Senate File 2228 - Introduced SENATE FILE 2228 BY QUIRMBACH A BILL FOR An Act relating to school district funding provisions, 1 including reducing the foundation property tax and repealing 2 the education savings account program, and including 3 effective date and applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 5845XS (5) 91 mb/md
S.F. 2228 DIVISION I 1 SCHOOL FOUNDATION PROPERTY TAX 2 Section 1. Section 257.3, subsection 1, paragraph a, Code 3 2026, is amended to read as follows: 4 a. Except as provided in subsections 2 and 3 , a school 5 district shall cause to be levied each year, for the school 6 general fund, a foundation property tax equal to five four 7 dollars and forty four cents per thousand dollars of assessed 8 valuation on all taxable property in the district. The county 9 auditor shall spread the foundation levy over all taxable 10 property in the district. 11 Sec. 2. Section 257.3, subsection 2, paragraphs a and b, 12 Code 2026, are amended to read as follows: 13 a. Notwithstanding subsection 1 , a reorganized school 14 district shall cause a foundation property tax of four three 15 dollars and forty four cents per thousand dollars of assessed 16 valuation to be levied on all taxable property which, in the 17 year preceding a reorganization, was within a school district 18 affected by the reorganization as defined in section 275.1 , 19 or in the year preceding a dissolution was a part of a school 20 district that dissolved if the dissolution proposal has 21 been approved by the director of the department of education 22 pursuant to section 275.55 . 23 b. In succeeding school years, the foundation property tax 24 levy on that portion shall be increased to the rate of four 25 three dollars and ninety fifty-four cents per thousand dollars 26 of assessed valuation the first succeeding year, five three 27 dollars and fifteen seventy-nine cents per thousand dollars of 28 assessed valuation the second succeeding year, and five four 29 dollars and forty four cents per thousand dollars of assessed 30 valuation the third succeeding year and each year thereafter. 31 Sec. 3. Section 425A.3, subsection 1, Code 2026, is amended 32 to read as follows: 33 1. The family farm tax credit fund shall be apportioned 34 each year in the manner provided in this chapter so as to give 35 -1- LSB 5845XS (5) 91 mb/md 1/ 7
S.F. 2228 a credit against the tax on each eligible tract of agricultural 1 land within the several school districts of the state in which 2 the levy for the general school fund exceeds five dollars and 3 forty cents per thousand dollars of assessed value the levy 4 rate under section 257.3, subsection 1, paragraph “a” . The 5 amount of the credit on each eligible tract of agricultural 6 land shall be the amount the tax levied for the general school 7 fund exceeds the amount of tax which would be levied on each 8 eligible tract of agricultural land were the levy for the 9 general school fund five dollars and forty cents per thousand 10 dollars of assessed value the levy rate under section 257.3, 11 subsection 1, paragraph “a” , for the previous year. However, 12 in the case of a deficiency in the family farm tax credit fund 13 to pay the credits in full, the credit on each eligible tract 14 of agricultural land in the state shall be proportionate and 15 applied as provided in this chapter . 16 Sec. 4. Section 425A.5, Code 2026, is amended to read as 17 follows: 18 425A.5 Computation by county auditor. 19 The family farm tax credit allowed each year shall be 20 computed as follows: On or before April 1, the county auditor 21 shall list by school districts all tracts of agricultural 22 land which are entitled to credit, the taxable value for the 23 previous year, the budget from each school district for the 24 previous year, and the tax rate determined for the general 25 fund of the school district in the manner prescribed in 26 section 444.3 for the previous year, and if the tax rate is in 27 excess of five dollars and forty cents per thousand dollars of 28 assessed value the levy rate under section 257.3, subsection 29 1, paragraph “a” , the auditor shall multiply the tax levy which 30 is in excess of five dollars and forty cents per thousand 31 dollars of assessed value the levy rate under section 257.3, 32 subsection 1, paragraph “a” , by the total taxable value of the 33 agricultural land entitled to credit in the school district, 34 and on or before April 1, certify the total amount of credit 35 -2- LSB 5845XS (5) 91 mb/md 2/ 7
S.F. 2228 and the total number of acres entitled to the credit to the 1 department of revenue. 2 Sec. 5. Section 426.3, Code 2026, is amended to read as 3 follows: 4 426.3 Where credit given. 5 The agricultural land credit fund shall be apportioned each 6 year in the manner hereinafter provided so as to give a credit 7 against the tax on each tract of agricultural lands within the 8 several school districts of the state in which the levy for 9 the general school fund exceeds five dollars and forty cents 10 per thousand dollars of assessed value the levy rate under 11 section 257.3, subsection 1, paragraph “a” ; the amount of such 12 credit on each tract of such lands shall be the amount the tax 13 levied for the general school fund exceeds the amount of tax 14 which would be levied on said tract of such lands were the 15 levy for the general school fund five dollars and forty cents 16 per thousand dollars of assessed value the levy rate under 17 section 257.3, subsection 1, paragraph “a” , for the previous 18 year, except in the case of a deficiency in the agricultural 19 land credit fund to pay said credits in full, in which case the 20 credit on each eligible tract of such lands in the state shall 21 be proportionate and shall be applied as hereinafter provided. 22 Sec. 6. Section 426.6, subsection 1, Code 2026, is amended 23 to read as follows: 24 1. The agricultural land tax credit allowed each year 25 shall be computed as follows: On or before April 1, the 26 county auditor shall list by school districts all tracts of 27 agricultural lands which are entitled to credit, together with 28 the taxable value for the previous year, together with the 29 budget from each school district for the previous year, and the 30 tax rate determined for the general fund of the district in 31 the manner prescribed in section 444.3 for the previous year, 32 and if such tax rate is in excess of five dollars and forty 33 cents per thousand dollars of assessed value the levy rate 34 under section 257.3, subsection 1, paragraph “a” , the auditor 35 -3- LSB 5845XS (5) 91 mb/md 3/ 7
S.F. 2228 shall multiply the tax levy which is in excess of five dollars 1 and forty cents per thousand dollars of assessed value the 2 levy rate under section 257.3, subsection 1, paragraph “a” , by 3 the total taxable value of the agricultural lands entitled to 4 credit in the district, and on or before April 1, certify the 5 amount to the department of revenue. 6 Sec. 7. ADJUSTMENT OF CALCULATIONS. For property tax 7 credits under chapters 425A and 426 for property taxes due and 8 payable in the fiscal year beginning July 1, 2026, the tax rate 9 determined for the general fund of the school district in the 10 manner prescribed in section 444.3 for the previous year shall 11 be determined using the property tax levy rate under section 12 257.3, as amended in this division of this Act. 13 Sec. 8. EFFECTIVE DATE. This division of this Act, being 14 deemed of immediate importance, takes effect upon enactment. 15 Sec. 9. APPLICABILITY. The following apply July 1, 2026, 16 for school budget years beginning on or after that date: 17 1. The section of this division of this Act amending section 18 257.3, subsection 1, paragraph “a”. 19 2. The section of this division of this Act amending section 20 257.3, subsection 2, paragraphs “a” and “b”. 21 DIVISION II 22 REPEAL OF THE EDUCATION SAVINGS ACCOUNT PROGRAM 23 Sec. 10. Section 256.9, subsection 66, Code 2026, is amended 24 by striking the subsection. 25 Sec. 11. Section 257.10, subsection 9, paragraph c, 26 subparagraph (1), Code 2026, is amended to read as follows: 27 (1) The unadjusted teacher salary supplement district cost 28 is the teacher salary supplement district cost per pupil for 29 each school district for a budget year multiplied by the sum 30 of the budget enrollment for that school district plus the 31 number of resident pupils in the school district that received 32 an education savings account payment under section 257.11B for 33 the base year . 34 Sec. 12. Section 257.10, subsection 10, paragraph c, 35 -4- LSB 5845XS (5) 91 mb/md 4/ 7
S.F. 2228 subparagraph (1), Code 2026, is amended to read as follows: 1 (1) The unadjusted professional development supplement 2 district cost is the professional development supplement 3 district cost per pupil for each school district for a budget 4 year multiplied by the sum of the budget enrollment for that 5 school district plus the number of resident pupils in the 6 school district that received an education savings account 7 payment under section 257.11B for the base year . 8 Sec. 13. Section 257.10, subsection 11, paragraph c, 9 subparagraph (1), Code 2026, is amended to read as follows: 10 (1) The unadjusted early intervention supplement district 11 cost is the early intervention supplement district cost per 12 pupil for each school district for a budget year multiplied 13 by the sum of the budget enrollment for that school district 14 plus the number of resident pupils in the school district that 15 received an education savings account payment under section 16 257.11B for the base year . 17 Sec. 14. Section 257.10, subsection 12, paragraph c, 18 subparagraph (1), Code 2026, is amended to read as follows: 19 (1) The unadjusted teacher leadership supplement district 20 cost is the teacher leadership supplement district cost per 21 pupil for each school district for a budget year multiplied 22 by the sum of the budget enrollment for that school district 23 plus the number of resident pupils in the school district that 24 received an education savings account payment under section 25 257.11B for the base year . 26 Sec. 15. Section 422.7, subsection 43, Code 2026, is amended 27 by striking the subsection. 28 Sec. 16. REPEAL. Section 257.11B, Code 2026, is repealed. 29 Sec. 17. EFFECTIVE DATE. This division of this Act, being 30 deemed of immediate importance, takes effect upon enactment. 31 Sec. 18. APPLICABILITY. This division of this Act applies 32 July 1, 2026, for school budget years beginning on or after 33 that date. 34 EXPLANATION 35 -5- LSB 5845XS (5) 91 mb/md 5/ 7
S.F. 2228 The inclusion of this explanation does not constitute agreement with 1 the explanation’s substance by the members of the general assembly. 2 This bill relates to school district funding, including 3 reducing the foundation property tax and repealing the 4 education savings account program. 5 DIVISION I. As part of Iowa’s system for funding school 6 districts, Code section 257.3 requires each school district 7 to levy each year, for the school general fund, a foundation 8 property tax equal to $5.40 per $1,000 of assessed valuation 9 on all taxable property in the district. The bill reduces 10 the foundation property tax rate from $5.40 to $4.04. An 11 exception to the $5.40 levy rate under current law is for 12 recently reorganized and dissolved school districts. For such 13 districts, the initial year requires a rate of $4.40, the first 14 succeeding year requires a rate of $4.90, the second succeeding 15 year requires a rate of $5.15, and for the third succeeding 16 year and thereafter, a rate of $5.40. The bill reduces all of 17 the applicable foundation property tax rates to correspond with 18 the reduction in the foundation property tax. 19 The bill provides for an adjustment of property tax credit 20 calculations under Code chapters 425A (family farm tax credit) 21 and 426 (agricultural land tax credit) for property taxes due 22 and payable in the fiscal year beginning July 1, 2026, to 23 account for the change to the property tax levy rate under Code 24 section 257.3 in the bill. 25 Division I takes effect upon enactment. 26 The sections of division I that amend Code section 257.3 27 apply July 1, 2026, for school budget years beginning on or 28 after that date. 29 DIVISION II. The education savings account program is a 30 program that provides funds to pupils who attend nonpublic 31 schools to pay for qualified educational expenses including 32 but not limited to tuition, tutoring or cognitive skill 33 training fees, educational therapy costs, software expenses, 34 and expenses related to course materials. For school years 35 -6- LSB 5845XS (5) 91 mb/md 6/ 7
S.F. 2228 beginning on or after July 1, 2025, each student eligible to 1 enroll in kindergarten through grade 12 is eligible for the 2 education savings account program. 3 Division II repeals the education savings account program 4 and makes conforming changes. 5 Division II takes effect upon enactment and applies July 1, 6 2026, for school budget years beginning on or after that date. 7 -7- LSB 5845XS (5) 91 mb/md 7/ 7