House File 2736 - Introduced HOUSE FILE 2736 BY BAGNIEWSKI , OLSON , WICHTENDAHL , LEVIN , MATSON , ZABNER , WILBURN , GOSA , RAMIREZ , EHLERT , MADISON , CROKEN , JACOBY , McBURNEY , B. MEYER , KRESSIG , BROWN-POWERS , GJERDE , and WESSEL-KROESCHELL A BILL FOR An Act modifying provisions related to area education agency 1 funding, and including effective date and applicability 2 provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5670YH (2) 91 jda/jh

H.F. 2736 Section 1. Section 257.1, subsection 2, paragraph b, Code 1 2026, is amended to read as follows: 2 b. For the budget year commencing July 1, 1999, and for 3 each succeeding budget year beginning before July 1, 2022, 4 the regular program foundation base per pupil is eighty-seven 5 and five-tenths percent of the regular program state cost per 6 pupil. For the budget year commencing July 1, 2022, and for 7 each succeeding budget year, the regular program foundation 8 base per pupil is eighty-eight and four-tenths percent of the 9 regular program state cost per pupil. For the budget year 10 commencing July 1, 1991, and for each succeeding budget year 11 the special education support services foundation base is 12 seventy-nine percent of the special education support services 13 state cost per pupil. The combined foundation base is the sum 14 of the regular program foundation base, the special education 15 support services foundation base, the total teacher salary 16 supplement district cost, the total professional development 17 supplement district cost, the total early intervention 18 supplement district cost, the total teacher leadership 19 supplement district cost, and the total area education agency 20 teacher salary supplement district cost , and the total area 21 education agency professional development supplement district 22 cost . 23 Sec. 2. Section 257.1, subsection 3, Code 2026, is amended 24 to read as follows: 25 3. Computations rounded. In making computations and 26 payments under this chapter , except in the case of computations 27 relating to funding of special education support services, 28 media services, and educational services under section 257.37 29 provided through the area education agencies , and the teacher 30 salary supplement, the professional development supplement, 31 the early intervention supplement, and the teacher leadership 32 supplement, the department of management shall round amounts to 33 the nearest whole dollar. 34 Sec. 3. Section 257.1, Code 2026, is amended by adding the 35 -1- LSB 5670YH (2) 91 jda/jh 1/ 17

H.F. 2736 following new subsection: 1 NEW SUBSECTION . 5. Legislative intent. The general 2 assembly finds that the general welfare of this state and 3 well-being of its citizens is directly related to the quality 4 of education provided to students enrolled in Iowa’s schools, 5 and the quality of education provided to students enrolled in 6 Iowa’s schools is directly related to the funding available to 7 those schools. Therefore, the general assembly intends that 8 Iowa’s schools and area education agencies should be fully 9 funded to maximize the quality of the education provided to 10 students. 11 Sec. 4. Section 257.4, subsection 1, paragraph a, Code 2026, 12 is amended by adding the following new subparagraph: 13 NEW SUBPARAGRAPH . (07) The total area education agency 14 professional development supplement district cost. 15 Sec. 5. Section 257.9, Code 2026, is amended by adding the 16 following new subsection: 17 NEW SUBSECTION . 9A. Area education agency professional 18 development supplement state cost per pupil. For the budget 19 year beginning July 1, 2026, for the area education agency 20 professional development supplement state cost per pupil, the 21 department of management shall add together the professional 22 development allocation made to each area education agency for 23 the fiscal year beginning July 1, 2023, pursuant to section 24 257.37A, subsection 2, Code 2024, and divide that sum by 25 the statewide special education support services weighted 26 enrollment for the fiscal year beginning July 1, 2026. The 27 area education agency professional development supplement state 28 cost per pupil for the budget year beginning July 1, 2027, 29 and succeeding budget years, shall be the amount calculated 30 by the department of management under this subsection for the 31 base year plus a supplemental state aid amount that is equal 32 to the professional development supplement categorical state 33 percent of growth, pursuant to section 257.8, subsection 2, for 34 the budget year, multiplied by the amount calculated by the 35 -2- LSB 5670YH (2) 91 jda/jh 2/ 17

H.F. 2736 department of management under this subsection for the base 1 year. 2 Sec. 6. Section 257.10, subsection 7, Code 2026, is amended 3 to read as follows: 4 7. Special education support services district cost. Special 5 education support services district cost for a school district 6 for a budget year is equal to the special education support 7 services district cost per pupil for the budget year multiplied 8 by the special education support services weighted enrollment 9 for the district for the budget year. If the special education 10 support services district cost for a school district for 11 a budget year is less than the special education support 12 services district cost for that district for the base year, the 13 department of management shall adjust the special education 14 support services district cost for that district for the budget 15 year to equal the special education support services district 16 cost for the base year. Funds calculated under this subsection 17 and received by a school district shall be used for special 18 education support services. For budget years beginning on 19 or after July 1, 2025, not less than ninety percent of funds 20 calculated under this subsection and received by a school 21 district shall be used by the school district for special 22 education support services contracted from an area education 23 agency. The contract between the school district and the area 24 education agency shall not require the school district to 25 describe the specific special education support services the 26 school district will receive from the area education agency. 27 The special education services provided by the area education 28 agency to the school district pursuant to the contract shall 29 not be limited by the amount of funding the school district 30 provided to the area education agency. 31 Sec. 7. Section 257.10, subsection 8, paragraph a, Code 32 2026, is amended to read as follows: 33 a. Combined district cost is the sum of the regular 34 program district cost per pupil multiplied by the weighted 35 -3- LSB 5670YH (2) 91 jda/jh 3/ 17

H.F. 2736 enrollment, the special education support services district 1 cost, the total teacher salary supplement district cost, the 2 total professional development supplement district cost, the 3 total early intervention supplement district cost, and the 4 total teacher leadership supplement district cost, plus the 5 sum of the additional district cost allocated to the district 6 to fund media services and educational services under section 7 257.37 provided through the area education agency , and the area 8 education agency total teacher salary supplement district cost , 9 and the area education agency total professional development 10 supplement district cost . 11 Sec. 8. Section 257.16, subsection 4, Code 2026, is amended 12 to read as follows: 13 4. Notwithstanding any provision to the contrary, if 14 the governor orders budget reductions in accordance with 15 section 8.31 , the teacher salary supplement district cost, 16 the professional development supplement district cost, the 17 early intervention supplement district cost, and the teacher 18 leadership supplement district cost as calculated under section 19 257.10, subsections 9, 10, 11, and 12 , and the area education 20 agency teacher salary supplement district cost and the area 21 education agency professional development supplement district 22 cost as calculated under section 257.37A , subsections 1 and 2, 23 shall be paid in full as calculated and the reductions in the 24 appropriations provided in accordance with this section shall 25 be reduced from the remaining moneys appropriated pursuant 26 to this section and shall be distributed on a per pupil 27 basis calculated with the weighted enrollment determined in 28 accordance with section 257.6, subsection 5 . 29 Sec. 9. Section 257.35, subsection 1, paragraph a, 30 subparagraph (3), unnumbered paragraph 1, Code 2026, is amended 31 to read as follows: 32 For the fiscal year beginning July 1, 2025, and each fiscal 33 year thereafter, the department of management shall deduct 34 the following from the state aid due to each school district 35 -4- LSB 5670YH (2) 91 jda/jh 4/ 17

H.F. 2736 pursuant to this chapter and shall pay the amounts to the 1 respective area education agencies on a monthly basis from 2 September 15 through June 15 during each school year: 3 Sec. 10. Section 257.35, subsection 1, paragraph a, Code 4 2026, is amended by adding the following new subparagraph: 5 NEW SUBPARAGRAPH . (4) For the fiscal year beginning July 6 1, 2026, and each fiscal year thereafter, the department of 7 management shall deduct the amounts calculated for special 8 education support services, media services, area education 9 agency teacher salary supplement district cost, area education 10 agency professional development supplement district cost, and 11 educational services for each school district from the state 12 aid due to the district pursuant to this chapter and shall 13 pay the amounts to the respective area education agencies on 14 a monthly basis from September 15 through June 15 during each 15 school year. The department of management shall notify each 16 school district of the amount of state aid deducted for these 17 purposes and the balance of state aid shall be paid to the 18 district. If a district does not qualify for state aid under 19 this chapter in an amount sufficient to cover its amount due 20 to the area education agency as calculated by the department 21 of management, the school district shall pay the deficiency to 22 the area education agency from other moneys received by the 23 district, on a quarterly basis during each school year. 24 Sec. 11. Section 257.35, subsection 2, Code 2026, is amended 25 to read as follows: 26 2. The amounts specified for school districts in section 27 257.10, subsection 7 , for the fiscal year beginning July 1, 28 2025, and each succeeding fiscal year, shall be reduced by 29 the department of management by seven million five hundred 30 thousand dollars. The department of management shall calculate 31 a state aid reduction such that such amounts shall be reduced 32 proportionally to the amount that the district would otherwise 33 have received under section 257.10, subsection 7 . 34 Sec. 12. Section 257.36, subsection 1, Code 2026, is amended 35 -5- LSB 5670YH (2) 91 jda/jh 5/ 17

H.F. 2736 to read as follows: 1 1. Notwithstanding chapters 256B and 273 and sections 2 of this chapter relating to the moneys available to school 3 districts and area education agencies for special education 4 support services, for each school year, the department of 5 education may direct the department of management to deduct 6 amounts from the portions of school district budgets that 7 fund special education support services in an area education 8 agency. The total amount deducted for a school district in 9 an area shall be based upon excess special education support 10 services unreserved and undesignated fund balances in that 11 school district or paid by the school district to an area 12 education agency for a school year that remain unreserved and 13 undesignated as determined by the department of education. The 14 department of management shall determine the amount deducted 15 from each school district in an area education agency on 16 a proportional basis. The department of management shall 17 determine from the amounts deducted from the portions of school 18 district budgets that fund area education agency special 19 education support services the amount that would have been 20 local property taxes and the amount that would have been state 21 aid and for the next following budget year shall increase the 22 district’s total state school aid available under this chapter 23 for area education agency special education support services 24 and reduce the district’s property tax levy for area education 25 agency special education support services by the amount 26 necessary for the property tax portion of the deductions made 27 under this section during the budget year. 28 Sec. 13. Section 257.37, Code 2026, is amended to read as 29 follows: 30 257.37 Funding media and educational services. 31 Media services and educational services provided by a school 32 district or through the area education agency agencies shall be 33 funded, to the extent provided, by an addition to the combined 34 district cost of each school district, determined as follows: 35 -6- LSB 5670YH (2) 91 jda/jh 6/ 17

H.F. 2736 1. For the budget year beginning July 1, 1991, and 1 succeeding budget years, the total amount funded in each area 2 for media services shall be computed as provided in this 3 subsection . For the budget year beginning July 1, 1991, the 4 total amount funded in each area for media services in the 5 base year shall be divided by the enrollment served in the 6 base year to provide an area media services cost per pupil in 7 the base year, and the department of management shall compute 8 the state media services cost per pupil in the base year which 9 is equal to the average of the area media services costs per 10 pupil in the base year. For the budget year beginning July 1, 11 1991, and succeeding budget years, the department of management 12 shall compute the supplemental state aid for media services 13 in the budget year by multiplying the state media services 14 cost per pupil in the base year times the state percent of 15 growth for the budget year, and the total amount funded in each 16 area for media services cost in the budget year equals the 17 area media services cost per pupil in the base year plus the 18 supplemental state aid for media services in the budget year 19 times the enrollment served in the budget year. For fiscal 20 years beginning before July 1, 2025, funds Funds shall be paid 21 to area education agencies as provided in section 257.35 . For 22 fiscal years beginning on or after July 1, 2024, funds not 23 required to be paid to an area education agency may be used 24 by the school district for any school district general fund 25 purpose. 26 2. Up to thirty percent of the budget of an area for media 27 services may be expended for media resource material including 28 the purchase or replacement of material required in section 29 273.6, subsection 1 . Funds shall be paid to area education 30 agencies as provided in section 257.35. 31 3. For the budget year beginning July 1, 1991, and 32 succeeding budget years, the total amount funded in each area 33 for educational services shall be computed as provided in this 34 subsection . For the budget year beginning July 1, 1991, the 35 -7- LSB 5670YH (2) 91 jda/jh 7/ 17

H.F. 2736 total amount funded in each area for educational services 1 in the base year shall be divided by the enrollment served 2 in the area in the base year to provide an area educational 3 services cost per pupil in the base year, and the department of 4 management shall compute the state educational services cost 5 per pupil in the base year, which is equal to the average of 6 the area educational services costs per pupil in the base year. 7 For the budget year beginning July 1, 1991, and succeeding 8 budget years, the department of management shall compute the 9 supplemental state aid for educational services by multiplying 10 the state educational services cost per pupil in the base year 11 times the state percent of growth for the budget year, and the 12 total amount funded in each area for educational services for 13 the budget year equals the area educational services cost per 14 pupil for the base year plus the supplemental state aid for 15 educational services in the budget year times the enrollment 16 served in the area in the budget year. For fiscal years 17 beginning before July 1, 2025, funds Funds shall be paid to 18 area education agencies as provided in section 257.35 . For 19 fiscal years beginning on or after July 1, 2024, funds not 20 required to be paid to an area education agency may be used 21 by the school district for any school district general fund 22 purpose. 23 4. “Enrollment served” means the basic enrollment of all 24 school districts within the boundaries of the area education 25 agency plus the number of nonpublic school pupils served by 26 the area education agency with media services or educational 27 services, as applicable, except that if a nonpublic school 28 pupil or a pupil attending another district under a whole grade 29 sharing agreement or open enrollment receives services through 30 an area other than the area of the pupil’s residence, the 31 pupil shall be deemed to be served by the area of the pupil’s 32 residence, which shall by contractual arrangement reimburse 33 the area through which the pupil actually receives services. 34 Each school district shall include in the enrollment report 35 -8- LSB 5670YH (2) 91 jda/jh 8/ 17

H.F. 2736 submitted pursuant to section 257.6, subsection 1 , the number 1 of nonpublic school pupils within each school district for 2 media and educational services served by the area. However, 3 the school district shall not include in the enrollment report 4 nonpublic school pupils receiving classes or services funded 5 entirely by federal grants or allocations. 6 5. a. If an area education agency does not serve nonpublic 7 school pupils in a manner comparable to services provided 8 public school pupils for media and educational services, as 9 determined by the state board of education, the state board 10 shall instruct the department of management to reduce the funds 11 for media services and educational services within the area one 12 time by an amount to compensate for such reduced services. The 13 media services budget shall be reduced by an amount equal to 14 the product of the cost per pupil in basic enrollment for the 15 budget year for media services times the difference between 16 the enrollment served and the basic enrollment recorded for 17 the area. The educational services budget shall be reduced by 18 an amount equal to the product of the cost per pupil in basic 19 enrollment for the budget year for educational services times 20 the difference between the enrollment served and the basic 21 enrollment recorded for the area. 22 b. This subsection applies only to media and educational 23 services which cannot be diverted for religious purposes. 24 c. Notwithstanding this subsection , an area education agency 25 shall distribute to nonpublic schools media materials purchased 26 wholly or partially with federal funds in a manner comparable 27 to the distribution of such media materials to public schools 28 as determined by the director of the department of education. 29 6. For the budget year beginning July 1, 2002, and each 30 succeeding budget year, notwithstanding the requirements of 31 this section for determining the budgets and funding of media 32 services and education services, an area education agency or 33 school district may , within the limits of the total of the 34 funds provided for the budget years pursuant to section 257.35, 35 -9- LSB 5670YH (2) 91 jda/jh 9/ 17

H.F. 2736 expend for special education support services an amount that 1 exceeds the payment for special education support services 2 pursuant to section 257.35 in order to maintain the level 3 of required special education support services in the area 4 education agency or the school district, as applicable . 5 Sec. 14. Section 257.37A, Code 2026, is amended to read as 6 follows: 7 257.37A Area education agency salary supplement funding. 8 1. Area education agency teacher salary supplement cost per 9 pupil and district cost. 10 1. a. For the budget year beginning July 1, 2009, the 11 department of management shall add together the teacher 12 compensation allocation made to each area education agency for 13 the fiscal year beginning July 1, 2008, pursuant to section 14 284.13, subsection 1 , paragraph “i” , Code 2009, and the phase II 15 allocation made to each area education agency for the fiscal 16 year beginning July 1, 2008, pursuant to section 294A.9, Code 17 2009 , and divide that sum by the special education support 18 services weighted enrollment in the fiscal year beginning July 19 1, 2009, to determine the area education agency teacher salary 20 supplement cost per pupil. For the budget year beginning July 21 1, 2010, and succeeding budget years, the area education agency 22 teacher salary supplement district cost per pupil for each area 23 education agency for a budget year is the area education agency 24 teacher salary supplement district cost per pupil for the base 25 year plus the area education agency teacher salary supplement 26 supplemental state aid amount for the budget year. 27 2. b. For the budget year beginning July 1, 2010, and 28 succeeding budget years, if the department of management 29 determines that the unadjusted area education agency teacher 30 salary supplement district cost of an area education agency 31 for a budget year is less than one hundred percent of the 32 unadjusted area education agency teacher salary supplement 33 district cost for the base year for the area education agency, 34 the area education agency shall receive a budget adjustment for 35 -10- LSB 5670YH (2) 91 jda/jh 10/ 17

H.F. 2736 that budget year equal to the difference. 1 3. a. c. (1) The unadjusted area education agency teacher 2 salary supplement district cost is the area education agency 3 teacher salary supplement district cost per pupil for each area 4 education agency for a budget year multiplied by the special 5 education support services weighted enrollment for that area 6 education agency. 7 b. (2) The total area education agency teacher salary 8 supplement district cost is the sum of the unadjusted area 9 education agency teacher salary supplement district cost plus 10 the budget adjustment for that budget year. 11 4. d. For the budget year beginning July 1, 2009, the 12 use of the funds calculated under this section subsection 13 shall comply with requirements of chapter 284 and shall be 14 distributed to teachers pursuant to section 284.3A . For the 15 budget year beginning July 1, 2010, and succeeding budget 16 years, the use of the funds calculated under this section 17 subsection shall comply with the requirements of chapter 284 18 and shall be distributed to teachers pursuant to section 19 284.3A . 20 2. Area education agency professional development supplement 21 cost per pupil and district cost. 22 a. For the budget year beginning July 1, 2026, the 23 department of management shall divide the area education agency 24 professional development supplement made to each area education 25 agency for the fiscal year beginning July 1, 2023, pursuant 26 to section 257.37A, subsection 2, Code 2024, by the special 27 education support services weighted enrollment in the fiscal 28 year beginning July 1, 2026, to determine the professional 29 development supplement cost per pupil. For the budget year 30 beginning July 1, 2027, and succeeding budget years, the area 31 education agency professional development supplement district 32 cost per pupil for each area education agency for a budget 33 year is the area education agency professional development 34 supplement district cost per pupil for the base year plus the 35 -11- LSB 5670YH (2) 91 jda/jh 11/ 17

H.F. 2736 area education agency professional amount for the budget year. 1 b. For the budget year beginning July 1, 2027, and 2 succeeding budget years, if the department of management 3 determines that the unadjusted area education agency 4 professional development supplement district cost of an area 5 education agency for a budget year is less than one hundred 6 percent of the unadjusted area education agency professional 7 development supplement district cost for the base year for 8 the area education agency, the area education agency shall 9 receive a budget adjustment for that budget year equal to the 10 difference. 11 c. (1) The unadjusted area education agency professional 12 development supplement district cost is the area education 13 agency professional development supplement district cost 14 per pupil for each area education agency for a budget year 15 multiplied by the special education support services weighted 16 enrollment for that area education agency. 17 (2) The total area education agency professional 18 development supplement district cost is the sum of the 19 unadjusted area education agency professional development 20 supplement district cost plus the budget adjustment for that 21 budget year. 22 d. The use of the funds calculated under this subsection 23 shall comply with the requirements of chapter 284. 24 Sec. 15. Section 284.3A, subsection 4, Code 2026, is amended 25 to read as follows: 26 4. The teacher salary supplement district cost as 27 calculated under section 257.10, subsection 9 , and the area 28 education agency teacher salary supplement district cost as 29 calculated under section 257.37A , subsection 1, are not subject 30 to a uniform reduction in accordance with section 8.31 . 31 Sec. 16. Section 284.4, subsection 1, paragraph b, 32 subparagraph (3), Code 2026, is amended to read as follows: 33 (3) Determine, following the adoption of the Iowa 34 professional development model by the state board of education, 35 -12- LSB 5670YH (2) 91 jda/jh 12/ 17

H.F. 2736 the use and distribution of the professional development 1 funds calculated and paid to the school district or agency as 2 provided in section 257.9, subsection 9A, or section 257.10, 3 subsection 10 , based upon school district or agency , attendance 4 center, and individual teacher and professional development 5 plans. 6 Sec. 17. Section 284.6, subsections 8, 9, and 10, Code 2026, 7 are amended to read as follows: 8 8. For each year in which a school district receives funds 9 calculated and paid to school districts for professional 10 development pursuant to section 257.10, subsection 10 , or 11 section 257.37A, subsection 2, the school district shall create 12 quality professional development opportunities. Not less than 13 thirty-six hours in the school calendar, held outside of the 14 minimum school day, shall be set aside during nonpreparation 15 time or designated professional development time to allow 16 practitioners to collaborate with each other to deliver 17 educational programs and assess student learning, or to engage 18 in peer review pursuant to section 284.8, subsection 1 . The 19 funds may be used to implement the professional development 20 provisions of the teacher career paths and leadership roles 21 specified in section 284.15 , including but not limited to 22 providing professional development to teachers, including 23 additional salaries for time beyond the normal negotiated 24 agreement; activities and pay to support a beginning teacher 25 mentoring and induction program that meets the requirements 26 of section 284.5 ; pay for substitute teachers, professional 27 development materials, speakers, and professional development 28 content; textbooks and curriculum materials used for classroom 29 purposes if such textbooks and curriculum materials include 30 professional development; administering assessments pursuant to 31 section 256.7, subsection 21 , paragraph “b” , subparagraphs (1) 32 and (2), if such assessments include professional development; 33 and costs associated with implementing the individual 34 professional development plans. The use of the funds shall 35 -13- LSB 5670YH (2) 91 jda/jh 13/ 17

H.F. 2736 be balanced between school district, attendance center, 1 and individual professional development plans, making every 2 reasonable effort to provide equal access to all teachers. 3 9. Moneys received pursuant to section 257.10, subsection 4 10 , or section 257.37A, subsection 2, shall be maintained 5 as a separate listing within a school district’s or area 6 education agency’s budget for funds received and expenditures 7 made pursuant to this subsection . The department shall not 8 require a school district or area education agency to allocate 9 a specific amount or percentage of moneys received pursuant to 10 section 257.10, subsection 10 , or section 257.37A, subsection 11 2, for professional development related to implementation of 12 the core curriculum under section 256.7, subsection 26 . A 13 school district shall certify to the department how the school 14 district allocated the funds and that moneys received under 15 this subsection were used to supplement, not supplant, the 16 professional development opportunities the school district 17 would otherwise make available. For budget years beginning 18 on or after July 1, 2017, all or a portion of the moneys 19 received pursuant to section 257.10, subsection 10 , that remain 20 unexpended and unobligated at the end of a fiscal year may, 21 pursuant to section 257.10, subsection 10 , paragraph “d” , be 22 transferred for deposit in the school district’s flexibility 23 account established under section 298A.2, subsection 2 . 24 10. If funds are allocated for purposes of professional 25 development pursuant to section 284.13, subsection 1 , paragraph 26 “c” , the department shall , in collaboration with the area 27 education agencies, establish teacher development academies 28 for public and nonpublic school-based teams of teachers and 29 instructional leaders. Each academy shall include an institute 30 and shall provide follow-up training and coaching. 31 Sec. 18. EFFECTIVE DATE. This Act, being deemed of 32 immediate importance, takes effect upon enactment. 33 Sec. 19. APPLICABILITY. This Act applies July 1, 2026, for 34 school budget years beginning on or after that date. 35 -14- LSB 5670YH (2) 91 jda/jh 14/ 17

H.F. 2736 EXPLANATION 1 The inclusion of this explanation does not constitute agreement with 2 the explanation’s substance by the members of the general assembly. 3 This bill modifies provisions related to area education 4 agency funding. 5 The bill modifies provisions related to the calculation 6 of the combined foundation base, the area education agency 7 professional development supplement state cost per pupil, and 8 the combined district cost. The bill also modifies provisions 9 related to the computation of the additional property tax 10 levied by school districts to include the total area education 11 agency professional development supplement district cost. 12 Current law provides that funds calculated under Code 13 section 257.10(7) (special education support services district 14 cost) and received by a school district are required to be 15 used for special education support services. Current law 16 also provides that for budget years beginning on or after 17 July 1, 2025, not less than 90 percent of funds calculated 18 under Code section 257.10(7) and received by a school district 19 are required to be used by the school district for special 20 education support services contracted from an area education 21 agency. The contract between the school district and the area 22 education agency shall not require the school district to 23 describe the specific special education support services the 24 school district will receive from the area education agency. 25 The special education services provided by the area education 26 agency to the school district pursuant to the contract shall 27 not be limited by the amount of funding the school district 28 provided to the area education agency. The bill strikes these 29 provisions. 30 The bill provides that for the fiscal year beginning July 31 1, 2026, and each fiscal year thereafter, the department of 32 management is required to deduct the amounts calculated for 33 special education support services, media services, area 34 education agency teacher salary supplement district cost, area 35 -15- LSB 5670YH (2) 91 jda/jh 15/ 17

H.F. 2736 education agency professional development supplement district 1 costs, and educational services for each school district from 2 the state aid due to the district pursuant to Code chapter 3 257 and pay the amounts to the respective area education 4 agencies on a monthly basis from September 15 through June 15 5 during each school year. The bill requires the department of 6 management to notify each school district of the amount of 7 state aid deducted for these purposes and the balance of state 8 aid is required to be paid to the district. If a district 9 does not qualify for state aid under Code chapter 257 in an 10 amount sufficient to cover its amount due to the area education 11 agency as calculated by the department of management, the 12 school district is required to pay the deficiency to the area 13 education agency from other moneys received by the district, on 14 a quarterly basis during each school year. 15 Current law provides that, notwithstanding the deduction and 16 payment called for under Code section 257.35(1), the amounts 17 specified for school districts and area education agencies in 18 Code section 257.35(1)(a) for the fiscal year beginning July 1, 19 2025, and each succeeding fiscal year, shall be reduced by the 20 department of management by $7.5 million. The bill provides 21 that this reduction does not apply to fiscal years after the 22 fiscal year beginning July 1, 2025. 23 The bill modifies provisions related to moneys available 24 to school districts and area education agencies for special 25 education support services and the funding and provisions 26 related to the media and educational services provided by 27 school districts or through area education agencies, including 28 by modifying Code section 257.37 (funding media and educational 29 services) to strike a provision that state funds that are not 30 required to be paid to an area education agency may be used 31 by the school district for any school district general fund 32 purpose and by modifying the definition of “enrollment served” 33 in Code section 257.37. 34 The bill modifies Code section 257.37A (area education 35 -16- LSB 5670YH (2) 91 jda/jh 16/ 17

H.F. 2736 agency salary supplement funding), including by providing that, 1 if the department of management determines that the unadjusted 2 area education agency professional development supplement 3 district cost of an area education agency for a budget year is 4 less than 100 percent of the unadjusted area education agency 5 professional development supplement district cost for the base 6 year for the area education agency, the area education agency 7 shall receive a budget adjustment for that budget year equal 8 to the difference. 9 The bill takes effect upon enactment and applies July 1, 10 2026, for school budget years beginning on or after that date. 11 -17- LSB 5670YH (2) 91 jda/jh 17/ 17