fund balance to a level determined by the school budget review committee before levying additional property taxes to raise funds.
   The bill defines “unexpended fund balance” in Code section 257.2. References to “unexpended cash balance” are changed to “unexpended fund balance” in Code chapter 257.
   The number of members on the school budget review committee (SBRC) who are knowledgeable in the areas of Iowa school finance or public finance issues is increased from three to four and the director of the department of education is made an ex officio, nonvoting member in Code section 257.30.
   The bill amends Code sections 257.31 and 298.10 to provide that the SBRC shall review a school district’s unexpended fund balance upon a school district’s request for supplemental aid due to an unusual financial circumstance. If the SBRC determines the school district’s unexpended fund balance is excessive, the school district may be required to use those funds prior to levying additional property taxes. The bill provides that the SBRC shall also review a school district’s unspent balance before increasing its modified allowable growth.