Iowa State General Fund, Economic and Education Funding

2014 UEN Legislative Luncheon
State General Fund, Iowa
Economic and Education
Comparability and UEN 2015
Legislative Priorities
UEN Membership requires:
• Two or more comprehensive high schools and/or 10,000 or more
• 4,000 or more students or
• 3,000 students combined with 40% or more of the students
identified as free/reduced price lunch eligible
UEN Member Districts:
Enroll 37.4% of Iowa's 478,921 PK-12 students.
Enroll 60.4% of Iowa's PK-12 students of color
Enroll 62.9% of Iowa's LEP students
Serve 45.1% of Iowa's K-12 students receiving free/reduced
price lunches
Employ 35.2% of Iowa's PK-12 certified staff
Agenda Today
State of Iowa General Fund
State of Iowa Economy
Comparison of Education Funding
UEN Priorities for the 2015 Legislative Session
UEN Resources
State of Iowa General Fund
• CRF = $522.3M
• EEF = $174.1M
Source: Iowa Legislative
Services Agency Graybook,
end of session analysis
FY2015 Surplus:
• $660.0 million
Source: Iowa Legislative Services Agency Graybook, end of session analysis
State’s Cash Position
aka “don’t panic”
• Cash position: north of $1B
– CRF full at $522.3 million
– EEF full at $174.1 million
– Surplus for FY 2015 $660.0 million
• LSA details $350 million May 2014 revenue dip
$100 million due to deposit of cig taxes in Health Care Trust Fund
$80 million deposit into Taxpayer Trust Fund
$32 million due to expansion of Earned Income Tax Credit
Behavior changes as taxpayers made financial decisions at the end
of 2012 calendar year, impacting 2013 revenues
Current State of State Revenues
Oct. 2014 net General Fund revenue was $1.1 million (0.2%) below Oct. 2013.
After four months of the fiscal year, year-to-date net tax receipts are up $84.9
million (4.2%) higher than FY 2014.
LSA Monthly General Fund Revenue Receipts Through October 31, 2014, Document
published location:
• Big 3 are strong through 11/3/14
• Refunds are down through 11/3/14
• Means Net Receipts are up
Future Revenue Estimate
Revenue Estimating Conference (REC)
• REC Background
– Three member panel sets a consensus revenue
estimate for the state that is used by the Governor
and General Assembly in setting budgets
– Sets/revises the current year estimate and the
upcoming budget year estimate
– Met on October 9 to re-estimate revenues
REC Oct. 9
• Revised FY 2015 to 5.6% ($361.5 million)
• Set FY 2016 growth of 4.8% ($328.2 million)
• Overall, healthy if not spectacular revenue
• REC will meet again Dec. 12, 2014 to set the estimate
that binds the 2016 budget. (December estimate is
binding unless Spring estimate is lower, then GA and
Governor must use that one.)
Economic Comparability
Per Capita Personal Income
2012 2011
$45,114 $43,935 $40,470 $42,040 $29,828
National $44,543 $43,735 $41,663 $39,937 $31,472
Highest ranking among the states
for Iowa in years and two
consecutive years higher than
national average.
Iowa’s growth of 3.2% (201213) ranked 9th in the nation
and is in the highest quintile.
Median Household Income
In 2011, Iowa ranked 24th in the nation in Median Household Income, with
two consecutive years above the national average.
LSA FACTBOOK quoting U.S. Bureau of the Census
Iowa State and Local Total Tax Burden Per Capita
as a Percentage of Per Capita Personal Income
Iowa Rank Among 50 States
(1 is highest and 50 is lowest)
Source: Tax Foundation calculations based on
data from the Bureau of Economic Analysis, the Census Bureau, the
Council on State Taxation, the Travel Industry Association, Department
of Energy, and others.
Iowa’s economic index shows growth
in July (DMR 9.7.14)
• An Iowa DOR look at the future of the state’s
economy improved in July, increasing for the 10th
straight month. The state’s economic index rose to
109.3 in July, up from a revised 109.2 in June.
• Index looks at 8 factors, such as residential building
permits, to forecast the direction of Iowa’s economy.
• A year ago, the index was at 106.3
• A separate DOR index measures employment. That
index rose by .08 in July, marking the 46th consecutive
month of gains.
Condition of the Economy
(March 10 Education Coalition Funding Fact of the Week)
• Des Moines, Iowa, tops Forbes list of best places for business and
careers. “It is the only place that ranks among the top quartile in
at least nine of the 12 metrics we graded the cities on. Highlights
for the Des Moines metro area include business costs that are 17%
below the national average and an educated workforce where 36%
of the population has a college degree and 92% possess a high
school diploma.”
• Forbes also cites tech sector growth (Facebook and Microsoft
expansions) and low energy costs in Iowa, stating, “a big carrot in
Iowa for data centers and other businesses with heavy energy
usage: Energy costs are 22% below the national average, according
to Moody’s Analytics;
• Iowa has a AAA bond rating by all three bond rating agencies,
Moody’s and Fitch, and also Standard and Poor’s, for many years
running. The highest rating is AAA, or triple-A, which indicates an
“extremely strong capacity to meet financial commitments.”
Condition of the Economy
(March 10 Education Coalition Funding Fact of the Week)
• Iowa: The June RMI (Rural Mainstreet Index) for Iowa expanded to 56.8
from May’s 55.8. The state’s farmland-price index for June advanced to
57.8 from May’s 44.1. Iowa’s new-hiring index for June soared to 73.9
from May’s 61.1. Ernie Goss, a Creighton University economist, compiles
the report ;
• The June farm-equipment sales index inched forward to 35.0 from 33.6 in
May. The index has been below growth neutral for 12 straight months.
“Despite improving economic activity on the regional farm, agriculture
equipment and implement dealers in the region are experiencing very
weak sales to farmers in the region. On the other hand, farm equipment
manufacturers continue to experience positive growth due to healthy
sales abroad,” said Goss.
Do low crop prices mean the
economy will tank?
• REC had info on the ag economy when they set the
estimate of 5.6% for FY15 and 4.8% for FY16.
• Farmers typically use income averaging, spreading out
swings for them and the state.
• Low price per bushel of corn lowers income for corn
producers (depending on yields), however . .
• Cost of feed for livestock goes down, increasing profit
• Cost of corn for ethanol production goes down
• Equipment manufacturing is experiencing layoffs but
long term investments (grain driers and bins) are
steady to increasing
Sum it Up
• Is this Heaven? No, it’s Iowa.
• We’ve recovered from the economic
downturn better than most states.
• Revenue dip appears to be one-time.
• Education funding will keep the economy
moving along and build a solid workforce.
• So remember that policy question? Do you
think Iowa can afford to commit to funding
education adequately (and timely)?
Governor’s Goal to Reduce State
Government by 15%
• “Branstad has achieved these reductions by
slowing growth in education spending, reducing
state employment and driving a harder bargain
with public employee unions, said Director of
Management David Roederer. In the long run,
those steps will ensure the government doesn't
face an across-the board cut like the one enacted
by Culver in 2009.”
• “Measuring Branstad success is a numbers game”,
Des Moines Register, August 31, 2014
Education Funding Comparability
Public Education Coalition Funding
Fact of the Week
• Joint effort of AEAs, IASB, ISEA, SAI and UEN
• April 24 Issue has link to the entire set
• Let’s take a look at some of the data:
below the
Source data: Iowa Legislative Services Agency 2013 FACTBOOK
below the
All expenditures
includes state penny,
$919 per pupil, the
envy of the nation.
Without it, gap could
be another $600 or so
($2,200 estimate)
Source data: Iowa Legislative Services Agency 2013 FACTBOOK
• Iowa’s funding for
at-risk students
and dropout
resources, combined with targeted grant funds for highneeds schools soon to be appropriated in July 2015,
translates into a 9.8% additional funding commitment
for low-income students.
• The national average investment is an additional 29%
funding per pupil beyond the base for low-income
students. Most states provide an additional 20-25%.
Source data: Free and Reduced Lunch Percentage Count data from Iowa
Department of Education BEDS data collection.
National statistics from American Institutes for Research, Study of New Funding
Method for Nevada Public Schools, Sept. 25, 2012.
English-Language Learner Funding
Source: Iowa Department of Education, Bureau of Information and
Analysis, Basic Educational Data Survey and EASIER
During the 2013
interim, an ELL task
force met and studied
needs of students, best
practice and funding
considerations. In their
report, they
“weighted funding
closer to the national
average by increasing
from .22 to .39 through
a phase-in formula over
a three-year period.”
As Special Education Costs Increase,
So do Deficits
LSA Issue
Review: “An
growth rate of
0.0% in FY12
impacted FY12
Special Education Deficits: FY 2007 through FY 2013
(dollars in millions)
FY 2007
FY 2008
FY 2009
FY 2010
FY 2011
FY 2012
The FY13 special
deficits in this
chart shows the
trend continues.
Amount of Revenue Shortfall to Cover Expenditures
Legislative Services Agency, Fiscal Division, Issue Review, Dec. 12, 2013, State School
Aid Funding for Special Education
Education in Iowa gets a Smaller Slice
• The National Association of State Budget Officers
(NASBO) State Expenditure Report analyze all
state expenditures excluding bonds (not just general
fund.) In their analysis on Table 5, page 11, titled State
Spending by Function, as a Percent of Total State
Expenditures, Fiscal 2012
• Iowa Elementary and Secondary Education for FY 2012
was 16.8% of total state spending. That compares with
an average of 18.9% in the plain states region in which
Iowa is categorized and well below the national
average of 20.0% for all states.
Education in Iowa gets a Smaller Slice
The National Association of State Budget Officers (NASBO) State Expenditure Report
Increase in Iowa Per Pupil Funding Since 2008:
Is it really more than 10%?
• Digging deeper into a study that showed Iowa posted more
than a 10% increase in formula funding: A study titled “NO
RECOVERY HERE” is from the Center on Budget and Policy
Priorities, Sept. 2013.
• It reports most states’ funding for schools is less than
before the 2008 recession.
– The report stated that at least 34 states are providing less
funding per student for the 2013-14 school year than they did
before the recession hit, with 13 of these states having cut perstudent funding by more than 10 percent.
– At the opposite end of the spectrum, per-pupil spending grew in
14 states, but only two states posted an increase of more than
10 percent. Those two states? North Dakota and Iowa.
How did they conclude 10%?
• Iowa’s biggest increase in formula funding since 2008 occurred
when the legislature rolled over $300 million for teacher salary
supplement, professional development and early intervention class
size funds into the formula beginning in FY 2010. These funds were
previously a categorical fund, which this methodology states they
did not consider.
• From the LSA’s per pupil funding analysis, footnote #6 explains: “FY
2010 is the first year of K-12 funding of the State Categorical
Supplements through the school aid formula and accounts for $648
per pupil.” Adjustment for this item alone would show Iowa’s per
pupil funding formula adjusted for inflation at a reduction of $96
per student since 2008, not the $552 increase cited in the report.
• In simple terms, the 10% increase in state foundation aid in Iowa is
visible only on accounting forms, not more funding available for
schools and classrooms.
Center on Budget and Policy Priorities, May 20,
2014 New study looking at all spending.
Iowa experienced -11.7% change in spending
per student, inflation –adjusted, since 2008
Only 10 states lowered spending more than
Study concludes Iowa has lost $641 per
student, inflation-adjusted, since 2008
Increases in per student spending this year
don’t fully compensate for the prior cuts:
Iowa’s change in spending per student,
inflation-adjusted, FY 13 to FY 14 is $23
Iowa’s % change in spending
per student, inflation-adjusted,
FY08 to FY14, is down $641 per
Source: NCES
data adjusting
for cost of living
Source: NCES
data adjusting
for cost of living
It’s not the Money, it’s what you do
with it. . . .
• We often hear push back on the request for
adequate funding with the statement, “we
shouldn’t just throw more money at the
• What does education spending buy? Or put it
this way,
• If your district had $1,657 more per pupil,
what would you be doing with it to make a
difference for students?
Legislative Timeline
• Election over. 26D:23R in Iowa Senate and 57R:43D in the
• Caucuses meet to set priorities soon – typically before the
end of November. Legislative leadership retained. Waiting
for Committee chair announcements.
• Governor’s staff is already working on the budget
• Dec. 15, 2014 School Finance Formula Review Interim
Committee (1 day committee means won’t be very
• Jan. 12, 2015 First Day of Session
• Feb. 13, 2015 Last day for bill draft requests
• May 1, 2015 110th day of Session
Advocacy Actions
• Send a “thanks for running” letter
• Send a congrats letter (all House, 25 senators in
odd numbered senate districts, Governor)
• Call and invite to coffee - and listen
– Thank them for their public service (and for anything
they supported – TLC grants, 5th year of ELL state
funding, preserving PK – if you don’t know, call or
email and we can look up something for you)
– Ask what are hearing about education issues
– Give contact information and invite them to connect
with you as a resource
– Find out how they prefer to be contacted
Advocacy Actions
• Invite them to a school function, board meeting,
ribbon cutting, PD day, academic awards senior
recognition, staff recognition for retirees, etc.)
• Follow up with priority lists, issues, position
papers and data soon, but doesn’t have to be the
first conversation if you are just building a
• Watch for announcement of committee chairs
and appointments. Send a letter thanking them
for serving on education or ways and means
committee, etc. Offer to sit down and talk issues.
Next: Advocacy action steps
• Attend Forums “Eggs & Issues”
• Go to picnics and fundraisers
“Most committee votes are won or lost at fish fries, not in
committee meetings.” Bob Guyer
• Come to the Capitol anytime (wing it or call an
insider for help)
• Donate money to a candidate or legislator
• Have a letter writing party
– Ask for legislative support
– Thanks for legislative action
UEN 2015
Legislative Priorities
UEN Steering Committee 2014-15
• Stan Rheingans, Superintendent, Dubuque, Chair
• Jane Lindaman, Superintendent, Waterloo, Chair-Elect (1)
• Arthur Tate, Superintendent, Davenport, Chair-Elect (2)
• Dave Benson, Superintendent, Cedar Rapids, Past Chair
• Davenport, Rich Clewell, Board Vice President
• Des Moines, Cindy Elsbernd, Board Chair
• Sioux City, Mike McTaggert, Board Vice President
• Council Bluffs, J.J. Harvey, Board President
Funding Adequacy 6% State
Percent of Growth
• In order to fulfill the goal of regaining Iowa’s first in the nation
education status and delivering world-class schools, the UEN
supports the provision of adequate funding, which we know,
spent wisely, will prepare our students for success.
• The UEN supports a goal to get Iowa’s investment in education
to the national average, currently $1,657 per pupil above Iowa’s
level of expenditure, beginning with a commitment of no lower
than 6% annually for a minimum of 3 years.
• Funding for the 2015-16 school year must be determined ASAP
as the 2015 Session convenes. Funding for the 2016-17 school
year must be set within 30 days of the governor’s budget
announcement in the 2015 Session, according to Iowa law.
The LSA FACTBOOK shows continuation of a downward trend.
Although Iowa maintained its 37th in the nation ranking for the
2012-13 school year, Iowa per pupil expenditures continued its
downward trend, falling to $1,657 below the national average.
Childhood Poverty / At-risk
Student Weighting
• UEN supports revisions to the foundation
formula to support students from low-income
families and students at-risk of dropping out.
• Funding should reflect student need and
districts should have authority to identify
students and flexibly administer funds.
Change in Free & Reduced Lunch % of Certified Enrollment
UEN Districts FY 2001 to FY 2014
FY 2001 80
FY 2014 70
9.8% Iowa vs. 29% national average additional
resources per low-income students
Student Mental Health Services
• UEN acknowledges that mental health needs are increasing, yet
the delivery systems of education for students with mental health
challenges as well as services to meet mental health needs both in
and out of school are experiencing funding and regulatory
• UEN supports access to mental health services for students and
clarity of funding sources and funding responsibilities, particularly
for students costly to educate, such as those in residential
• UEN encourages state support for mental health services through
either the education system (weighting for students with mental
health challenges without special education distinction or funding
which parallels the process for state juvenile home educational
expenses) and/or early childhood, human services/juvenile justice
appropriations when appropriate.
Mental Health Issues
Insufficient Resources
Undefined responsibilities
Barriers to service are numerous
Lack of service prevents academic success
Risks for staff and students
Policy Intersection: education, human services,
insurance and health care, juvenile justice, special
education, PMIC/facility, county and school local
governments, state, federal, (Collaboration required)
Extend State Penny Sales Tax by
Repealing the Sunset
• UEN supports eliminating the sunset
permanently, allowing districts and taxpayers to
enable long-term planning and access to a full 20
years of sales tax capacity to avoid a resurgence
of property tax bond issues.
• State penny expenditures must remain restricted
as exists in current law (construction, repair,
technology, equipment, buses, etc.) and as
approved by voters in 99 counties, including
property tax relief.
State Penny So Far
• Progress but not done (and never will be unless time and
weather stop)
• With only 14 years of bonding capacity, a shortened bonding
stream has left approximately $700 million dollars of
borrowing capacity on the table, compared to a full 20-year
period (Piper Jaffrey Inc. estimate in 2013).
• With low interest rates and unmet needs, this is the wrong
time to turn to property taxes rather than sales taxes to
continue facilities repair and construction.
• Fallback will always be property taxes.
• Although others may want part of it, no other entity has
achieved voter approval in 99 counties for their purpose.
SILO began here
State Penny began here
Formula Equity
• UEN supports promoting both student and
taxpayer equity in the school foundation
formula, including equalizing the district cost
per pupil and
• providing tax equity to property poor districts
within the formula and other property-tax
supported levies.
Student Cost per Pupil Inequity
• $175 difference between the state cost per pupil and
the highest district cost per pupil:
– 165 of the 338 school districts were limited to a cost per
pupil of $6,366
– 173 districts were allowed up to $175 more per pupil (FY
2015 data).
• The district cost per pupil is a ceiling which creates
large cumulative differences in district capacity to serve
students. The districts with a cost per pupil above the
state minimum use cash reserve (local property taxes)
to fund the additional capacity.
Taxpayer Inequity
• Range in the total property tax levy is directly
related to the formula:
– Low of $7.49 per $1,000 of net assessed taxable valuation
– Hi of $23.05 per $1,000 of net assessment taxable valuation
• Here’s why. . .
General Fund Per Pupil
Property Poorest
Average Valuation
Property Richest
Levy 
State Aid
UEN Resources
• Position Papers/Issue Briefs, talking points, advocacy
• Lobby days organized by district (OK to partner)
• Legislative updates
• Testimony
• Support to Public Education Advocacy Coalition (Funding
Fact of the Week)
• Web site
• Advocacy Action Plan at District Level will engage when
Calls to Action are Implemented
• Support for local legislative conversations, press releases,
public forums etc.
• ISFIS Staff and Capacity support to UEN
Never doubt that a small group of
thoughtful citizens can change the
world. Indeed, it is the only thing that
ever has.
Margaret Mead
Decisions are made by those
who show up.
President Josiah “Jed” Bartlett
NBC’s “The West Wing”