S.F. 2405 Section 1. Section 260C.18C, Code 2024, is amended to read 1 as follows: 2 260C.18C State aid distribution formula. 3 1. Purpose. A distribution plan for general state financial 4 aid to Iowa’s community colleges is established for the fiscal 5 year commencing July 1, 2005 2025 , and succeeding fiscal years. 6 Funds appropriated by the general assembly to the department 7 for general financial aid to community colleges shall be 8 allocated to each community college in the manner provided 9 under this section for the community colleges to provide 10 the highest quality educational opportunities and services, 11 as described in section 260C.1, to the greatest number of 12 students . 13 2. Definitions. As used in this section and section 14 260C.18D , unless the context otherwise requires: 15 a. “Base funding allocation” means the amount of general 16 state financial aid all community colleges received in the base 17 year. 18 b. “Base year” means the fiscal year immediately preceding 19 the budget year. 20 c. “Below-average support per FTEE” for a community college 21 means the state-average combined support per FTEE minus the 22 combined support per FTEE for the community college if the 23 community college’s combined support per FTEE is less than the 24 state-average combined support per FTEE. 25 d. c. “Budget year” means the fiscal year for which moneys 26 are appropriated by the general assembly. 27 e. d. “Combined support” for a community college means 28 the total amount of moneys the community college received in 29 general state financial aid in the base year plus the community 30 college’s general fund property tax revenue, including utility 31 replacement, for the base year. 32 f. “Combined support per FTEE” for a community college 33 means the community college’s combined support divided by its 34 three-year rolling average full-time equivalent enrollment for 35 -1- LSB 5661SZ (2) 90 jda/jh 1/ 10

S.F. 2405 the three years prior to the base year. 1 g. “Contact hour” for a noncredit course equals fifty 2 minutes of contact between an instructor and students in a 3 scheduled course offering for which students are registered. 4 h. “Credit hour” , for purposes of community college funding 5 distribution, shall be as defined by the department by rule. 6 i. “Eligible credit courses” means all credit courses that 7 are eligible for general state financial aid which are part 8 of a department-approved program of study. The department 9 shall review and provide a determination should a question of 10 eligibility occur. 11 j. “Eligible growth support” for a community college is the 12 community college’s below-average support per FTEE multiplied 13 times its three-year rolling average full-time equivalent 14 enrollment. 15 k. “Eligible noncredit courses” means all noncredit courses 16 eligible for general state financial aid which fall under one 17 of the eligible categories for noncredit courses as defined 18 by rule of the department. The department shall review and 19 provide a determination should a question of eligibility occur. 20 l. “Eligible student” means a student enrolled in eligible 21 credit or eligible noncredit courses. The department shall 22 review and provide a determination should a question of 23 eligibility occur. 24 m. e. “Fiscal year” means the period of twelve months 25 beginning on July 1 and ending on June 30. 26 n. One “full-time equivalent enrollment (FTEE)” equals 27 twenty-four credit hours for credit courses or six hundred 28 contact hours for noncredit courses generated by all eligible 29 students enrolled in eligible courses. 30 o. f. “General fund property tax revenue” means the amount 31 of moneys a community college raised or could have raised from 32 a property tax of twenty and one-fourth cents per thousand 33 dollars of assessed valuation on all taxable property in its 34 merged area collected for the base year. 35 -2- LSB 5661SZ (2) 90 jda/jh 2/ 10

S.F. 2405 p. g. “General state financial aid” means the amount of 1 general state financial aid the community college received from 2 the general fund. 3 q. “Inflation adjustment amount” means the inflation rate 4 minus two percentage points multiplied times the base funding 5 allocation. The inflation adjustment amount shall not be less 6 than zero. 7 r. “Inflation rate” means the average of the preceding 8 twelve-month percentage change, which shall be computed on 9 a monthly basis, in the consumer price index for all urban 10 consumers, not seasonally adjusted, published by the United 11 States department of labor, bureau of labor statistics, 12 calculated for the calendar year ending six months after the 13 beginning of the base year. 14 s. “State-average combined support per FTEE” means the 15 average of the combined support per FTEE for all community 16 colleges in the state in the base year. 17 t. “Three-year rolling average full-time equivalent 18 enrollment” means the average of the audited full-time 19 equivalent enrollment for a community college over the three 20 fiscal years prior to the base year as determined by the 21 department. 22 u. “Total growth support amount” means the sum of the 23 eligible growth support for all the community colleges. 24 3. Distribution formula. Moneys appropriated by the general 25 assembly from the general fund to the department for community 26 college purposes for general state financial aid for a budget 27 year shall be allocated to each community college by the 28 department as follows: 29 a. If the inflation rate is equal to two percent or less: 30 (1) Base funding allocation. The moneys shall first 31 be allocated in the amount of general state financial aid 32 each community college received in the base year. If the 33 appropriation is less than the total of the amount of general 34 state financial aid each community college received in the base 35 -3- LSB 5661SZ (2) 90 jda/jh 3/ 10

S.F. 2405 year, the moneys shall be allocated in the same proportion as 1 the allocation of general state financial aid each community 2 college received in the base year. 3 (2) Marginal cost adjustment. After the base funding has 4 been allocated, each community college shall be allocated up to 5 an additional two percent of its base funding allocation. The 6 community college’s allocation shall be in the same proportion 7 as the allocation of general state financial aid each community 8 college received in the base year. 9 (3) Three-year rolling average of full-time equivalent 10 enrollment. If the increase in the total state general aid 11 exceeds two percent over the base funding allocation, an amount 12 up to an additional one percent of the base funding allocation 13 shall be distributed based upon each community college’s 14 proportional share of the three-year rolling average full-time 15 equivalent enrollments for all community colleges. 16 (4) Extraordinary growth adjustment. If the increase in 17 total state general aid exceeds three percent over the base 18 funding allocation, an amount up to an additional one percent 19 of the base funding allocation shall be distributed as follows: 20 (a) Forty percent of the moneys shall be allocated based 21 upon each community college’s proportional share of the 22 three-year rolling average full-time equivalent enrollments for 23 all community colleges. 24 (b) Sixty percent of the moneys shall be allocated to 25 community colleges that have eligible growth support. The 26 allocation shall be based upon the proportional share that each 27 community college’s eligible growth support bears to the total 28 growth support amount. Once the moneys allocated under this 29 subparagraph division equal the total growth support amount, 30 the remaining moneys allocated under this subparagraph shall be 31 allocated as provided in subparagraph division (a). 32 (5) Additional three-year rolling average FTEE 33 allocation. If the increase in total state general aid 34 exceeds four percent over the base funding allocation, all 35 -4- LSB 5661SZ (2) 90 jda/jh 4/ 10

S.F. 2405 remaining moneys shall be distributed based upon each college’s 1 proportional share of the three-year rolling average full-time 2 equivalent enrollments for all community colleges Annually, 3 on or before October 31 of each year, the presidents of 4 the community colleges and the chancellors of the community 5 colleges who serve as the chief executive officers of such 6 community colleges shall establish a distribution formula for 7 general state aid to the community colleges for the succeeding 8 budget year . When determining the distribution formula 9 pursuant to this paragraph, the presidents and chancellors 10 shall consider the enrollment and combined support for each 11 community college, along with any other factor deemed relevant 12 by the presidents and chancellors. The distribution formula 13 shall not allocate funding to a community college that is below 14 the general state financial aid the community college received 15 in any previous budget year, unless there is a reduction in the 16 base funding allocation. The distribution formula requires the 17 approval of at least ten of the presidents and chancellors. If 18 the presidents and chancellors approve a distribution formula 19 pursuant to this paragraph, the presidents and chancellors 20 shall transmit the distribution formula to the department, and 21 the department shall implement the distribution formula. 22 b. If the inflation rate is greater than two percent but 23 less than four percent: 24 (1) Base funding allocation. The moneys shall first 25 be allocated in the amount of general state financial aid 26 each community college received in the base year. If the 27 appropriation is less than the total of the amount of general 28 state financial aid each community college received in the base 29 year, the moneys shall be allocated in the same proportion as 30 the allocation of general state financial aid each community 31 college received in the base year. 32 (2) Marginal cost adjustment. After the base funding has 33 been allocated, each community college shall be allocated up to 34 an additional two percent of its base funding allocation. The 35 -5- LSB 5661SZ (2) 90 jda/jh 5/ 10

S.F. 2405 community college’s allocation shall be in the same proportion 1 as the allocation of general state financial aid each community 2 college received in the base year. 3 (3) Three-year rolling average of full-time equivalent 4 enrollment. If the increase in the total state general aid 5 exceeds two percent over the base funding allocation, an amount 6 up to an additional one percent of the base funding allocation 7 shall be distributed based upon each community college’s 8 proportional share of the three-year rolling average full-time 9 equivalent enrollments for all community colleges. 10 (4) Extraordinary growth adjustment. If the increase in 11 total state general aid exceeds three percent over the base 12 funding allocation, an amount up to an additional one percent 13 of the base funding allocation shall be based as follows: 14 (a) Forty percent of the moneys shall be allocated based 15 upon each community college’s proportional share of the 16 three-year rolling average full-time equivalent enrollments for 17 all community colleges. 18 (b) Sixty percent of the moneys shall be allocated to 19 community colleges that have eligible growth support. The 20 allocation shall be based upon the proportional share that each 21 community college’s eligible growth support bears to the total 22 growth support amount. Once the moneys allocated under this 23 subparagraph division equal the total growth support amount, 24 the remaining moneys allocated under this subparagraph shall be 25 allocated as provided in subparagraph division (a). 26 (5) Inflation adjustment. If the increase in total 27 state general aid exceeds four percent over the base funding 28 allocation, an amount up to the inflation adjustment amount 29 shall be distributed to each community college in the same 30 proportion as the allocation of general state financial aid 31 each community college received in the base year. 32 (6) Additional three-year rolling average FTEE 33 allocation. If there are remaining moneys to be distributed 34 under this paragraph after distributing moneys under 35 -6- LSB 5661SZ (2) 90 jda/jh 6/ 10

S.F. 2405 subparagraph (5), all remaining moneys shall be distributed 1 based upon each community college’s proportional share of the 2 three-year rolling average full-time equivalent enrollments 3 for all community colleges If the presidents of the community 4 colleges and the chancellors of the community colleges who 5 serve as the chief executive officers of such community 6 colleges fail to approve a distribution formula on or before 7 October 31 pursuant to paragraph “a” , the department shall 8 establish the distribution formula for general state aid 9 to the community colleges for the succeeding budget year . 10 When determining the distribution formula pursuant to this 11 paragraph, the department shall consider the enrollment 12 and combined support for each community college, along with 13 any other factor deemed relevant by the department. The 14 distribution formula shall not allocate funding to a community 15 college that is below the general state financial aid the 16 community college received in any previous budget year, unless 17 there is a reduction in the base funding allocation. 18 c. If the inflation rate equals or exceeds four percent: 19 (1) Base funding allocation. The moneys shall first 20 be allocated in the amount of general state financial aid 21 each community college received in the base year. If the 22 appropriation is less than the total of the amount of general 23 state financial aid each community college received in the base 24 year, the moneys shall be allocated in the same proportion as 25 the allocation of general state financial aid each community 26 college received in the base year. 27 (2) Marginal cost adjustment. After the base funding has 28 been allocated, each community college shall be allocated up to 29 an additional two percent of its base funding allocation. The 30 community college’s allocation shall be in the same proportion 31 as the allocation of general state financial aid each community 32 college received in the base year. 33 (3) Three-year rolling average of full-time equivalent 34 enrollment. If the increase in the total state general aid 35 -7- LSB 5661SZ (2) 90 jda/jh 7/ 10

S.F. 2405 exceeds two percent over the base funding allocation, an amount 1 up to an additional one percent of the base funding allocation 2 shall be distributed based upon each community college’s 3 proportional share of the three-year rolling average full-time 4 equivalent enrollments for all community colleges. 5 (4) Inflation adjustment. If the increase in total state 6 general aid exceeds three percent over the base funding 7 allocation, an amount up to the inflation adjustment amount 8 shall be distributed to each community college in the same 9 proportion as the allocation of general state financial aid 10 each community college received in the base year. 11 (5) Extraordinary growth adjustment. If there are 12 remaining moneys to be distributed under this paragraph after 13 distributing moneys under subparagraph (4), an amount up to an 14 additional one percent of the base funding allocation shall be 15 based as follows: 16 (a) Forty percent of the moneys shall be allocated based 17 upon each community college’s proportional share of the 18 three-year rolling average full-time equivalent enrollments for 19 all community colleges. 20 (b) Sixty percent of the moneys shall be allocated to 21 community colleges that have eligible growth support. The 22 allocation shall be based upon the proportional share that each 23 community college’s eligible growth support bears to the total 24 growth support amount. Once the moneys allocated under this 25 subparagraph division equal the total growth support amount, 26 the remaining moneys allocated under this subparagraph shall be 27 allocated as provided in subparagraph division (a). 28 (6) Additional three-year rolling average FTEE 29 allocation. If there are remaining moneys to be distributed 30 under this paragraph after distributing moneys under 31 subparagraph (5), all remaining moneys shall be distributed 32 based upon each community college’s proportional share of the 33 three-year rolling average full-time equivalent enrollments for 34 all community colleges. 35 -8- LSB 5661SZ (2) 90 jda/jh 8/ 10

S.F. 2405 4. Information supplied by colleges and adoption of rules. 1 a. Each community college shall provide information in 2 the manner and form as determined by the department. If 3 a community college fails to provide the information as 4 requested, the department shall estimate the full-time 5 equivalent enrollment of that college. 6 b. Each community college shall complete and submit an 7 annual student enrollment audit to the department. Adjustments 8 to community college state general aid allocations shall be 9 made based on student enrollment audit outcomes. 10 c. The department shall adopt rules under chapter 17A as 11 necessary for the allocation of general state financial aid. 12 Sec. 2. APPLICABILITY. This Act applies to budget years 13 beginning on or after July 1, 2025. 14 EXPLANATION 15 The inclusion of this explanation does not constitute agreement with 16 the explanation’s substance by the members of the general assembly. 17 This bill modifies provisions related to the distribution 18 formula for general state financial aid to community colleges. 19 Current Code section 260C.18C establishes a distribution 20 formula for the allocation of state moneys appropriated 21 annually by the general assembly to the department of education 22 for distribution to each community college. The distribution 23 formula includes a base funding allocation, a marginal 24 cost adjustment, a three-year rolling average of full-time 25 equivalent enrollment, an extraordinary growth adjustment, and 26 other allocations. 27 The bill provides that funds appropriated by the general 28 assembly to the department of education for general financial 29 aid to community colleges shall be allocated to each community 30 college for the community colleges to provide the highest 31 quality educational opportunities and services to the greatest 32 number of students. 33 The bill modifies Code section 260C.18C to provide that the 34 moneys that the general assembly appropriates from the general 35 -9- LSB 5661SZ (2) 90 jda/jh 9/ 10

S.F. 2405 fund of the state to the department of education for community 1 college purposes for general state financial aid shall be 2 allocated to each community college by the department pursuant 3 to the terms of a distribution formula that is approved by at 4 least 10 of the presidents and chancellors of the community 5 colleges. The presidents and chancellors must, on or before 6 October 31 of each year, establish such distribution formula 7 for the succeeding budget year. However, the distribution 8 formula shall not allocate funding to a community college 9 that is below the general state financial aid the community 10 college received in any previous budget year, unless there is a 11 reduction in the base funding allocation. 12 If the presidents and chancellors of the community colleges 13 fail to approve a distribution formula, the bill requires 14 the department of education to establish the distribution 15 formula for general state aid to the community colleges for 16 the succeeding budget year. When determining the distribution 17 formula, the department of education is required to consider 18 the enrollment and combined support for each community college. 19 Additionally, the bill provides that the distribution formula 20 established by the department of education shall not allocate 21 funding to a community college that is below the general state 22 financial aid the community college received in any previous 23 budget year, unless there is a reduction in the base funding 24 allocation. 25 Current law provides that adjustments to community college 26 state general aid allocations are required to be made based on 27 the outcomes of audits of student enrollment. The bill strikes 28 this provision. 29 The bill applies to budget years beginning on or after July 30 1, 2025. 31 -10- LSB 5661SZ (2) 90 jda/jh 10/ 10