Senate Study Bill 1254 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON EDUCATION BILL BY CHAIRPERSON QUIRMBACH) A BILL FOR An Act relating to school district funding by establishing a 1 district cost per pupil equity budget adjustment, modifying 2 limitations on the cash reserve levy, and including 3 effective date provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 2574XC (3) 86 md/sc

S.F. _____ Section 1. Section 257.2, subsection 2, Code 2015, is 1 amended by striking the subsection. 2 Sec. 2. NEW SECTION . 257.14A District cost per pupil equity 3 —— budget adjustment. 4 1. The board of directors of a school district with a 5 regular program district cost per pupil that is less than the 6 highest regular program district cost per pupil among all 7 school districts in the state for the same budget year that 8 wishes to receive the budget adjustment under this section may 9 adopt a resolution by May 15 preceding the budget year and 10 shall notify the department of management of the adoption of 11 the resolution and the amount of the budget adjustment to be 12 received. 13 2. a. For budget years beginning on or after July 1, 14 2015, each school district that satisfies the requirements of 15 subsection 1 shall be eligible for a budget adjustment for that 16 budget year in an amount not to exceed the difference between 17 the school district’s regular program district cost per pupil 18 and the highest regular program district cost per pupil among 19 all school districts in the state multiplied by the district’s 20 budget enrollment. The resolution adopted under subsection 1 21 may specify a budget adjustment amount that is less than the 22 maximum amount authorized under this paragraph. 23 b. The school district shall fund the budget adjustment 24 increase either by using moneys from its unexpended fund 25 balance or by using cash reserve moneys. 26 3. A budget adjustment received under this section shall 27 not affect the eligibility for or amount of any other budget 28 adjustment authorized by law for the same budget year. In 29 addition, a budget adjustment under this section shall be 30 limited to the budget year for which the adjustment was 31 authorized and shall not be included in any computation of a 32 school district’s cost for any future budget year. 33 Sec. 3. Section 257.34, Code 2015, is amended to read as 34 follows: 35 -1- LSB 2574XC (3) 86 md/sc 1/ 4

S.F. _____ 257.34 Cash reserve information. 1 1. If a school district receives less state school 2 foundation aid under section 257.1 than is due under that 3 section for a base year and the school district uses funds 4 from its cash reserve during the base year to make up for 5 the amount of state aid not paid, the board of directors of 6 the school district shall include in its general fund budget 7 document information about the amount of the cash reserve used 8 to replace state school foundation aid not paid. 9 2. If a school district uses funds from its cash reserve 10 during the base year to fund a budget adjustment under section 11 257.14A, the board of directors of the school district shall 12 include in its general fund budget document information about 13 the amount of the cash reserve used for such purpose. 14 Sec. 4. Section 298.10, subsection 3, Code 2015, is amended 15 to read as follows: 16 3. a. For Except as provided in paragraph “b” , for fiscal 17 years beginning on or after July 1, 2012, the cash reserve 18 levy for a budget year shall not exceed twenty percent of the 19 general fund expenditures for the year previous to the base 20 year minus the unexpended fund balance, as defined in section 21 257.2 , for the year previous to the base year. 22 b. For fiscal years beginning on or after July 1, 2015, 23 the cash reserve levy for a school district that received a 24 budget adjustment under section 257.14A, shall not exceed the 25 lesser of the amount determined under paragraph “a” and the 26 amount levied under this section in the year previous to the 27 base year, excluding any amount levied to fund a modified 28 supplemental amount established under section 257.31. 29 Sec. 5. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 30 immediate importance, takes effect upon enactment. 31 EXPLANATION 32 The inclusion of this explanation does not constitute agreement with 33 the explanation’s substance by the members of the general assembly. 34 This bill establishes a district cost per pupil equity 35 -2- LSB 2574XC (3) 86 md/sc 2/ 4

S.F. _____ budget adjustment. The board of directors of a school district 1 with a regular program district cost per pupil that is less 2 than the highest regular program district cost per pupil among 3 all school districts in the state for the same budget year may 4 annually adopt a resolution to receive the budget adjustment 5 authorized in the bill. Following adoption of the resolution 6 the board of directors must notify the department of management 7 of the adoption of the resolution and the amount of the budget 8 adjustment to be received. 9 For budget years beginning on or after July 1, 2015, each 10 eligible school district is eligible for a budget adjustment 11 for that budget year in an amount equal to the difference 12 between the school district’s regular program district cost 13 per pupil and the highest regular program district cost per 14 pupil among all school districts in the state multiplied by 15 the district’s budget enrollment. The resolution authorizing 16 the budget adjustment may specify a budget adjustment amount 17 that is less than the maximum amount authorized under the 18 bill. The bill requires the school district to fund the budget 19 adjustment increase either by using moneys from its unexpended 20 fund balance or by using cash reserve moneys. 21 The bill specifies that the budget adjustment received does 22 not affect the eligibility for or amount of any other budget 23 adjustment authorized by law for the same budget year and that 24 the budget adjustment under the bill is limited to the budget 25 year for which the adjustment was authorized and shall not be 26 included in any computation of a school district’s cost for any 27 future budget year. 28 Under the bill, if a school district uses funds from its 29 cash reserve during the base year to fund a budget adjustment 30 authorized in the bill, the board of directors of the school 31 district shall include in its general fund budget document 32 information about the amount of the cash reserve used for such 33 purpose. 34 Code section 298.10 directs the department of management to 35 -3- LSB 2574XC (3) 86 md/sc 3/ 4

S.F. _____ limit the school district’s cash reserve levy to a level that 1 is not in excess of 20 percent of the general fund expenditures 2 for the year previous to the base year minus the unexpended 3 fund balance for the year previous to the base year. The bill 4 provides that for fiscal years beginning on or after July 1, 5 2015, the cash reserve levy for a school district that received 6 a budget adjustment under the bill, shall not exceed the lesser 7 of the amount determined under the current law limitation and 8 the amount levied for cash reserve in the year previous to 9 the base year, excluding any amount levied to fund a modified 10 supplemental amount established under Code section 257.31. 11 The bill takes effect upon enactment. 12 -4- LSB 2574XC (3) 86 md/sc 4/ 4