House File 124 - Introduced HOUSE FILE 124 BY THEDE , HUNTER , GASKILL , BENNETT , HANSON , KACENA , ANDERSON , KEARNS , BEARINGER , OURTH , T. TAYLOR , R. SMITH , and MEYER A BILL FOR An Act relating to school district funding by establishing a 1 district cost per pupil equity budget adjustment for certain 2 budget years, requiring property tax rate reductions for 3 school districts using the district cost per pupil equity 4 budget adjustment, and including effective date provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 1093YH (5) 87 md/sc

H.F. 124 Section 1. Section 257.2, subsection 2, Code 2017, 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 within ten days of adoption of the resolution notify 11 the department of management of the amount of the budget 12 adjustment to be received. The resolution adopted by the board 13 of directors shall specify the board’s intent to use such funds 14 authorized under subsection 2, paragraph “b” , without any 15 corresponding increase to the school district’s cash reserve 16 levy or other property tax levy of the school district for the 17 current budget year or any future budget year to replenish such 18 amounts. 19 2. a. For budget years beginning on or after July 1, 2017, 20 but before July 1, 2020, each school district that satisfies 21 the requirements of subsection 1 shall be eligible for a 22 budget adjustment for that budget year in an amount not to 23 exceed the difference between the school district’s regular 24 program district cost per pupil and the highest regular program 25 district cost per pupil among all school districts in the state 26 multiplied by the district’s budget enrollment. The resolution 27 adopted under subsection 1 may specify a budget adjustment 28 amount that is less than the maximum amount authorized under 29 this paragraph “ a ”. 30 b. The school district shall fund the budget adjustment 31 either by using moneys from its unexpended fund balance or by 32 using cash reserve moneys. 33 3. A budget adjustment received under this section shall 34 not affect the eligibility for or amount of any other budget 35 -1- LSB 1093YH (5) 87 md/sc 1/ 5

H.F. 124 adjustment authorized by law for the same budget year. In 1 addition, a budget adjustment under this section shall be 2 limited to the budget year for which the adjustment was 3 authorized and shall not be included in any computation of a 4 school district’s cost for any future budget year. 5 4. For each budget year that a school district authorizes 6 a budget adjustment under this section, the department of 7 management shall, following property tax levy rate calculations 8 and state foundation aid amount calculations under this chapter 9 or any other applicable provision of law, reduce each of 10 the following property tax levy rates imposed by the school 11 district for that budget year by one percent: 12 a. The foundation property tax levy rate under section 13 257.3. 14 b. The additional property tax levy rate under section 15 257.4. 16 c. The instructional support property tax levy rate under 17 section 257.19. 18 d. The educational improvement property tax levy rate under 19 section 257.29. 20 e. The cash reserve levy rate under section 298.10. 21 Sec. 3. Section 257.34, Code 2017, is amended to read as 22 follows: 23 257.34 Cash reserve information. 24 1. If a school district receives less state school 25 foundation aid under section 257.1 than is due under that 26 section for a base year and the school district uses funds 27 from its cash reserve during the base year to make up for 28 the amount of state aid not paid, the board of directors of 29 the school district shall include in its general fund budget 30 document information about the amount of the cash reserve used 31 to replace state school foundation aid not paid. 32 2. If a school district uses funds from its cash reserve 33 during the base year to fund a budget adjustment under section 34 257.14A, the board of directors of the school district shall 35 -2- LSB 1093YH (5) 87 md/sc 2/ 5

H.F. 124 include in its general fund budget document information about 1 the amount of the cash reserve used for such purpose. 2 Sec. 4. IMPLEMENTATION. Notwithstanding the deadline 3 for adopting a resolution to approve the budget adjustment 4 in section 257.14A, subsection 1, for the school budget 5 year beginning July 1, 2017, the resolution of the board of 6 directors of a school district shall be approved not later than 7 June 10, 2017. 8 Sec. 5. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 9 immediate importance, takes effect upon enactment. 10 EXPLANATION 11 The inclusion of this explanation does not constitute agreement with 12 the explanation’s substance by the members of the general assembly. 13 This bill establishes a district cost per pupil equity 14 budget adjustment. The board of directors of a school district 15 with a regular program district cost per pupil that is less 16 than the highest regular program district cost per pupil among 17 all 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 within 10 days notify the 21 department of management of the amount of the budget adjustment 22 to be received. The bill requires the resolution adopted by 23 the board of directors to specify the board’s intent to use the 24 authorized funding sources without any corresponding increase 25 to the school district’s cash reserve levy or other property 26 tax levy of the school district for the current budget year or 27 any future budget year to replenish the funding sources used. 28 For budget years beginning on or after July 1, 2017, but 29 before July 1, 2020, each eligible school district is eligible 30 for a budget adjustment for that budget year in an amount 31 equal to the difference between the school district’s regular 32 program district cost per pupil and the highest regular program 33 district cost per pupil among all school districts in the 34 state multiplied by the district’s budget enrollment. The 35 -3- LSB 1093YH (5) 87 md/sc 3/ 5

H.F. 124 resolution authorizing the budget adjustment may specify a 1 budget adjustment amount that is less than the maximum amount 2 authorized under the bill. The bill requires the school 3 district to fund the budget adjustment either by using moneys 4 from its unexpended fund balance or by using cash reserve 5 moneys. 6 The bill specifies that the budget adjustment received does 7 not affect the eligibility for or amount of any other budget 8 adjustment authorized by law for the same budget year and that 9 the budget adjustment under the bill is limited to the budget 10 year for which the adjustment was authorized and shall not be 11 included in any computation of a school district’s cost for any 12 future budget year. 13 For each budget year that a school district authorizes a 14 budget adjustment under the bill, the department of management 15 is required to, following property tax levy rate calculations 16 and state foundation aid amount calculations under Code 17 chapter 257 or any other applicable provision of law, reduce 18 each of the following property tax levy rates imposed by 19 the school district for that budget year by 1 percent: (1) 20 foundation property tax levy rate under Code section 257.3; (2) 21 additional property tax levy rate under Code section 257.4; (3) 22 instructional support property tax levy rate under Code section 23 257.19; (4) educational improvement property tax levy rate 24 under Code section 257.29; and (5) school district levy rate 25 for cash reserve under Code section 298.10. 26 Under the bill, if a school district uses funds from its 27 cash reserve during the base year to fund a budget adjustment 28 authorized in the bill, the board of directors of the school 29 district shall include in its general fund budget document 30 information about the amount of the cash reserve used for such 31 purpose. 32 Notwithstanding the May 15 deadline for adopting a 33 resolution to approve the budget adjustment provided for in the 34 bill, for the school budget year beginning July 1, 2017, the 35 -4- LSB 1093YH (5) 87 md/sc 4/ 5