House Study Bill 551 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON EDUCATION BILL BY CHAIRPERSON JORGENSEN) A BILL FOR An Act relating to education funding by extending the period 1 of time for collecting sales tax for deposit in the secure 2 an advanced vision for education fund, modifying uses for 3 funding received from the secure an advanced vision for 4 education fund, and authorizing school districts to adopt a 5 district cost per pupil equity budget adjustment. 6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 7 TLSB 5595YC (7) 86 md/sc

H.F. _____ Section 1. Section 257.2, subsection 2, Code 2016, is 1 amended by striking the subsection. 2 Sec. 2. Section 257.4, subsection 1, paragraph a, Code 2016, 3 is amended by adding the following new subparagraph: 4 NEW SUBPARAGRAPH . (10) The amount of revenue received from 5 the secure an advanced vision for education fund and approved 6 by the school district for reducing the school district’s 7 additional property tax levy pursuant to a revenue purpose 8 statement adopted under section 423F.3. 9 Sec. 3. NEW SECTION . 257.14A District cost per pupil equity 10 —— budget adjustment. 11 1. The board of directors of a school district with a 12 regular program district cost per pupil that is less than the 13 highest regular program district cost per pupil among all 14 school districts in the state for the same budget year that 15 wishes to receive the budget adjustment under this section may 16 adopt a resolution by May 15 preceding the budget year and 17 shall notify the department of management of the adoption of 18 the resolution and the amount of the budget adjustment to be 19 received. 20 2. a. For budget years beginning on or after July 1, 21 2017, each school district that satisfies the requirements of 22 subsection 1 shall be eligible for a budget adjustment for that 23 budget year in an amount not to exceed the difference between 24 the school district’s regular program district cost per pupil 25 and the highest regular program district cost per pupil among 26 all school districts in the state multiplied by the district’s 27 budget enrollment. The resolution adopted under subsection 1 28 may specify a budget adjustment amount that is less than the 29 maximum amount authorized under this paragraph “ a ”. 30 b. The school district shall fund the budget adjustment 31 solely using moneys from its distribution of moneys received 32 from the secure an advanced vision for education fund under 33 Code section 423F.3 and authorized for such purpose by a 34 revenue purpose statement. Amounts used to fund the budget 35 -1- LSB 5595YC (7) 86 md/sc 1/ 7

H.F. _____ adjustment shall be excluded from collective bargaining and 1 shall be used solely for instructional expenditures and shall 2 supplement, not supplant, existing school district funding for 3 instructional expenditures. 4 3. A budget adjustment received under this section shall 5 not affect the eligibility for or amount of any other budget 6 adjustment authorized by law for the same budget year. In 7 addition, a budget adjustment under this section shall be 8 limited to the budget year for which the adjustment was 9 authorized and shall not be included in any computation of a 10 school district’s cost for any future budget year. 11 4. a. For purposes of this section, “instructional 12 expenditures” means any of the following: 13 (1) Textbooks, as defined in section 301.1. 14 (2) Library books. 15 (3) Other instructional materials and equipment used 16 directly by students. 17 b. “Instructional expenditures” does not include the 18 salary, benefits, or other compensation of any school district 19 employee. 20 Sec. 4. Section 423.2, subsection 11, paragraph b, 21 subparagraph (3), Code 2016, is amended to read as follows: 22 (3) Transfer one-sixth of the remaining revenues to the 23 secure an advanced vision for education fund created in section 24 423F.2 . This subparagraph (3) is repealed December 31, 2029 25 January 1, 2050 . 26 Sec. 5. Section 423.2, subsection 14, Code 2016, is amended 27 to read as follows: 28 14. The sales tax rate of six percent is reduced to five 29 percent beginning on January 1, 2030 2050 . 30 Sec. 6. Section 423.5, subsection 5, Code 2016, is amended 31 to read as follows: 32 5. The use tax rate of six percent is reduced to five 33 percent beginning on January 1, 2030 2050 . 34 Sec. 7. Section 423.43, subsection 1, paragraph b, Code 35 -2- LSB 5595YC (7) 86 md/sc 2/ 7

H.F. _____ 2016, is amended to read as follows: 1 b. Subsequent to the deposit into the general fund of 2 the state and after the transfer of such revenues collected 3 under chapter 423B , the department shall transfer one-sixth of 4 such remaining revenues to the secure an advanced vision for 5 education fund created in section 423F.2 . This paragraph is 6 repealed December 31, 2029 January 1, 2050 . 7 Sec. 8. Section 423F.3, subsection 1, paragraph d, Code 8 2016, is amended to read as follows: 9 d. For any authorized infrastructure purpose of the school 10 district as defined in subsection 6 , excluding purposes 11 specified in subsection 6, paragraph “0d” . 12 Sec. 9. Section 423F.3, subsection 3, paragraph b, Code 13 2016, is amended to read as follows: 14 b. If the board of directors intends to use funds for 15 purposes other than those listed in paragraph “a” , or change the 16 use of funds to purposes other than those listed in paragraph 17 “a” , the board shall adopt a revenue purpose statement or amend 18 an existing revenue purpose statement , subject to approval of 19 the electors, listing the proposed use of the funds. School 20 districts shall submit the statement to the voters no later 21 than sixty days prior to the expiration of any existing revenue 22 purpose statement or change in use not included in the existing 23 revenue purpose statement. 24 Sec. 10. Section 423F.3, subsection 6, paragraph a, Code 25 2016, is amended to read as follows: 26 a. For purposes of this chapter , “school infrastructure” 27 means those activities authorized in section 423E.1, subsection 28 3, Code 2007 , excluding the construction, reconstruction, 29 repair, demolition, purchase, or remodeling of a stadium unless 30 such stadium-related activity is specifically included in a 31 revenue purpose statement approved by the electors on or before 32 July 1, 2016 . 33 Sec. 11. Section 423F.3, subsection 6, Code 2016, is amended 34 by adding the following new paragraph: 35 -3- LSB 5595YC (7) 86 md/sc 3/ 7

H.F. _____ NEW PARAGRAPH . 0d. For school budget years beginning on or 1 after July 1, 2017, “school infrastructure” includes any of the 2 following if specified in a revenue purpose statement approved 3 at election: 4 (1) If a school district’s average transportation costs 5 per pupil exceed the state average transportation costs per 6 pupil determined under section 257.31, subsection 17, paragraph 7 “c” , the payment of school district transportation costs not 8 to exceed an amount equal to the district’s actual enrollment 9 for the school year multiplied by the difference between the 10 district’s average transportation costs per pupil and the state 11 average transportation costs per pupil for the school year. 12 (2) Funding a district cost per pupil equity budget 13 adjustment under section 257.14A. 14 (3) Reduction of the school district’s additional property 15 tax levy under section 257.4. 16 Sec. 12. Section 423F.6, Code 2016, is amended to read as 17 follows: 18 423F.6 Repeal. 19 This chapter is repealed December 31, 2029 January 1, 2050 . 20 EXPLANATION 21 The inclusion of this explanation does not constitute agreement with 22 the explanation’s substance by the members of the general assembly. 23 This bill relates to education funding by extending the 24 period of time for collecting sales tax for deposit in the 25 secure an advanced vision for education (SAVE) fund, specifying 26 uses for funding received from the secure an advanced vision 27 for education fund, and authorizing school districts to adopt a 28 district cost per pupil equity budget adjustment. 29 Code section 423.2 imposes a state tax of 6 percent upon 30 the sales price of all sales of tangible personal property, 31 consisting of goods, wares, merchandise, and other items 32 designated by statute, sold at retail in the state to 33 consumers, except as otherwise provided by Code chapter 423. 34 Generally, by operation of law, a sale subject to the sales 35 -4- LSB 5595YC (7) 86 md/sc 4/ 7

H.F. _____ tax is also subject to the use tax. Following the transfer 1 of amounts required for the natural resources and outdoor 2 recreation trust fund, one-sixth of the remaining state sales 3 tax revenue from the 6 percent tax is transferred to the SAVE 4 fund created in Code section 423F.2. Moneys in the SAVE fund 5 are allocated to school districts on a per pupil basis to be 6 used for infrastructure and property tax reduction purposes 7 specified in Code chapter 423F. Under current law, the sales 8 tax rate of 6 percent is reduced to 5 percent on January 1, 9 2030, and Code chapter 423F, along with other corresponding 10 provisions, is repealed December 31, 2029. 11 The bill extends the 6 percent sales tax rate and the 12 statutory repeal of Code chapter 423F until January 1, 2050. 13 The bill establishes a district cost per pupil equity budget 14 adjustment. The board of directors of a school district with 15 a regular program district cost per pupil that is less than 16 the highest regular program district cost per pupil among all 17 school districts in the state for the same budget year may 18 annually adopt a resolution to receive the budget adjustment 19 authorized in the bill. Following adoption of the resolution 20 the board of directors must notify the department of management 21 of the adoption of the resolution and the amount of the budget 22 adjustment to be received. 23 For budget years beginning on or after July 1, 2017, each 24 eligible school district is eligible for a budget adjustment 25 for that budget year in an amount equal to the difference 26 between the school district’s regular program district cost 27 per pupil and the highest regular program district cost per 28 pupil among all school districts in the state multiplied by the 29 district’s budget enrollment. The resolution authorizing the 30 budget adjustment may specify a budget adjustment amount that 31 is less than the maximum amount authorized under the bill. The 32 bill requires the school district to fund the budget adjustment 33 by using moneys received from the SAVE fund and authorized for 34 such purpose in a revenue purpose statement. Amounts used to 35 -5- LSB 5595YC (7) 86 md/sc 5/ 7

H.F. _____ fund the budget adjustment are required to be excluded from 1 collective bargaining and must be used solely for instructional 2 expenditures and must supplement, not supplant, existing school 3 funding for instructional expenditures. The bill defines 4 “instructional expenditures”. 5 The bill specifies that the budget adjustment received does 6 not affect the eligibility for or amount of any other budget 7 adjustment authorized by law for the same budget year and that 8 the budget adjustment under the bill is limited to the budget 9 year for which the adjustment was authorized and shall not be 10 included in any computation of a school district’s cost for any 11 future budget year. 12 As part of the restrictions on the use of revenues 13 received from the SAVE fund, Code section 423F.3 defines 14 “school infrastructure” to mean, in part, those activities 15 authorized in Code section 423E.1(3), Code 2007, which 16 includes the construction, reconstruction, repair, demolition, 17 purchase, or remodeling of a stadium. The bill excludes such 18 stadium-related activities unless specifically included in a 19 revenue purpose statement approved by the electors on or before 20 July 1, 2016. 21 The bill also specifies additional purposes for which a 22 school district may use funds received from the SAVE fund 23 in school budget years beginning on or after July 1, 2017, 24 if the purpose is included in a voter-approved revenue 25 purpose statement. Those additional purposes include: (1) 26 certain transportation costs if a school district’s average 27 transportation costs per pupil exceed the state average 28 transportation costs per pupil; (2) funding a district cost per 29 pupil equity budget adjustment, as authorized in the bill; and 30 (3) a reduction of the school district’s additional property 31 tax levy. 32 Code section 423F.3, subsection 7, provides that the 33 general assembly shall not alter the purposes for which the 34 revenues received under Code section 423F.3 may be used from 35 -6- LSB 5595YC (7) 86 md/sc 6/ 7