Senate Study Bill 3100 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON EDUCATION BILL BY CHAIRPERSON EVANS) A BILL FOR An Act relating to school funding by establishing the state 1 percent of growth and the categorical state percent of 2 growth for the budget year beginning July 1, 2026, modifying 3 provisions relating to property tax replacement payments, 4 the regular program state cost per pupil, funding for school 5 district budget adjustments, and school district enrollment, 6 and including effective date and applicability provisions. 7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 8 TLSB 6843XC (2) 91 mb/md

S.F. _____ DIVISION I 1 STATE AND CATEGORICAL PERCENTS OF GROWTH AND PROPERTY TAX 2 REPLACEMENT PAYMENTS 3 Section 1. Section 257.8, subsections 1 and 2, Code 2026, 4 are amended to read as follows: 5 1. State percent of growth. The state percent of growth for 6 the budget year beginning July 1, 2023, is three percent. The 7 state percent of growth for the budget year beginning July 1, 8 2024, is two and one-half percent. The state percent of growth 9 for the budget year beginning July 1, 2025, is two percent. 10 The state percent of growth for the budget year beginning July 11 1, 2026, is one and seventy-five hundredths percent. The state 12 percent of growth for each subsequent budget year shall be 13 established by statute which shall be enacted within thirty 14 days of the transmission of the governor’s budget required by 15 February 1 under section 8.21 during the regular legislative 16 session beginning in the base year. 17 2. Categorical state percent of growth. The categorical 18 state percent of growth for the budget year beginning July 19 1, 2023, is three percent. The categorical state percent of 20 growth for the budget year beginning July 1, 2024, is two and 21 one-half percent. The categorical state percent of growth for 22 the budget year beginning July 1, 2025, is two percent, except 23 for calculating the appropriation to the transportation equity 24 fund under section 257.16C . The categorical state percent of 25 growth for purposes of calculating the appropriation to the 26 transportation equity fund under section 257.16C for the budget 27 year beginning July 1, 2025, is five percent. The categorical 28 state percent of growth for the budget year beginning July 29 1, 2026, is one and seventy-five hundredths percent. The 30 categorical state percent of growth for each budget year shall 31 be established by statute which shall be enacted within thirty 32 days of the transmission of the governor’s budget required by 33 February 1 under section 8.21 during the regular legislative 34 session beginning in the base year. The categorical state 35 -1- LSB 6843XC (2) 91 mb/md 1/ 9

S.F. _____ percent of growth may include state percents of growth for 1 the teacher salary supplement, the professional development 2 supplement, the early intervention supplement, the teacher 3 leadership supplement, and for budget years beginning on or 4 after July 1, 2020, transportation equity aid payments under 5 section 257.16C . 6 Sec. 2. Section 257.16B, subsections 1 and 2, Code 2026, are 7 amended to read as follows: 8 1. For each fiscal year beginning on or after July 1, 2023 9 2024 , there is appropriated from the general fund of the state 10 to the department of education an amount necessary to make all 11 school district property tax replacement payments under this 12 section , as calculated in subsection 2 . 13 2. a. (1) For the budget year beginning July 1, 2023, 14 the amount of each school district’s property tax replacement 15 payment shall be the product of the school district’s weighted 16 enrollment for the budget year multiplied by the per pupil 17 property tax replacement amount for the budget year calculated 18 under subparagraph (2). 19 (2) The per pupil property tax replacement amount for the 20 budget year beginning July 1, 2023, is equal to the sum of one 21 hundred fifty-three dollars plus the difference between the 22 following: 23 (a) The regular program state cost per pupil for the budget 24 year beginning July 1, 2023, multiplied by one hundred percent 25 less the regular program foundation base per pupil percentage 26 pursuant to section 257.1 for the budget year beginning July 27 1, 2023. 28 (b) The regular program state cost per pupil for the budget 29 year beginning July 1, 2021, multiplied by one hundred percent 30 less the regular program foundation base per pupil percentage 31 pursuant to section 257.1 for the budget year beginning July 32 1, 2023. 33 b. a. (1) For the budget year beginning July 1, 2024, 34 the amount of each school district’s property tax replacement 35 -2- LSB 6843XC (2) 91 mb/md 2/ 9

S.F. _____ payment shall be the product of the school district’s weighted 1 enrollment for the budget year multiplied by the per pupil 2 property tax replacement amount for the budget year calculated 3 under subparagraph (2). 4 (2) The per pupil property tax replacement amount for the 5 budget year beginning July 1, 2024, is equal to the sum of one 6 hundred fifty-three dollars plus the difference between the 7 following: 8 (a) The regular program state cost per pupil for the budget 9 year beginning July 1, 2024, multiplied by one hundred percent 10 less the regular program foundation base per pupil percentage 11 pursuant to section 257.1 for the budget year beginning July 12 1, 2024. 13 (b) The regular program state cost per pupil for the budget 14 year beginning July 1, 2021, multiplied by one hundred percent 15 less the regular program foundation base per pupil percentage 16 pursuant to section 257.1 for the budget year beginning July 17 1, 2024. 18 c. b. (1) For each the budget year beginning on or after 19 July 1, 2025, the amount of each school district’s property 20 tax replacement payment shall be the product of the school 21 district’s weighted enrollment for the budget year multiplied 22 by the per pupil property tax replacement amount for the budget 23 year calculated under subparagraph (2). 24 (2) The per pupil property tax replacement amount for 25 the budget years year beginning on or after July 1, 2025, is 26 equal to the sum of one hundred fifty-three dollars plus the 27 difference between the following: 28 (a) The regular program state cost per pupil for the budget 29 year beginning July 1, 2025, multiplied by one hundred percent 30 less the regular program foundation base per pupil percentage 31 pursuant to section 257.1 for the applicable budget year under 32 this paragraph beginning July 1, 2025 . 33 (b) The regular program state cost per pupil for the budget 34 year beginning July 1, 2021, multiplied by one hundred percent 35 -3- LSB 6843XC (2) 91 mb/md 3/ 9

S.F. _____ less the regular program foundation base per pupil percentage 1 pursuant to section 257.1 for the applicable budget year under 2 this paragraph beginning July 1, 2025 . 3 c. (1) For each budget year beginning on or after July 4 1, 2026, the amount of each school district’s property 5 tax replacement payment shall be the product of the school 6 district’s weighted enrollment for the budget year multiplied 7 by the per pupil property tax replacement amount for the budget 8 year calculated under subparagraph (2). 9 (2) The per pupil property tax replacement amount for budget 10 years beginning on or after July 1, 2026, is equal to the sum 11 of one hundred fifty-three dollars plus the difference between 12 the following: 13 (a) The regular program state cost per pupil for the budget 14 year beginning July 1, 2026, multiplied by one hundred percent 15 less the regular program foundation base per pupil percentage 16 pursuant to section 257.1 for the applicable budget year under 17 this paragraph. 18 (b) The regular program state cost per pupil for the budget 19 year beginning July 1, 2021, multiplied by one hundred percent 20 less the regular program foundation base per pupil percentage 21 pursuant to section 257.1 for the applicable budget year under 22 this paragraph. 23 Sec. 3. EFFECTIVE DATE. This division of this Act, being 24 deemed of immediate importance, takes effect upon enactment. 25 DIVISION II 26 STATE COST PER PUPIL 27 Sec. 4. Section 257.9, subsection 2, paragraph i, Code 2026, 28 is amended to read as follows: 29 i. For the budget year beginning July 1, 2026, and 30 succeeding budget years, the regular program state cost per 31 pupil for a budget year is the regular program state cost per 32 pupil for the base year plus the regular program supplemental 33 state aid for the budget year , plus five dollars . 34 Sec. 5. Section 257.9, subsection 2, Code 2026, is amended 35 -4- LSB 6843XC (2) 91 mb/md 4/ 9

S.F. _____ by adding the following new paragraph: 1 NEW PARAGRAPH . j. For the budget year beginning July 1, 2 2027, and succeeding budget years, the regular program state 3 cost per pupil for a budget year is the regular program state 4 cost per pupil for the base year plus the regular program 5 supplemental state aid for the budget year. 6 Sec. 6. EFFECTIVE DATE. This division of this Act, being 7 deemed of immediate importance, takes effect upon enactment. 8 DIVISION III 9 SCHOOL DISTRICT BUDGET ADJUSTMENT —— FY 2026-2027 10 Sec. 7. SCHOOL DISTRICT BUDGET ADJUSTMENT —— FY 2026-2027. 11 1. For the school budget year beginning July 1, 2026, the 12 department of management shall add the amount of the school 13 district’s budget adjustment under section 257.14, if any, to 14 the combined foundation base under section 257.1, subsection 15 2, for the budget year. 16 2. For the school budget year beginning July 1, 2026, 17 a school district’s budget adjustment under section 257.14 18 shall be funded by state foundation aid resulting from the 19 calculation under subsection 1 and shall not be funded through 20 school district property taxes. 21 Sec. 8. EFFECTIVE DATE. This division of this Act, being 22 deemed of immediate importance, takes effect upon enactment. 23 DIVISION IV 24 SCHOOL DISTRICT ENROLLMENT 25 Sec. 9. Section 257.6, subsection 2, Code 2026, is amended 26 to read as follows: 27 2. Basic enrollment. Basic enrollment for a budget year 28 is the greater of a district’s actual enrollment for the base 29 year and the district’s adjusted enrollment for the base 30 year . Basic enrollment for the base year is the greater of 31 a district’s actual enrollment for the year preceding the 32 base year and a district’s adjusted enrollment for the year 33 preceding the base year . 34 Sec. 10. Section 257.6, Code 2026, is amended by adding the 35 -5- LSB 6843XC (2) 91 mb/md 5/ 9

S.F. _____ following new subsection: 1 NEW SUBSECTION . 7. Adjusted enrollment. 2 a. Adjusted enrollment is determined annually on February 3 1, or the first Monday in February if February 1 falls on 4 a Saturday or Sunday, and includes the same categories of 5 pupils used to determine actual enrollment under subsection 1, 6 paragraph “a” . 7 b. A school district shall certify its adjusted enrollment 8 to the department of education by February 15 of each year, and 9 the department shall promptly forward the information to the 10 department of management. 11 c. The department of management shall adjust the adjusted 12 enrollment and, if necessary, the basic enrollment of the 13 school district for the audit year based upon reports filed 14 under section 11.6, and shall further adjust the budget of the 15 second year succeeding the audit year for the property tax 16 and state aid portions of the reported differences in such 17 enrollments for the year succeeding the audit year. 18 Sec. 11. APPLICABILITY. This division of this Act applies 19 to enrollment determinations occurring on or after July 1, 20 2026, used for school budget years beginning on or after July 21 1, 2027. 22 EXPLANATION 23 The inclusion of this explanation does not constitute agreement with 24 the explanation’s substance by the members of the general assembly. 25 This bill relates to various aspects of school funding. 26 DIVISION I —— STATE AND CATEGORICAL PERCENTS OF GROWTH AND 27 PROPERTY TAX REPLACEMENT PAYMENTS. The bill establishes a 28 state percent of growth of 1.75 percent for the budget year 29 beginning July 1, 2026. The state percent of growth is used 30 to calculate the amount of supplemental state aid for a budget 31 year as part of the state school foundation program. The 32 bill also establishes a categorical state percent of growth 33 of 1.75 percent for the budget year beginning July 1, 2026. 34 The categorical state percent of growth is generally used to 35 -6- LSB 6843XC (2) 91 mb/md 6/ 9

S.F. _____ calculate the amount of supplemental state aid for each of the 1 categorical funding supplements. 2 Code section 257.16B provides for school district property 3 tax replacement payments. For each budget year beginning on 4 or after July 1, 2025, the amount of each school district’s 5 property tax replacement payment is the product of the school 6 district’s weighted enrollment for the budget year multiplied 7 by the per pupil property tax replacement amount for the budget 8 year. The per pupil property tax replacement amount for budget 9 years beginning on or after July 1, 2025, is equal to the 10 sum of $153 plus the difference between the following: (1) 11 the regular program state cost per pupil for the budget year 12 beginning July 1, 2025, multiplied by 100 percent less the 13 regular program foundation base per pupil percentage; and (2) 14 the regular program state cost per pupil for the budget year 15 beginning July 1, 2021, multiplied by 100 percent less the 16 regular program foundation base per pupil percentage. 17 The bill modifies the property tax replacement payment 18 calculation for budget years beginning on or after July 1, 19 2026. For budget years beginning on or after July 1, 2026, 20 the amount of each school district’s property tax replacement 21 payment is the product of the school district’s weighted 22 enrollment for the budget year multiplied by the per pupil 23 property tax replacement amount for the budget year. The 24 per pupil property tax replacement amount for budget years 25 beginning on or after July 1, 2026, is equal to the sum of $153 26 plus the difference between the following: (1) the regular 27 program state cost per pupil for the budget year beginning July 28 1, 2026, 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, 2021, multiplied by 100 percent less the regular program 32 foundation base per pupil percentage. The regular program 33 foundation base per pupil percentage is 88.4 percent. 34 The division takes effect upon enactment. 35 -7- LSB 6843XC (2) 91 mb/md 7/ 9

S.F. _____ DIVISION II —— STATE COST PER PUPIL. Under the bill, for 1 the budget year beginning July 1, 2026, the regular program 2 state cost per pupil is the regular program state cost per 3 pupil for the base year plus the regular program supplemental 4 state aid for the budget year, plus $5. Then with the budget 5 year beginning July 1, 2027, and succeeding budget years, the 6 regular program state cost per pupil will again be calculated 7 as the regular program state cost per pupil for the base year 8 plus the regular program supplemental state aid for the budget 9 year. 10 The division takes effect upon enactment. 11 DIVISION III —— SCHOOL DISTRICT BUDGET ADJUSTMENT —— FY 12 2026-2027. Code section 257.14 authorizes school districts to 13 receive a budget adjustment equal to the difference between 14 the regular program district cost for the budget year and 101 15 percent of the regular program district cost for the base year. 16 If approved by the school district’s board of directors, such a 17 budget adjustment is funded through school district property 18 taxes. The bill provides that for the school budget year 19 beginning July 1, 2026, the department of management shall add 20 the amount of the school district’s budget adjustment under 21 Code section 257.14, if any, to the combined foundation base 22 under Code section 257.1(2). Code section 257.1 provides 23 foundation aid from the state in an amount per pupil equal 24 to the difference between the amount per pupil of foundation 25 property tax in the district and the combined foundation base 26 per pupil or the combined district cost per pupil, whichever 27 is less. Accordingly, following the addition to the combined 28 foundation base, the budget adjustment amount shall be funded 29 by foundation aid from the state instead of property taxes. 30 The division takes effect upon enactment. 31 DIVISION IV —— SCHOOL DISTRICT ENROLLMENT. Under current 32 law, a school district’s basic enrollment for a budget year is 33 the district’s actual enrollment for the base year. Under the 34 bill, a school district’s basic enrollment for a budget year 35 -8- LSB 6843XC (2) 91 mb/md 8/ 9

S.F. _____ is the greater of the actual enrollment for the base year and 1 adjusted enrollment for the base year. 2 Under the bill, adjusted enrollment is to be determined 3 annually on February 1, or the first Monday in February if 4 February 1 falls on a weekend, of the base year, based on the 5 same categories of students used to determine actual enrollment 6 under Code section 257.6(1)(a). School districts are required 7 to certify adjusted enrollment to the department of education 8 by February 15 of the base year, and the department is required 9 to promptly forward the information to the department of 10 management for use in determining and adjusting tax and funding 11 amounts. 12 The division applies to enrollment determinations occurring 13 on or after July 1, 2026, used for school budget years 14 beginning on or after July 1, 2027. 15 -9- LSB 6843XC (2) 91 mb/md 9/ 9