Senate Study Bill 3106 - Introduced SENATE/HOUSE FILE _____ BY (PROPOSED GOVERNOR BUDGET BILL) A BILL FOR An Act relating to education funding by establishing a state 1 percent of growth and the categorical state percent of 2 growth for the budget year beginning July 1, 2020, modifying 3 provisions and references relating to the property tax 4 replacement payment, modifying appropriations for the 5 transportation equity program, area education agency 6 funding, and the instructional support program, making 7 appropriations, and including effective date provisions. 8 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 9 TLSB 5019XG (3) 88 md/jh

S.F. _____ H.F. _____ Section 1. Section 257.8, subsections 1 and 2, Code 2020, 1 are amended to read as follows: 2 1. State percent of growth. The state percent of growth 3 for the budget year beginning July 1, 2017, is one and eleven 4 hundredths percent. The state percent of growth for the 5 budget year beginning July 1, 2018, is one percent. The 6 state percent of growth for the budget year beginning July 1, 7 2019, is two and six hundredths percent. The state percent 8 of growth for the budget year beginning July 1, 2020, is two 9 and one-half percent. The state percent of growth for each 10 subsequent budget year shall be established by statute which 11 shall be enacted within thirty days of the transmission of the 12 governor’s budget required by February 1 under section 8.21 13 during the regular legislative session beginning in the base 14 year. 15 2. Categorical state percent of growth. The categorical 16 state percent of growth for the budget year beginning July 1, 17 2017, is one and eleven hundredths percent. The categorical 18 state percent of growth for the budget year beginning July 19 1, 2018, is one percent. The categorical state percent of 20 growth for the budget year beginning July 1, 2019, is two and 21 six hundredths percent. The categorical state percent of 22 growth for the budget year beginning July 1, 2020, is two and 23 one-half percent. The categorical state percent of growth 24 for each budget year shall be established by statute which 25 shall be enacted within thirty days of the transmission of the 26 governor’s budget required by February 1 under section 8.21 27 during the regular legislative session beginning in the base 28 year. The categorical state percent of growth may include 29 state percents of growth for the teacher salary supplement, the 30 professional development supplement, the early intervention 31 supplement, the teacher leadership supplement, and for budget 32 years beginning on or after July 1, 2020, transportation equity 33 aid payments under section 257.16C . 34 Sec. 2. Section 257.16B, subsections 1 and 2, Code 2020, are 35 -1- LSB 5019XG (3) 88 md/jh 1/ 8

S.F. _____ H.F. _____ amended to read as follows: 1 1. For each fiscal year beginning on or after July 1, 2017 2 2018 , there is appropriated from the general fund of the state 3 to the department of education an amount necessary to make all 4 school district property tax replacement payments under this 5 section , as calculated in subsection 2 . 6 2. a. For the budget year beginning July 1, 2017, the 7 department of management shall calculate for each school 8 district all of the following: 9 (1) The regular program state cost per pupil for the budget 10 year beginning July 1, 2012, multiplied by one hundred percent 11 less the regular program foundation base per pupil percentage 12 pursuant to section 257.1 . 13 (2) The regular program state cost per pupil for the budget 14 year beginning July 1, 2017, multiplied by one hundred percent 15 less the regular program foundation base per pupil percentage 16 pursuant to section 257.1 . 17 (3) The amount of each school district’s property tax 18 replacement payment. Each school district’s property tax 19 replacement payment equals the school district’s weighted 20 enrollment for the budget year beginning July 1, 2017, 21 multiplied by the remainder of the amount calculated for 22 the school district under subparagraph (2) minus the amount 23 calculated for the school district under subparagraph (1). 24 b. a. For the budget year beginning July 1, 2018, the 25 department of management shall calculate for each school 26 district all of the following: 27 (1) The regular program state cost per pupil for the budget 28 year beginning July 1, 2012, multiplied by one hundred percent 29 less the regular program foundation base per pupil percentage 30 pursuant to section 257.1 . 31 (2) The regular program state cost per pupil for the budget 32 year beginning July 1, 2018, multiplied by one hundred percent 33 less the regular program foundation base per pupil percentage 34 pursuant to section 257.1 . 35 -2- LSB 5019XG (3) 88 md/jh 2/ 8

S.F. _____ H.F. _____ (3) The amount of each school district’s property tax 1 replacement payment. Each school district’s property tax 2 replacement payment equals the school district’s weighted 3 enrollment for the budget year beginning July 1, 2018, 4 multiplied by the remainder of the amount calculated for 5 the school district under subparagraph (2) minus the amount 6 calculated for the school district under subparagraph (1). 7 c. b. For each the budget year beginning on or after July 8 1, 2019, the department of management shall calculate for each 9 school district all of the following: 10 (1) The regular program state cost per pupil for the budget 11 year beginning July 1, 2012, multiplied by one hundred percent 12 less the regular program foundation base per pupil percentage 13 pursuant to section 257.1 . 14 (2) The regular program state cost per pupil for the budget 15 year beginning July 1, 2019, multiplied by one hundred percent 16 less the regular program foundation base per pupil percentage 17 pursuant to section 257.1 . 18 (3) The amount of each school district’s property tax 19 replacement payment. Each school district’s property tax 20 replacement payment equals the school district’s weighted 21 enrollment for the budget year beginning July 1, 2019, 22 multiplied by the remainder of the amount calculated for 23 the school district under subparagraph (2) minus the amount 24 calculated for the school district under subparagraph (1). 25 c. For each budget year beginning on or after July 1, 2020, 26 the department of management shall calculate for each school 27 district all of the following: 28 (1) The regular program state cost per pupil for the budget 29 year beginning July 1, 2012, multiplied by one hundred percent 30 less the regular program foundation base per pupil percentage 31 pursuant to section 257.1. 32 (2) The regular program state cost per pupil for the budget 33 year beginning July 1, 2020, multiplied by one hundred percent 34 less the regular program foundation base per pupil percentage 35 -3- LSB 5019XG (3) 88 md/jh 3/ 8

S.F. _____ H.F. _____ pursuant to section 257.1. 1 (3) The amount of each school district’s property tax 2 replacement payment. Each school district’s property tax 3 replacement payment equals the school district’s weighted 4 enrollment for the budget year multiplied by the remainder 5 of the amount calculated for the school district under 6 subparagraph (2) minus the amount calculated for the school 7 district under subparagraph (1). 8 Sec. 3. Section 257.16C, subsection 3, paragraph d, Code 9 2020, is amended to read as follows: 10 d. (1) For the fiscal year beginning July 1, 2019, there 11 is appropriated from the general fund of the state to the 12 department of management for deposit in the transportation 13 equity fund the sum of nineteen million dollars, or so much 14 thereof as is necessary, to be used for the purposes of this 15 section . 16 (2) For the fiscal year beginning July 1, 2020, there 17 is appropriated from the general fund of the state to the 18 department of management for deposit in the transportation 19 equity fund the sum of twenty-four million four hundred 20 seventy-five thousand dollars, or so much thereof as is 21 necessary, to be used for the purposes of this section. 22 (2) (3) For each fiscal year beginning on or after July 23 1, 2020 2021 , there is appropriated from the general fund of 24 the state to the department of management for deposit in the 25 transportation equity fund the sum of the following, or so much 26 thereof as is necessary, to be used for the purposes of this 27 section : 28 (a) The amount appropriated to the transportation equity 29 fund under this paragraph for the immediately preceding fiscal 30 year. 31 (b) The product of the amount determined under subparagraph 32 division (a) multiplied by the categorical percent of growth 33 under section 257.8, subsection 2 , for the budget year 34 beginning on the same date of the fiscal year for which the 35 -4- LSB 5019XG (3) 88 md/jh 4/ 8

S.F. _____ H.F. _____ appropriation is made. 1 Sec. 4. Section 257.16D, subsection 2, paragraph b, Code 2 2020, is amended to read as follows: 3 b. The moneys available in a fiscal year in the foundation 4 base supplement fund shall be distributed by the department 5 of management to each school district on a per pupil basis 6 calculated using each school district’s weighted enrollment, 7 as defined in section 257.6 , for that fiscal year. However, 8 the amount of a school district’s foundation base supplement 9 payment for a budget year shall not exceed an amount equal to 10 the product of the school district’s weighted enrollment for 11 the budget year multiplied by the amount for the budget year 12 calculated under section 257.16B, subsection 2 , paragraph “b” , 13 subparagraph (2), product of the regular program state cost per 14 pupil for the budget year multiplied by one hundred percent 15 less the regular program foundation base per pupil percentage 16 pursuant to section 257.1, minus the amount of the school 17 district’s property tax replacement payment under section 18 257.16B for the budget year. 19 Sec. 5. Section 257.35, Code 2020, is amended by adding the 20 following new subsection: 21 NEW SUBSECTION . 14A. Notwithstanding subsection 1, and in 22 addition to the reduction applicable pursuant to subsection 23 2, the state aid for area education agencies and the portion 24 of the combined district cost calculated for these agencies 25 for the fiscal year beginning July 1, 2020, and ending June 26 30, 2021, shall be reduced by the department of management by 27 fifteen million dollars. The reduction for each area education 28 agency shall be prorated based on the reduction that the agency 29 received in the fiscal year beginning July 1, 2003. 30 Sec. 6. INSTRUCTIONAL SUPPORT STATE AID —— FY 2020-2021. In 31 lieu of the appropriation provided in section 257.20, 32 subsection 2, the appropriation for the fiscal year 33 beginning July 1, 2020, and ending June 30, 2021, for paying 34 instructional support state aid under section 257.20 for such 35 -5- LSB 5019XG (3) 88 md/jh 5/ 8

S.F. _____ H.F. _____ fiscal year is zero. 1 Sec. 7. EFFECTIVE DATE. This Act, being deemed of immediate 2 importance, takes effect upon enactment. 3 EXPLANATION 4 The inclusion of this explanation does not constitute agreement with 5 the explanation’s substance by the members of the general assembly. 6 This bill relates to education funding by establishing the 7 state percent of growth and the categorical state percent of 8 growth for the budget year beginning July 1, 2020, modifying 9 provisions and references relating to the property tax 10 replacement payments, and modifying various appropriations for 11 certain education funding programs. 12 The bill establishes a state percent of growth of 2.5 percent 13 for the budget year beginning July 1, 2020. The state percent 14 of growth is used to calculate the amount of supplemental state 15 aid for a budget year as part of the state school foundation 16 program. The bill also establishes a categorical state percent 17 of growth of 2.5 percent for the budget year beginning July 18 1, 2020. The categorical state percent of growth is used to 19 calculate the amount of supplemental state aid for each of the 20 categorical funding supplements. 21 Code section 257.16B provides for school district property 22 tax replacement payments. Under current law, for each budget 23 year beginning on or after July 1, 2019, each school district’s 24 property tax replacement payment amount is equal to the school 25 district’s weighted enrollment for the budget year multiplied 26 by the difference of the following: (1) the regular program 27 state cost per pupil for the budget year beginning July 1, 28 2019, multiplied by 100 percent less the regular program 29 foundation base per pupil percentage; and (2) the regular 30 program state cost per pupil for the budget year beginning July 31 1, 2012, multiplied by 100 percent less the regular program 32 foundation base per pupil percentage. The regular program 33 foundation base per pupil percentage is 87.5 percent. 34 The bill modifies the property tax replacement payment 35 -6- LSB 5019XG (3) 88 md/jh 6/ 8

S.F. _____ H.F. _____ calculation for budget years beginning on or after July 1, 1 2020. For budget years beginning on or after July 1, 2020, 2 each school district’s property tax replacement payment amount 3 is equal to the school district’s weighted enrollment for the 4 applicable budget year multiplied by the difference of the 5 following: (1) the regular program state cost per pupil for 6 the budget year beginning July 1, 2020, multiplied by 100 7 percent less the regular program foundation base per pupil 8 percentage; and (2) the regular program state cost per pupil 9 for the budget year beginning July 1, 2012, multiplied by 100 10 percent less the regular program foundation base per pupil 11 percentage. 12 Code section 257.16C establishes a transportation equity 13 program to provide additional funding for school districts with 14 a transportation cost per pupil that exceeds the statewide 15 adjusted transportation cost per pupil, as determined by the 16 department of management. If the balance of the fund exceeds 17 the amount necessary to make all transportation equity aid 18 payments, moneys remaining in the fund are required to be used 19 for transportation base funding payments as calculated under 20 Code section 257.16C(4). 21 For each fiscal year beginning on or after July 1, 2020, 22 Code section 257.16C appropriates from the general fund of the 23 state to the transportation equity fund the sum of the amount 24 appropriated for the immediately preceding fiscal year plus 25 the product of the amount appropriated for the immediately 26 preceding fiscal year multiplied by the categorical percent 27 of growth for the corresponding school budget year. The 28 bill amends Code section 257.16C so that this appropriation 29 calculation begins with the fiscal year beginning July 1, 2021, 30 and appropriates $24,475,000 to the transportation equity fund 31 for the fiscal year beginning July 1, 2020. 32 The bill amends Code section 257.35 to reduce the state aid 33 for area education agencies and the portion of the combined 34 district cost calculated for these agencies for the fiscal 35 -7- LSB 5019XG (3) 88 md/jh 7/ 8

S.F. _____ H.F. _____ year beginning July 1, 2020, and ending June 30, 2021, by an 1 additional $15 million. The reduction for each area education 2 agency shall be prorated based on the reduction that the agency 3 received in the fiscal year beginning July 1, 2003. 4 The bill provides that in lieu of the appropriation provided 5 in Code section 257.20(2), the appropriation for the fiscal 6 year beginning July 1, 2020, and ending June 30, 2021, for 7 paying instructional support state aid for such fiscal year is 8 zero. 9 The bill takes effect upon enactment. 10 -8- LSB 5019XG (3) 88 md/jh 8/ 8