H.F. 671 DIVISION I 1 EDUCATION FINANCE 2 Section 1. Section 257.1, subsection 2, paragraph b, Code 3 2011, is amended by striking the paragraph and inserting in 4 lieu thereof the following: 5 b. (1) The regular program foundation base per pupil is the 6 following: 7 (a) For the budget year commencing July 1, 2011, the 8 regular program foundation base per pupil is eighty-seven and 9 five-tenths percent of the regular program state cost per 10 pupil. 11 (b) For the budget year commencing July 1, 2012, the 12 regular program foundation base per pupil is eighty-nine and 13 twenty-eight hundredths percent of the regular program state 14 cost per pupil. 15 (c) For the budget year commencing July 1, 2013, the 16 regular program foundation base per pupil is ninety-one and six 17 hundredths percent of the regular program state cost per pupil. 18 (d) For the budget year commencing July 1, 2014, the regular 19 program foundation base per pupil is ninety-two and eighty-four 20 hundredths percent of the regular program state cost per pupil. 21 (e) For the budget year commencing July 1, 2015, the regular 22 program foundation base per pupil is ninety-four and sixty-two 23 hundredths percent of the regular program state cost per pupil. 24 (f) For the budget year commencing July 1, 2016, the regular 25 program foundation base per pupil is ninety-six and forty 26 hundredths percent of the regular program state cost per pupil. 27 (g) For the budget year commencing July 1, 2017, the regular 28 program foundation base per pupil is ninety-eight and eighteen 29 hundredths percent of the regular program state cost per pupil. 30 (h) For the budget year commencing July 1, 2018, and 31 succeeding budget years, the regular program foundation base 32 per pupil is one hundred percent of the regular program state 33 cost per pupil. 34 (2) For each budget year, the special education support 35 -1- LSB 1484HV (2) 84 md/sc 1/ 8

H.F. 671 services foundation base is seventy-nine percent of the special 1 education support services state cost per pupil. The combined 2 foundation base is the sum of the regular program foundation 3 base, the special education support services foundation base, 4 the total teacher salary supplement district cost, the total 5 professional development supplement district cost, the total 6 early intervention supplement district cost, the total area 7 education agency teacher salary supplement district cost, 8 and the total area education agency professional development 9 supplement district cost. 10 DIVISION II 11 PROPERTY ASSESSMENT LIMITATION 12 Sec. 2. Section 441.21, subsections 4 and 5, Code 2011, are 13 amended to read as follows: 14 4. For valuations established as of January 1, 1979, 15 the percentage of actual value at which agricultural and 16 residential property shall be assessed shall be the quotient 17 of the dividend and divisor as defined in this section . The 18 dividend for each class of property shall be the dividend 19 as determined for each class of property for valuations 20 established as of January 1, 1978, adjusted by the product 21 obtained by multiplying the percentage determined for that 22 year by the amount of any additions or deletions to actual 23 value, excluding those resulting from the revaluation of 24 existing properties, as reported by the assessors on the 25 abstracts of assessment for 1978, plus six percent of the 26 amount so determined. However, if the difference between the 27 dividend so determined for either class of property and the 28 dividend for that class of property for valuations established 29 as of January 1, 1978, adjusted by the product obtained by 30 multiplying the percentage determined for that year by the 31 amount of any additions or deletions to actual value, excluding 32 those resulting from the revaluation of existing properties, 33 as reported by the assessors on the abstracts of assessment 34 for 1978, is less than six percent, the 1979 dividend for the 35 -2- LSB 1484HV (2) 84 md/sc 2/ 8

H.F. 671 other class of property shall be the dividend as determined for 1 that class of property for valuations established as of January 2 1, 1978, adjusted by the product obtained by multiplying 3 the percentage determined for that year by the amount of 4 any additions or deletions to actual value, excluding those 5 resulting from the revaluation of existing properties, as 6 reported by the assessors on the abstracts of assessment for 7 1978, plus a percentage of the amount so determined which is 8 equal to the percentage by which the dividend as determined 9 for the other class of property for valuations established 10 as of January 1, 1978, adjusted by the product obtained by 11 multiplying the percentage determined for that year by the 12 amount of any additions or deletions to actual value, excluding 13 those resulting from the revaluation of existing properties, 14 as reported by the assessors on the abstracts of assessment 15 for 1978, is increased in arriving at the 1979 dividend for 16 the other class of property. The divisor for each class of 17 property shall be the total actual value of all such property 18 in the state in the preceding year, as reported by the 19 assessors on the abstracts of assessment submitted for 1978, 20 plus the amount of value added to said total actual value by 21 the revaluation of existing properties in 1979 as equalized 22 by the director of revenue pursuant to section 441.49 . The 23 director shall utilize information reported on abstracts of 24 assessment submitted pursuant to section 441.45 in determining 25 such percentage. For valuations established as of January 26 1, 1980, and each year thereafter, the percentage of actual 27 value as equalized by the director of revenue as provided 28 in section 441.49 at which agricultural and residential 29 property shall be assessed shall be calculated in accordance 30 with the methods provided herein including the limitation of 31 increases in agricultural and residential assessed values to 32 the percentage increase of the other class of property if the 33 other class increases less than the allowable limit adjusted 34 to include the applicable and current values as equalized by 35 -3- LSB 1484HV (2) 84 md/sc 3/ 8

H.F. 671 the director of revenue in this subsection , except that any 1 references to six percent in this subsection shall be four 2 percent. For valuations established for the assessment year 3 beginning January 1, 2011, and each assessment year thereafter, 4 the percentage of actual value as equalized by the director of 5 revenue as provided in section 441.49 at which agricultural 6 and residential property shall be assessed shall be calculated 7 in accordance with the methods provided in this subsection and 8 subsection 5A, except that any references to six percent in 9 this subsection shall be four percent. 10 5. For valuations established as of January 1, 1979, 11 commercial property and industrial property, excluding 12 properties referred to in section 427A.1, subsection 8 , shall 13 be assessed as a percentage of the actual value of each class 14 of property. The percentage shall be determined for each 15 class of property by the director of revenue for the state in 16 accordance with the provisions of this section . For valuations 17 established as of January 1, 1979, the percentage shall be 18 the quotient of the dividend and divisor as defined in this 19 section . The dividend for each class of property shall be the 20 total actual valuation for each class of property established 21 for 1978, plus six percent of the amount so determined. The 22 divisor for each class of property shall be the valuation 23 for each class of property established for 1978, as reported 24 by the assessors on the abstracts of assessment for 1978, 25 plus the amount of value added to the total actual value by 26 the revaluation of existing properties in 1979 as equalized 27 by the director of revenue pursuant to section 441.49 . For 28 valuations established as of January 1, 1979, property valued 29 by the department of revenue pursuant to chapters 428 , 433 , 30 437 , and 438 shall be considered as one class of property and 31 shall be assessed as a percentage of its actual value. The 32 percentage shall be determined by the director of revenue in 33 accordance with the provisions of this section . For valuations 34 established as of January 1, 1979, the percentage shall be 35 -4- LSB 1484HV (2) 84 md/sc 4/ 8

H.F. 671 the quotient of the dividend and divisor as defined in this 1 section . The dividend shall be the total actual valuation 2 established for 1978 by the department of revenue, plus ten 3 percent of the amount so determined. The divisor for property 4 valued by the department of revenue pursuant to chapters 428 , 5 433 , 437 , and 438 shall be the valuation established for 1978, 6 plus the amount of value added to the total actual value by 7 the revaluation of the property by the department of revenue 8 as of January 1, 1979. For valuations established as of 9 January 1, 1980, commercial property and industrial property, 10 excluding properties referred to in section 427A.1, subsection 11 8 , shall be assessed at a percentage of the actual value of 12 each class of property. The percentage shall be determined 13 for each class of property by the director of revenue for the 14 state in accordance with the provisions of this section . For 15 valuations established as of January 1, 1980, the percentage 16 shall be the quotient of the dividend and divisor as defined in 17 this section . The dividend for each class of property shall 18 be the dividend as determined for each class of property for 19 valuations established as of January 1, 1979, adjusted by the 20 product obtained by multiplying the percentage determined 21 for that year by the amount of any additions or deletions to 22 actual value, excluding those resulting from the revaluation 23 of existing properties, as reported by the assessors on the 24 abstracts of assessment for 1979, plus four percent of the 25 amount so determined. The divisor for each class of property 26 shall be the total actual value of all such property in 1979, 27 as equalized by the director of revenue pursuant to section 28 441.49 , plus the amount of value added to the total actual 29 value by the revaluation of existing properties in 1980. The 30 director shall utilize information reported on the abstracts of 31 assessment submitted pursuant to section 441.45 in determining 32 such percentage. For valuations established as of January 1, 33 1980, property valued by the department of revenue pursuant 34 to chapters 428 , 433 , 437 , and 438 shall be assessed at a 35 -5- LSB 1484HV (2) 84 md/sc 5/ 8

H.F. 671 percentage of its actual value. The percentage shall be 1 determined by the director of revenue in accordance with the 2 provisions of this section . For valuations established as of 3 January 1, 1980, the percentage shall be the quotient of the 4 dividend and divisor as defined in this section . The dividend 5 shall be the total actual valuation established for 1979 by 6 the department of revenue, plus eight percent of the amount so 7 determined. The divisor for property valued by the department 8 of revenue pursuant to chapters 428 , 433 , 437 , and 438 shall 9 be the valuation established for 1979, plus the amount of 10 value added to the total actual value by the revaluation of 11 the property by the department of revenue as of January 1, 12 1980. For valuations established as of January 1, 1981, 13 and each year thereafter, the percentage of actual value as 14 equalized by the director of revenue as provided in section 15 441.49 at which commercial property and industrial property, 16 excluding properties referred to in section 427A.1, subsection 17 8 , shall be assessed shall be calculated in accordance with 18 the methods provided herein in this subsection , except that 19 any references to six percent in this subsection shall be four 20 percent. For valuations established as of January 1, 1981, 21 and each year thereafter, the percentage of actual value at 22 which property valued by the department of revenue pursuant 23 to chapters 428 , 433 , 437 , and 438 shall be assessed shall be 24 calculated in accordance with the methods provided herein, 25 except that any references to ten percent in this subsection 26 shall be eight percent. Beginning with valuations established 27 as of January 1, 1979, and each year thereafter, property 28 valued by the department of revenue pursuant to chapter 434 29 shall also be assessed at a percentage of its actual value 30 which percentage shall be equal to the percentage determined 31 by the director of revenue for commercial property, industrial 32 property, or property valued by the department of revenue 33 pursuant to chapters 428 , 433 , 437 , and 438 , whichever is 34 lowest. For valuations established for the assessment year 35 -6- LSB 1484HV (2) 84 md/sc 6/ 8

H.F. 671 beginning January 1, 2011, and each assessment year thereafter, 1 the percentage of actual value as equalized by the director of 2 revenue as provided in section 441.49 at which commercial and 3 industrial property shall be assessed shall be calculated in 4 accordance with the methods provided in this subsection and 5 subsection 5A, except that any references to six percent in 6 this subsection shall be four percent. 7 Sec. 3. Section 441.21, Code 2011, is amended by adding the 8 following new subsection: 9 NEW SUBSECTION . 5A. Notwithstanding the limitation 10 of increases for agricultural and residential property in 11 subsection 4 and the limitation of increases for commercial and 12 industrial property in subsection 5, for valuations established 13 for the assessment year beginning January 1, 2011, and each 14 assessment year thereafter, for residential, agricultural, and 15 commercial property, the assessed values of these three classes 16 of property shall be limited to the percentage increase of that 17 class of property that is the lowest percentage increase under 18 the allowable limit adjusted to include the applicable and 19 current values as equalized by the director of revenue. The 20 lowest percentage increase determined under this subsection 21 shall also be applied to industrial property in the same manner 22 it is applied to the other three classes of property. 23 Sec. 4. RETROACTIVE APPLICABILITY. This division of this 24 Act applies retroactively to January 1, 2011, for assessment 25 years beginning on or after that date. 26 EXPLANATION 27 This bill makes changes relating to property taxation and 28 school financing. 29 Division I of the bill provides for an increase in the 30 regular program foundation base under the state school 31 foundation program. The foundation base is the specified 32 percentage of the state cost per pupil calculation which is 33 paid as state aid to school districts, above and beyond the 34 uniform property tax levy imposed in Code section 257.3. 35 -7- LSB 1484HV (2) 84 md/sc 7/ 8

H.F. 671 Beginning with the budget year commencing July 1, 2012, the 1 increase is phased in over a seven-year period in equal annual 2 increments, from the current foundation base level of 87.5 3 percent to the level of 100 percent. 4 Division II of the bill ties together the assessment 5 limitations of residential, agricultural, and commercial 6 property by limiting the percentage increase in all of those 7 classes of property to the percentage increase of that class 8 of property that is the lowest percentage increase under the 9 allowable (4 percent) limit. The division also provides that 10 the lowest percentage increase shall be applied to industrial 11 property in the same manner that it is applied to the other 12 three classes of property. 13 Division II of the bill applies retroactively to January 1, 14 2011, for assessment years beginning on or after that date. 15 -8- LSB 1484HV (2) 84 md/sc 8/ 8