Senate File 2077 - Introduced SENATE FILE 2077 BY D. JOHNSON A BILL FOR An Act relating to public education funding by establishing 1 the state percent of growth and the categorical state 2 percent of growth for the budget year beginning July 1, 3 2018, eliminating future repeal provisions for collection of 4 sales tax for deposit in the secure an advanced vision for 5 education fund, and authorizing uses for revenues received 6 from the fund. 7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 8 TLSB 5578XS (4) 87 md/jh

S.F. 2077 DIVISION I 1 STATE PERCENTS OF GROWTH 2 Section 1. Section 257.8, subsections 1 and 2, Code 2018, 3 are amended to read as follows: 4 1. State percent of growth. The state percent of growth for 5 the budget year beginning July 1, 2015, is one and twenty-five 6 hundredths percent. The state percent of growth for the budget 7 year beginning July 1, 2016, is two and twenty-five hundredths 8 percent. The state percent of growth for the budget year 9 beginning July 1, 2017, is one and eleven hundredths percent. 10 The state percent of growth for the budget year beginning July 11 1, 2018, is zero percent. The state percent of growth for each 12 subsequent budget year shall be established by statute which 13 shall be enacted within thirty days of the transmission of the 14 governor’s budget required by February 1 under section 8.21 15 during the regular legislative session beginning in the base 16 year. 17 2. Categorical state percent of growth. The categorical 18 state percent of growth for the budget year beginning July 19 1, 2015, is one and twenty-five hundredths percent. The 20 categorical state percent of growth for the budget year 21 beginning July 1, 2016, is two and twenty-five hundredths 22 percent. The categorical state percent of growth for 23 the budget year beginning July 1, 2017, is one and eleven 24 hundredths percent. The categorical state percent of growth 25 for the budget year beginning July 1, 2018, is zero percent. 26 The categorical state percent of growth for each budget 27 year shall be established by statute which shall be enacted 28 within thirty days of the transmission of the governor’s 29 budget required by February 1 under section 8.21 during the 30 regular legislative session beginning in the base year. The 31 categorical state percent of growth may include state percents 32 of growth for the teacher salary supplement, the professional 33 development supplement, the early intervention supplement, and 34 the teacher leadership supplement. 35 -1- LSB 5578XS (4) 87 md/jh 1/ 6

S.F. 2077 DIVISION II 1 SECURE AN ADVANCED VISION FOR EDUCATION FUND 2 Sec. 2. Section 423.2, subsection 11, paragraph b, 3 subparagraph (3), Code 2018, is amended to read as follows: 4 (3) Transfer one-sixth of the remaining revenues to the 5 secure an advanced vision for education fund created in section 6 423F.2 . This subparagraph (3) is repealed December 31, 2029. 7 Sec. 3. Section 423.2, subsection 14, Code 2018, is amended 8 by striking the subsection. 9 Sec. 4. Section 423.5, subsection 5, Code 2018, is amended 10 by striking the subsection. 11 Sec. 5. Section 423.43, subsection 1, paragraph b, Code 12 2018, is amended to read as follows: 13 b. Subsequent to the deposit into the general fund of 14 the state and after the transfer of such revenues collected 15 under chapter 423B , the department shall transfer one-sixth of 16 such remaining revenues to the secure an advanced vision for 17 education fund created in section 423F.2 . This paragraph is 18 repealed December 31, 2029. 19 Sec. 6. Section 423F.3, subsection 1, unnumbered paragraph 20 1, Code 2018, is amended to read as follows: 21 A school district receiving revenues from the secure an 22 advanced vision for education fund under this chapter without 23 a valid revenue purpose statement or if the valid revenue 24 purpose statement does not specify purposes for all revenues 25 received shall expend the revenues or unspecified revenues, as 26 applicable, subject to subsections 2 and 3 for the following 27 purposes: 28 Sec. 7. Section 423F.3, subsection 1, Code 2018, is amended 29 by adding the following new paragraph: 30 NEW PARAGRAPH . f. School district direct transportation 31 costs, as defined in subsection 3, paragraph “a” . 32 Sec. 8. Section 423F.3, subsection 3, paragraph a, Code 33 2018, is amended to read as follows: 34 a. If the board of directors adopts a resolution to use 35 -2- LSB 5578XS (4) 87 md/jh 2/ 6

S.F. 2077 funds received under the operation of this chapter solely for 1 providing property tax relief by reducing indebtedness from 2 the levies specified under section 298.2 or 298.18 , for the 3 payment of direct transportation costs of the school district, 4 or for both, the board of directors may approve a revenue 5 purpose statement for that purpose without submitting the 6 revenue purpose statement to a vote of the electors. If the 7 board of directors adopts a resolution to use funds received 8 under this chapter for the payment of direct transportation 9 costs, the amount used for such purpose shall not exceed 10 twenty-five percent of the total amount received by the 11 district for the fiscal year. For purposes of this paragraph, 12 “direct transportation costs” means costs incurred by a school 13 district for the transportation of pupils required under 14 chapter 285, including the purchase of transportation equipment 15 for transporting students, the repair and maintenance of 16 such transportation equipment, and the cost of fuel for such 17 transportation equipment. “Direct transportation costs” do not 18 include the cost of salaries, wages, or benefits of a school 19 bus driver or other employee of the school district or of a 20 person with whom the school district has contracted to provide 21 transportation services. 22 Sec. 9. Section 423F.4, Code 2018, is amended to read as 23 follows: 24 423F.4 Borrowing authority for school districts. 25 A school district may anticipate its share of the revenues 26 under section 423F.2 by issuing bonds in the manner provided in 27 section 423E.5 , Code 2018 . However, to the extent any school 28 district has issued bonds anticipating the proceeds of an 29 extended local sales and services tax for school infrastructure 30 purposes imposed by a county pursuant to former chapter 423E, 31 Code and Code Supplement 2007, prior to July 1, 2008, the 32 pledge of such revenues for the payment of principal and 33 interest on such bonds shall be replaced by a pledge of its 34 share of the revenues under section 423F.2 . 35 -3- LSB 5578XS (4) 87 md/jh 3/ 6

S.F. 2077 Sec. 10. REPEAL. Section 423F.6, Code 2018, is repealed. 1 EXPLANATION 2 The inclusion of this explanation does not constitute agreement with 3 the explanation’s substance by the members of the general assembly. 4 Division I of this bill establishes the state percent of 5 growth and the categorical state percent of growth for the 6 budget year beginning July 1, 2018. The bill establishes 7 a state percent of growth of 0 percent for the budget year 8 beginning July 1, 2018. The state percent of growth is used 9 to calculate the amount of supplemental state aid for a budget 10 year as part of the state school foundation program. 11 Division I of the bill also establishes a categorical state 12 percent of growth of 0 percent for the budget year beginning 13 July 1, 2018. The categorical state percent of growth is used 14 to calculate the amount of supplemental state aid for each of 15 the categorical funding supplements. 16 Code section 423.2 imposes a state sales tax of 6 percent 17 upon the sales price of all sales of tangible personal 18 property, consisting of goods, wares, merchandise, and other 19 items designated by statute, sold at retail in the state to 20 consumers, except as otherwise provided by Code chapter 423. 21 Generally, by operation of law, a sale subject to the sales 22 tax is also subject to the use tax. Following the transfer 23 of amounts required by statute, if applicable, one-sixth of 24 the remaining state sales tax revenue from the 6 percent tax 25 is transferred to the secure an advanced vision for education 26 (SAVE) fund created in Code section 423F.2. Moneys in the SAVE 27 fund are allocated to school districts on a per pupil basis to 28 be used for infrastructure and property tax reduction purposes 29 specified in Code chapter 423F. Under current law, the sales 30 and use tax rate of 6 percent is reduced to 5 percent on January 31 1, 2030, and Code chapter 423F, along with other corresponding 32 provisions, is repealed December 31, 2029. 33 Division II of the bill repeals Code section 423F.6, which 34 currently provides for the repeal of Code chapter 423F on 35 -4- LSB 5578XS (4) 87 md/jh 4/ 6

S.F. 2077 December 31, 2029. The bill also strikes corresponding repeal 1 provisions relating to the allocation of sales tax revenue and 2 provisions that reduce the state sales and use tax rate from 6 3 percent to 5 percent beginning January 1, 2030, and specifies a 4 Code year for a statutory reference related to the manner by 5 which school districts may issue bonds in anticipation of SAVE 6 fund revenues. 7 Code section 423F.3 authorizes the school district board 8 of directors to approve a revenue purpose statement to use 9 funds received from the SAVE fund solely for providing property 10 tax relief by reducing indebtedness from the physical plant 11 and equipment levy and the school district debt service 12 levy without submitting the revenue purpose statement to 13 a vote of the electors. The bill authorizes the board of 14 directors to similarly approve a revenue purpose statement for 15 the payment of school district direct transportation costs 16 without submitting the revenue purpose statement to a vote of 17 the electors. The bill provides, however, if the board of 18 directors adopts a resolution to use funds received under this 19 Code chapter for the payment of direct transportation costs, 20 the amount used for such purpose shall not exceed 25 percent 21 of the total amount received by the district for the fiscal 22 year. The bill defines “direct transportation costs” to mean 23 costs incurred for the transportation of pupils required under 24 Code chapter 285, including the purchase of transportation 25 equipment for transporting students, the repair and maintenance 26 of such transportation equipment, and the cost of fuel for 27 such transportation equipment. The bill excludes the cost 28 of salaries, wages, or benefits of a school bus driver or 29 other employee of the school district or of a person with whom 30 the school district has contracted to provide transportation 31 services from the definition of direct transportation costs. 32 Code section 423F.3 provides that a school district 33 receiving revenues from the SAVE fund without a valid revenue 34 purpose statement is required to use such revenues for 35 -5- LSB 5578XS (4) 87 md/jh 5/ 6