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 students •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

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• CRF = $522.3M• EEF = $174.1M

Source: Iowa Legislative Services Agency Graybook, end of session analysishttps://www.legis.iowa.gov/docs/publications/EOS/26076.pdf

Source: Iowa Legislative Services Agency Graybook, end of session analysishttps://www.legis.iowa.gov/docs/publications/EOS/26076.pdf

FY2015 Surplus:•$660.0 million

State’s Cash Positionaka “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

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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 $84.9million (4.2%) higher than FY 2014.

9LSA Monthly General Fund Revenue Receipts Through October 31, 2014, Document published location: https://www.legis.iowa.gov/docs/publications/MM/402984.pdf

• Big 3 are strong through 11/3/14

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https://www.legis.iowa.gov/publications/fiscal/dailyReceipts

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• Refunds are down through 11/3/14• Means Net Receipts are up

Future Revenue Estimate

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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

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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

growth• 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.)

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Economic Comparability

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Per Capita Personal Income

2013 2012 2011 2010 2003

Iowa $45,114 $43,935 $40,470 $42,040 $29,828

National $44,543 $43,735 $41,663 $39,937 $31,472Iowa Rank 22 24 25 28 33

www.bea.gov Highest ranking among the states for Iowa in years and two consecutive years higher than national average.

Iowa’s growth of 3.2% (2012-13) ranked 9th in the nation and is in the highest quintile.

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

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Source: www.taxfoundation.org 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 http://www.gossinstitute.com/?q=node/129 ;

• 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 potential

• 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

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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• http://us5.campaign-archive1.com/?

u=e0acb6236d9a5dbd136a38ef4&id=948ddcee87&e=2570288da8

• Let’s take a look at some of the data:

Source data: Iowa Legislative Services Agency 2013 FACTBOOK https://www.legis.iowa.gov/docs/publications/FCT/2014/25037/25037.pdf

$1,647 below the national average

Source data: Iowa Legislative Services Agency 2013 FACTBOOK https://www.legis.iowa.gov/docs/publications/FCT/2014/25037/25037.pdf

$1,647 below the national average

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)

Poverty• Iowa’s funding for

at-risk students and dropout prevention resources, combined with targeted grant funds for high-needs 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 FundingDuring the 2013 interim, an ELL task force met and studied needs of students, best practice and funding considerations. In their report, they recommended “weighted funding closer to the national average by increasing from .22 to .39 through a phase-in formula over a three-year period.”

Source: Iowa Department of Education, Bureau of Information and Analysis, Basic Educational Data Survey and EASIER

As Special Education Costs Increase,So do Deficits

LSA Issue Review: “An allowable growth rate of 0.0% in FY12 impacted FY12 balances negatively.”

The FY13 special education deficits in this chart shows the trend continues.

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 per-student 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.

Iowa’s % change in spending per student, inflation-adjusted, FY08 to FY14, is down $641 per

student

• Iowa experienced -11.7% change in spending per student, inflation –adjusted, since 2008

• Only 10 states lowered spending more than Iowa

• 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

Center on Budget and Policy Priorities, May 20, 2014 New study looking at all spending.http://www.cbpp.org/cms/?fa=view&id=4011

Source: NCES data adjusting for cost of living differences

Source: NCES data adjusting for cost of living differences

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 problem.”

• 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

House• 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 comprehensive)

• Jan. 12, 2015 First Day of Session• Feb. 13, 2015 Last day for bill draft requests• May 1, 2015 110th day of Session

https://www.legis.iowa.gov/docs/Schedules/SessionTimetable.pdf42

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 43

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 relationship.

• 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.

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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

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UEN 2015 Legislative Priorities

UEN Steering Committee 2014-15 • Stan Rheingans, Superintendent, Dubuque, Chair

srheingans@dbqschools.org• Jane Lindaman, Superintendent, Waterloo, Chair-Elect (1)

lindamanj@waterlooschools.org • Arthur Tate, Superintendent, Davenport, Chair-Elect (2)

tateart@davenportschools.org• Dave Benson, Superintendent, Cedar Rapids, Past Chair

dbenson@cr.k12.ia.us• 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

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 challenges.

• 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 facilities.

• 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

(Okoboji)– Hi of $23.05 per $1,000 of net assessment taxable valuation

(Ballard)

• Here’s why. . .

General Fund Per Pupil

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Property RichestAverage Valuation

Property Poorest

Uniform Levy

State Aid

Additional Levy

UEN Resources

• Position Papers/Issue Briefs, talking points, advocacy messages

• 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” BartlettNBC’s “The West Wing”

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