House File 546 - Reprinted HOUSE FILE 546 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HF 425) (SUCCESSOR TO HSB 18) (As Amended and Passed by the House March 13, 2019 ) A BILL FOR An Act relating to school funding by modifying provisions 1 relating to the collection of sales tax for deposit in the 2 secure an advanced vision for education fund, provisions 3 relating to the use of tax revenue from the secure an 4 advanced vision for education fund, and provisions relating 5 to the calculation of the additional property tax levy, and 6 making appropriations. 7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 8 HF 546 (3) 88 md/jh

H.F. 546 Section 1. Section 257.2, subsection 8, Code 2019, is 1 amended by adding the following new paragraph: 2 NEW PARAGRAPH . e. Foundation base supplement payments 3 received under section 257.16D. 4 Sec. 2. Section 257.4, subsection 1, paragraph a, Code 2019, 5 is amended by adding the following new subparagraph: 6 NEW SUBPARAGRAPH . (10) The amount of the foundation base 7 supplement payment to be received by the school district under 8 section 257.16D. 9 Sec. 3. Section 257.4, subsection 1, paragraph b, Code 2019, 10 is amended to read as follows: 11 b. For the budget year beginning July 1, 2008, and 12 succeeding budget years, the department of management shall 13 annually determine an adjusted additional property tax levy 14 and a statewide maximum adjusted additional property tax 15 levy rate, not to exceed the statewide average additional 16 property tax levy rate, calculated by dividing the total 17 adjusted additional property tax levy dollars statewide by the 18 statewide total net taxable valuation. For purposes of this 19 paragraph, the adjusted additional property tax levy shall be 20 that portion of the additional property tax levy corresponding 21 to the state cost per pupil multiplied by a school district’s 22 weighted enrollment, and then multiplied by one hundred 23 percent less the regular program foundation base per pupil 24 percentage pursuant to section 257.1 , and then reduced by the 25 amount of the property tax replacement payment to be received 26 under section 257.16B and the amount of the foundation base 27 supplement payment to be received under section 257.16D . The 28 district shall receive adjusted additional property tax levy 29 aid in an amount equal to the difference between the adjusted 30 additional property tax levy rate and the statewide maximum 31 adjusted additional property tax levy rate, as applied per 32 thousand dollars of assessed valuation on all taxable property 33 in the district. The statewide maximum adjusted additional 34 property tax levy rate shall be annually determined by the 35 -1- HF 546 (3) 88 md/jh 1/ 12

H.F. 546 department taking into account amounts allocated pursuant to 1 section 257.15, subsection 4 , and the balance of the property 2 tax equity and relief fund created in section 257.16A at the 3 end of the calendar year. 4 Sec. 4. Section 257.15, subsection 4, paragraph b, Code 5 2019, is amended to read as follows: 6 b. After lowering all school district adjusted additional 7 property tax levy rates to the statewide maximum adjusted 8 additional property tax levy rate under paragraph “a” , the 9 department of management shall use any remaining funds at the 10 end of the calendar year to further lower additional property 11 taxes by increasing for the budget year beginning the following 12 July 1, the state regular program foundation base per pupil 13 percentage under section 257.1 . Moneys used pursuant to this 14 paragraph shall supplant an equal amount of the appropriation 15 made from the general fund of the state pursuant to section 16 257.16 that represents the increase in state foundation aid. 17 Sec. 5. NEW SECTION . 257.16D Foundation base supplement 18 fund. 19 1. A foundation base supplement fund is created as a 20 separate and distinct fund in the state treasury under the 21 control of the department of management. Moneys in the fund 22 include revenues credited to the fund, appropriations made to 23 the fund, and other moneys deposited into the fund. 24 2. a. There is appropriated annually from the fund to 25 the department of management an amount necessary to make all 26 foundation base supplement payments under this section. The 27 department of management shall calculate each school district’s 28 foundation base supplement payment based on the distribution 29 methodology under paragraph “b” . 30 b. The moneys available in a fiscal year in the foundation 31 base supplement fund shall be distributed by the department 32 of management to each school district on a per pupil basis 33 calculated using each school district’s weighted enrollment, 34 as defined in section 257.6, for that fiscal year. However, 35 -2- HF 546 (3) 88 md/jh 2/ 12

H.F. 546 the amount of a school district’s foundation base supplement 1 payment for a budget year shall not exceed an amount equal to 2 the school district’s weighted enrollment for the budget year 3 multiplied by the amount for the budget year calculated under 4 section 257.16B, subsection 2, paragraph “f” , subparagraph 5 (2), minus the amount of the school district’s property tax 6 replacement payment under section 257.16B for the budget year. 7 3. Notwithstanding section 8.33, any moneys remaining in 8 the foundation base supplement fund at the end of a fiscal year 9 shall not revert to any other fund but shall remain in the 10 foundation base supplement fund for use as provided in this 11 section for the following fiscal year. 12 Sec. 6. NEW SECTION . 257.51 Career academy fund —— grant 13 program. 14 1. A career academy fund is created and established as 15 a separate and distinct fund in the state treasury under the 16 control of the department of education. 17 2. a. In addition to moneys deposited in the career 18 academy fund pursuant to section 423F.2, the department of 19 education may accept gifts, grants, bequests, and other private 20 contributions, as well as state or federal funds, and shall 21 deposit the moneys in the fund to be used for purposes of 22 this section. Moneys in the fund are appropriated to the 23 department of education and shall be used for the purposes of 24 this section. 25 b. Notwithstanding section 8.33, moneys in the fund 26 that remain unencumbered or unobligated at the close of the 27 fiscal year shall not revert but shall remain available for 28 expenditure for the purposes of this section in succeeding 29 fiscal years. Notwithstanding section 12C.7, subsection 2, 30 interest earned on moneys in the career academy fund shall be 31 credited to the fund. 32 3. The department of education shall adopt rules to 33 establish and administer a career academy grant program 34 to provide for the allocation of money in the fund in 35 -3- HF 546 (3) 88 md/jh 3/ 12

H.F. 546 the form of competitive grants, not to exceed one million 1 dollars per grant, to school corporations for career academy 2 infrastructure, career academy equipment, or both, in 3 accordance with the goals of this section and to further the 4 goals of the establishment and operation of career academies 5 under section 258.15. The rules adopted by the department 6 of education shall specify the eligibility of applicants 7 and eligible items for grant funding. Priority for grants 8 shall first be given to applications to establish new career 9 academies that are organized as regional centers pursuant 10 to chapter 258. Subsequent priority shall be given to 11 applications for expanding existing career academies. 12 Sec. 7. Section 423.2, subsection 12, Code 2019, is amended 13 to read as follows: 14 12. The sales tax rate of six percent is reduced to five 15 percent on January 1, 2030 2051 . 16 Sec. 8. Section 423.2A, subsection 2, paragraph c, Code 17 2019, is amended to read as follows: 18 c. Transfer one-sixth of the remaining revenues to the 19 secure an advanced vision for education fund created in section 20 423F.2 . This paragraph “c” is repealed December 31, 2029 21 January 1, 2051 . 22 Sec. 9. Section 423.5, subsection 4, Code 2019, is amended 23 to read as follows: 24 4. The use tax rate of six percent is reduced to five 25 percent on January 1, 2030 2051 . 26 Sec. 10. Section 423.43, subsection 1, paragraph b, Code 27 2019, is amended to read as follows: 28 b. Subsequent to the deposit into the general fund of 29 the state and after the transfer of such revenues collected 30 under chapter 423B , the department shall transfer one-sixth of 31 such remaining revenues to the secure an advanced vision for 32 education fund created in section 423F.2 . This paragraph is 33 repealed December 31, 2029 January 1, 2051 . 34 Sec. 11. Section 423F.2, subsection 3, Code 2019, is amended 35 -4- HF 546 (3) 88 md/jh 4/ 12

H.F. 546 to read as follows: 1 3. a. The moneys available in a fiscal year in the secure 2 an advanced vision for education fund shall be distributed by 3 the department of revenue to each school district on a per 4 pupil basis calculated using each school district’s budget 5 enrollment, as defined in section 257.6 , for that fiscal year. 6 b. (1) Prior to distribution of moneys in the secure an 7 advanced vision for education fund to school districts, two 8 and one-tenths percent of the moneys available in a an amount 9 equal to the equity transfer amount for the fiscal year minus 10 the foundation base transfer amount for the fiscal year shall 11 be distributed and credited to the property tax equity and 12 relief fund created in section 257.16A , an amount equal to 13 the foundation base transfer amount shall be distributed and 14 credited to the foundation base supplement fund created in 15 section 257.16D, and an amount equal to the career academy 16 transfer amount for the fiscal year shall be distributed and 17 credited to the career academy fund created in section 257.51 . 18 (2) For purposes of this subsection, the equity transfer 19 amount is determined by multiplying the equity transfer 20 percentage by the amount of moneys available in the secure an 21 advanced vision for education fund in the fiscal year. 22 (a) For the fiscal year beginning July 1, 2018, the equity 23 transfer percentage is two and one-tenth percent. For the 24 fiscal year beginning July 1, 2019, the equity transfer 25 percentage is three and one-tenth percent. 26 (b) For each fiscal year beginning on or after July 1, 2020, 27 the equity transfer percentage is equal to the equity transfer 28 percentage for the immediately preceding fiscal year, unless 29 the amount of moneys available in the secure an advanced vision 30 for education fund in the immediately preceding fiscal year 31 equals or exceeds one hundred two percent of the amount of 32 moneys available in the fund for the fiscal year prior to the 33 immediately preceding fiscal year, in which case the equity 34 transfer percentage shall be the equity transfer percentage for 35 -5- HF 546 (3) 88 md/jh 5/ 12

H.F. 546 the immediately preceding fiscal year plus one percent subject 1 to the limitation in subparagraph division (c). 2 (c) If the equity transfer percentage calculated under 3 subparagraph division (b) exceeds fifteen percent, the equity 4 transfer percentage for that fiscal year shall be fifteen 5 percent. 6 (3) For purposes of this subsection, the foundation base 7 transfer amount for the fiscal year beginning July 1, 2019, is 8 zero, and for each fiscal year beginning on or after July 1, 9 2020, the foundation base transfer amount equals the equity 10 transfer amount for the fiscal year under subparagraph (2) 11 minus the sum of the following: 12 (a) Three and one-tenth percent of the amount of the moneys 13 available in the secure an advanced vision for education fund 14 in the fiscal year. 15 (b) One-half of the product of the equity transfer 16 percentage for the fiscal year minus three and one-tenth 17 percent multiplied by the moneys available in the secure an 18 advanced vision for education fund in the fiscal year. 19 (4) (a) For purposes of this subsection, the career academy 20 transfer amount for the fiscal year beginning July 1, 2019, is 21 one million dollars. 22 (b) For each fiscal year beginning on or after July 1, 23 2020, the career academy transfer amount is equal to the lesser 24 of five million dollars or the amount of the career academy 25 transfer amount for the immediately preceding fiscal year, 26 unless the amount of moneys available in the secure an advanced 27 vision for education fund in the immediately preceding fiscal 28 year equals or exceeds one hundred two and one-half percent of 29 the amount of moneys available in the fund for the fiscal year 30 prior to the immediately preceding fiscal year, in which case 31 the career academy transfer amount equals the lesser of five 32 million dollars or the sum of the amount of the career academy 33 transfer amount for the immediately preceding fiscal year plus 34 one-half percent of the amount of moneys available in the 35 -6- HF 546 (3) 88 md/jh 6/ 12

H.F. 546 secure an advanced vision for education fund in the fiscal year 1 following the deposit of revenues in the property tax equity 2 and relief fund and the foundation base supplement fund. 3 Sec. 12. Section 423F.3, subsection 3, paragraph b, Code 4 2019, is amended to read as follows: 5 b. (1) If the board of directors intends to use funds for 6 purposes other than those listed in paragraph “a” , or change the 7 use of funds to purposes other than those listed in paragraph 8 “a” , the board shall adopt a revenue purpose statement or amend 9 an existing revenue purpose statement , subject to approval of 10 the electors, listing the proposed use of the funds. School 11 districts shall submit the statement to the voters no later 12 than sixty days prior to the expiration of any existing revenue 13 purpose statement or change in use not included in the existing 14 revenue purpose statement. 15 (2) (a) Notwithstanding any provision of law to the 16 contrary, for each school district with an existing revenue 17 purpose statement for the use of revenues from the secure an 18 advanced vision for education fund adopted under this paragraph 19 or adopted under another provision of law before July 1, 20 2019, such revenue purpose statement shall terminate and be 21 of no further force and effect on January 1, 2031, or the 22 expiration date of the revenue purpose statement, whichever is 23 earlier. If such a school district intends to use funds for 24 purposes other than those listed in paragraph “a” and does not 25 intend to operate without a revenue purpose statement on or 26 after January 1, 2031, or the expiration date of the revenue 27 purpose statement, whichever is earlier, the board of directors 28 shall submit a revenue purpose statement for approval by the 29 electors under subparagraph (1) on or after July 1, 2019, 30 and such revenue purpose statement submitted to the electors 31 shall include all proposed uses including those previously 32 approved by the electors, if applicable. The following, in 33 substantially the following form, shall be included in the 34 notice of the election published under paragraph “d” and 35 -7- HF 546 (3) 88 md/jh 7/ 12

H.F. 546 published on the school district’s internet site: 1 If a majority of eligible electors voting on the question 2 fail to approve this revenue purpose statement, revenues 3 received by the school district from the secure an advanced 4 vision for education fund shall first be expended for . . . . 5 (State the purposes in the order listed in subsection 1 and as 6 required by subsection 4 of this section for which the revenues 7 received by the school district under this chapter will be 8 expended.) 9 (b) Unless a new revenue purpose statement is adopted by 10 the electors, the existing revenue purpose statement remains 11 in effect until January 1, 2031, or the expiration date of the 12 revenue purpose statement, whichever is earlier. If a revenue 13 purpose statement is terminated under the provisions of this 14 subparagraph, such termination shall not affect the validity 15 of or a first lien on bonds issued under section 423E.5, Code 16 2019, or section 423F.5 prior to the date the revenue purpose 17 statement is terminated under subparagraph division (a), or 18 the validity of a contract or other obligation of the school 19 district secured in whole or in part by or requiring the 20 payment of funds received under this chapter in effect prior 21 to the date the revenue purpose statement is terminated under 22 subparagraph division (a). 23 Sec. 13. Section 423F.3, subsection 5, paragraph b, Code 24 2019, is amended to read as follows: 25 b. The infeasibility cost-benefit analysis of remodeling, 26 reconstructing, or repairing existing buildings. 27 Sec. 14. Section 423F.3, subsection 5, Code 2019, is amended 28 by adding the following new paragraph: 29 NEW PARAGRAPH . i. Benefits and effects of the new 30 construction on student learning. 31 Sec. 15. Section 423F.3, subsection 6, Code 2019, is amended 32 by adding the following new paragraph: 33 NEW PARAGRAPH . 0d. Additionally, “school infrastructure” 34 includes school safety and security infrastructure. For 35 -8- HF 546 (3) 88 md/jh 8/ 12

H.F. 546 purposes of this paragraph, “school safety and security 1 infrastructure” includes but is not limited to safe rooms, 2 remote entry technology and equipment, security camera systems, 3 card access systems, and communication systems with access to 4 fire and police emergency frequencies. For purposes of this 5 paragraph, “school safety and security infrastructure” does 6 not include the cost of personnel, development of safety and 7 security plans, or training related to the implementation of 8 safety and security plans. It is the intent of the general 9 assembly that each school district prioritize the use of 10 revenues under this chapter for secure entries for the 11 district’s attendance centers before expending such revenues 12 for athletic facility infrastructure projects. 13 Sec. 16. Section 423F.3, Code 2019, is amended by adding the 14 following new subsection: 15 NEW SUBSECTION . 6A. a. Prior to approving the use 16 of revenues received under this chapter for an athletic 17 facility infrastructure project within the scope of the 18 school district’s approved revenue purpose statement or 19 pursuant to subsection 4 for a school district without an 20 approved revenue statement, the board of directors shall adopt 21 a resolution setting forth the proposal for the athletic 22 facility infrastructure project and hold an additional public 23 hearing on the issue of construction of the athletic facility. 24 Notice of the time and place of the public hearing shall be 25 published not less than ten nor more than twenty days before 26 the public hearing in a newspaper which is a newspaper of 27 general circulation in the school district. If at any time 28 prior to the fifteenth day following the hearing, the secretary 29 of the board of directors receives a petition containing the 30 required number of signatures and asking that the question 31 of the approval of the use of revenues for the athletic 32 facility infrastructure project be submitted to the voters 33 of the school district, the board of directors shall either 34 rescind the board’s resolution for the use of revenues for 35 -9- HF 546 (3) 88 md/jh 9/ 12

H.F. 546 the athletic facility infrastructure project or direct the 1 county commissioner of elections to submit the question to the 2 registered voters of the school district at an election held 3 on a date specified in section 39.2, subsection 4, paragraph 4 “c” . The petition must be signed by eligible electors equal 5 in number to not less than one hundred or thirty percent of 6 the number of voters at the last preceding election of school 7 officials under section 277.1, whichever is greater. If a 8 majority of those voting on the question favors the use of the 9 revenues for the athletic facility infrastructure project, the 10 board shall be authorized to approve such use by resolution of 11 the board. If a majority of those voting on the question does 12 not favor the use of the revenues for the athletic facility 13 infrastructure project, the board of directors shall rescind 14 the board’s resolution for the use of revenues for the athletic 15 facility infrastructure project. If a petition is not received 16 by the board of directors within the prescribed time period, 17 the board of directors may approve the use of revenues for 18 the athletic facility infrastructure project without voter 19 approval. 20 b. After fourteen days from the date of the hearing under 21 paragraph “a” or fourteen days after the date of the election 22 held under paragraph “a” , if applicable, whichever is later, an 23 action shall not be brought questioning the board of directors’ 24 authority to use funds for the athletic facility infrastructure 25 project or questioning the legality of any proceedings in 26 connection with the authorization of such use. 27 c. For purposes of this subsection: 28 (1) “Athletic facility” means a building or structure, or 29 portion thereof, that is not physically attached to a student 30 attendance center. 31 (2) “Athletic facility infrastructure project” means a school 32 infrastructure project that includes in whole or in part the 33 construction of an athletic facility. 34 (3) “Construction” does not include repair or maintenance 35 -10- HF 546 (3) 88 md/jh 10/ 12

H.F. 546 of an existing facility. 1 Sec. 17. Section 423F.4, Code 2019, is amended to read as 2 follows: 3 423F.4 Borrowing authority for school districts. 4 1. A Subject to the conditions established under subsection 5 2, a school district may anticipate its share of the revenues 6 under section 423F.2 by issuing bonds in the manner provided in 7 section 423E.5 , Code 2019 . However, to the extent any school 8 district has issued bonds anticipating the proceeds of an 9 extended local sales and services tax for school infrastructure 10 purposes imposed by a county pursuant to former chapter 423E, 11 Code and Code Supplement 2007, prior to July 1, 2008, the 12 pledge of such revenues for the payment of principal and 13 interest on such bonds shall be replaced by a pledge of its 14 share of the revenues under section 423F.2 . 15 2. a. Bonds issued on or after July 1, 2019, shall not be 16 sold at public sale as provided in chapter 75, or at a private 17 sale, without notice and hearing. Notice of the time and place 18 of the public hearing shall be published not less than ten nor 19 more than twenty days before the public hearing in a newspaper 20 which is a newspaper of general circulation in the school 21 district. 22 b. For bonds subject to the requirements of paragraph 23 “a” , if at any time prior to the fifteenth day following the 24 hearing, the secretary of the board of directors receives a 25 petition containing the required number of signatures and 26 asking that the question of the issuance of such bonds be 27 submitted to the voters of the school district, the board shall 28 either rescind its adoption of the resolution or direct the 29 county commissioner of elections to submit the question to the 30 registered voters of the school district at an election held 31 on a date specified in section 39.2, subsection 4, paragraph 32 “c” . The petition must be signed by eligible electors equal 33 in number to not less than one hundred or thirty percent of 34 the number of voters at the last preceding election of school 35 -11- HF 546 (3) 88 md/jh 11/ 12

H.F. 546 officials under section 277.1, whichever is greater. If the 1 board submits the question at an election and a majority of 2 those voting on the question favors issuance of the bonds, the 3 board shall be authorized to issue the bonds. 4 c. After fourteen days from the date of the hearing under 5 paragraph “a” or fourteen days after the date of the election 6 held under paragraph “b” , if applicable, whichever is later, 7 an action shall not be brought questioning the legality of 8 any bonds or the power of the authority to issue any bonds 9 or to the legality of any proceedings in connection with the 10 authorization or issuance of the bonds. 11 Sec. 18. Section 423F.6, Code 2019, is amended to read as 12 follows: 13 423F.6 Repeal. 14 This chapter is repealed December 31, 2029 January 1, 2051 . 15 Sec. 19. STATE MANDATE FUNDING SPECIFIED. In accordance 16 with section 25B.2, subsection 3, the state cost of requiring 17 compliance with any state mandate included in this Act shall 18 be paid by a school district from state school foundation aid 19 received by the school district under section 257.16. This 20 specification of the payment of the state cost shall be deemed 21 to meet all of the state funding-related requirements of 22 section 25B.2, subsection 3, and no additional state funding 23 shall be necessary for the full implementation of this Act 24 by and enforcement of this Act against all affected school 25 districts. 26 -12- HF 546 (3) 88 md/jh 12/ 12