HF 2481 (LSB 5423HZ (4) 87)

HOUSE FILE 2481  BY  COMMITTEE ON WAYS AND MEANS 
(SUCCESSOR TO HF 2438)
(SUCCESSOR TO HSB 647)

Bill Title HF 2481

This bill is in the form as amended and approved by the Iowa House on April 10, 2018, with 95 Representatives voting yes and 3 voting no. 
SF 

A BILL FOR

An Act relating to school funding by modifying provisions relating to the collection of sales tax for deposit in the secure an advanced vision for education fund, provisions relating to the use of tax revenue from the secure an advanced vision for education fund, and provisions relating to the calculation of the additional property tax levy, and making appropriations.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

Section analysis of the Sales Tax Extension bill is annotated, with bill language on the left and translation on the right.  If the bill changes current Code, you’ll see deletions as a strike through and additions as an underline.   If there is a new section of Code, it is not underlined, but is introduced as a NEW section.  

Link to the bill https://www.legis.iowa.gov/legislation/BillBook?ga=87&ba=hf2481 
Link to the Fiscal Note:   https://www.legis.iowa.gov/docs/publications/LGR/87/HF2481.pdf  Last page of the fiscal note showing fiscal impact is on page 11 of this document. 

Margaret Buckton, 515.201.3755 cell  
margaret@iowaschoolfinance.com

Sec. 1 & 2 NEW accomplishes property tax relief to all districts through the new Foundation Base Supplement Payment.  

c. 3: Includes Foundation Base Supplement Payment in DOM’s calculation of the district’s property tax rate. 

Sec. 4: after getting to average via PTER which lowers the highest levies in the state, the balance goes to regular program property tax relief via Foundation Base Supplement Payment. 

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    Section 1.  Section 257.2, subsection 8, Code 2018, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  e.  Foundation base supplement payments received under section 257.16C.
    Sec. 2.  Section 257.4, subsection 1, paragraph a, Code 2018, is amended by adding the following new subparagraph:
   NEW SUBPARAGRAPH.  (10)  The amount of the foundation base supplement payment to be received by the school district under section 257.16C.
    Sec. 3.  Section 257.4, subsection 1, paragraph b, Code 2018, is amended to read as follows:
   b.  For the budget year beginning July 1, 2008, and succeeding budget years, the department of management shall annually determine an adjusted additional property tax levy and a statewide maximum adjusted additional property tax levy rate, not to exceed the statewide average additional property tax levy rate, calculated by dividing the total adjusted additional property tax levy dollars statewide by the statewide total net taxable valuation. For purposes of this paragraph, the adjusted additional property tax levy shall be that portion of the additional property tax levy corresponding to the state cost per pupil multiplied by a school district’s weighted enrollment, and then multiplied by one hundred percent less the regular program foundation base per pupil percentage pursuant to section 257.1, and then reduced by the amount of the property tax replacement payment to be received under section 257.16B and the amount of the foundation base supplement payment to be received under section 257.16C. The district shall receive adjusted additional property tax levy aid in an amount equal to the difference between the adjusted additional property tax levy rate and the statewide maximum adjusted additional property tax levy rate, as applied per thousand dollars of assessed valuation on all taxable property in the district. The statewide maximum adjusted additional property tax levy rate shall be annually determined by the department taking into account amounts allocated pursuant to section 257.15, subsection 4, and the balance of the property tax equity and relief fund created in section 257.16A at the end of the calendar year.
    Sec. 4.  Section 257.15, subsection 4, paragraph b, Code 2018, is amended to read as follows:
   b.  After lowering all school district adjusted additional property tax levy rates to the statewide maximum adjusted additional property tax levy rate under paragraph “a”, the department of management shall use any remaining funds at the end of the calendar year to further lower additional property taxes by increasing for the budget year beginning the following July 1, the state regular program foundation base per pupil percentage under section 257.1. Moneys used pursuant to this paragraph shall supplant an equal amount of the appropriation made from the general fund of the state pursuant to section 257.16 that represents 
Sect. 5 NEW Creates a separate fund called the Foundation Base Supplement Fund.  

This subsection describes the calculation: all money in the fund divided by weighted enrollment = the per pupil distribution.  

Also keeps the total when combined with the PTER fund payment from exceeding the amount of property taxes the district would otherwise collect. 
Non-reversion language.

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the increase in state foundation aid.
    Sec. 5.  NEW SECTION.  257.16C  Foundation base supplement fund.
   1.  A foundation base supplement fund is created as a separate and distinct fund in the state treasury under the control of the department of management. Moneys in the fund include revenues credited to the fund, appropriations made to the fund, and other moneys deposited into the fund.
   2.  a.  There is appropriated annually from the fund to the department of management an amount necessary to make all foundation base supplement payments under this section. The department of management shall calculate each school district’s foundation base supplement payment based on the distribution methodology under paragraph “b”.
   b.  The moneys available in a fiscal year in the foundation base supplement fund shall be distributed by the department of revenue to each school district on a per pupil basis calculated using each school district’s weighted enrollment, as defined in section 257.6, for that fiscal year. However, the amount of a school district’s foundation base supplement payment for a budget year shall not exceed an amount equal to the school district’s weighted enrollment for the budget year multiplied by the amount for the budget year calculated under section 257.16B, subsection 2, paragraph “f”, subparagraph (2), as enacted in 2018 Iowa Acts, House File 2230, §4, minus the amount of the school district’s property tax replacement payment under section 257.16B for the budget year.
   3.  Notwithstanding section 8.33, any moneys remaining in the foundation base supplement fund at the end of a fiscal year shall not revert to any other fund but shall remain in the foundation base supplement fund for use as provided in this section for the following fiscal year.

NEW: Sec. 6 creates a new Career Academy fund. 
Allows appropriations into the fund and gifts, grants, bequests as well as other state or federal funds. 
Non-reversion language. 

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    Sec. 6.  NEW SECTION.  257.51  Career academy fund —— grant program.
   1.  A career academy fund is created and established as a separate and distinct fund in the state treasury under the control of the department of education.
   2.  a.  In addition to moneys deposited in the career academy fund pursuant to section 423F.2, the department of education may accept gifts, grants, bequests, and other private contributions, as well as state or federal funds, and shall deposit the moneys in the fund to be used for purposes of this section. Moneys in the fund are appropriated to the department of education and shall be used for the purposes of this section.
   b.  Notwithstanding section 8.33, moneys in the fund that remain unencumbered or unobligated at the close of the fiscal year shall not revert but shall remain available for expenditure for the purposes of this section in succeeding fiscal years. Notwithstanding 
Sect 6 continued: 
Requires DE to adopt rules for competitive grant program. Limits grants to school corporations to $1.0 million max. 
Grants are for career academy infrastructure, equipment or both. 
Rules will define eligibility of applicants and items. Priority goes first to new career academies that are organized as regional CTE planning partnerships. Second priority to applications for expanding and updating infrastructure for existing facilities. 

section 12C.7, subsection 2, interest earned on moneys in the career academy fund shall be credited to the fund.
   3.  The department of education shall adopt rules to establish and administer a career academy grant program to provide for the allocation of money in the fund in the form of competitive grants, not to exceed one million dollars per grant, to school corporations for career academy infrastructure, career academy equipment, or both, in accordance with the goals of this section and to further the goals of the establishment and operation of career academies under section 258.15. The rules adopted by the department of education shall specify the eligibility of applicants and eligible items for grant funding. Priority for grants shall first be given to applications to establish new career academies that are organized as regional career and technical education planning partnerships pursuant to section 258.14 with three or more school districts. Subsequent priority shall be given to applications for expanding and updating existing facilities and infrastructure to serve as career academies.
    Sec. 7.  Section 423.2, subsection 11, paragraph b, subparagraph (3), Code 2018, is amended to read as follows:
   (3)  Transfer one-sixth of the remaining revenues to the secure an advanced vision for education fund created in section 423F.2. This subparagraph (3) is repealed December 31, 2029 January 1, 2050.

Sect 7-10
Extends sunset of state penny sales tax and use tax sections to Jan. 1, 2050

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    Sec. 8.  Section 423.2, subsection 14, Code 2018, is amended to read as follows:
   14.  The sales tax rate of six percent is reduced to five percent on January 1, 2030 2050.
    Sec. 9.  Section 423.5, subsection 5, Code 2018, is amended to read as follows:
   5.  The use tax rate of six percent is reduced to five percent on January 1, 2030 2050.

Sect 11: 
New language in subsection b requires deposits of SAVE revenues into the Property Tax Equity and Relief (PTER) Fund, Foundation Base Supplement fund and the Career Academy Fund.

    Sec. 10.  Section 423.43, subsection 1, paragraph b, Code 2018, is amended to read as follows:
   b.  Subsequent to the deposit into the general fund of the state and after the transfer of such revenues collected under chapter 423B, the department shall transfer one-sixth of such remaining revenues to the secure an advanced vision for education fund created in section 423F.2. This paragraph is repealed December 31, 2029 January 1, 2050.
    Sec. 11.  Section 423F.2, subsection 3, Code 2018, is amended to read as follows:
   3.  a.  The moneys available in a fiscal year in the secure an advanced vision for education fund shall be distributed by the department of revenue to each school district on a per pupil basis calculated using each school district’s budget enrollment, as defined in section 257.6, for that fiscal year.
   b.  (1)  Prior to distribution of moneys in the secure an advanced vision for education fund to school districts, two and one-tenths percent of the moneys 
Sect. 11 continued:

Defines the calculations to phase in the Foundation Base Percentage Fund and the PTER fund increases:  
FY 2019 2.1%
FY 2020 3.1%
FY 2021 4.1%
FY 2025 5.1% etc. until
FY 2027 capped at 12%

Of the PTER funds in FY 2027, $72.9 million, of which $20.0 million goes to Foundation Base Percentage Fund. 

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The Career Academy amount is $1 million annually, unless SAVE grows by 2.5%. If that happens, the Career Academy amount grows by one half of 1%, but never more than $5.0 million. 

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available in a an amount equal to the equity transfer amount for the fiscal year minus the foundation base transfer amount for the fiscal year shall be distributed and credited to the property tax equity and relief fund created in section 257.16A, an amount equal to the foundation base transfer amount shall be distributed and credited to the foundation base supplement fund created in section 257.16C, and an amount equal to the career academy transfer amount for the fiscal year shall be distributed and credited to the career academy fund created in section 257.51.
   (2)  For purposes of this subsection, the equity transfer amount is determined by multiplying the equity transfer percentage by the amount of moneys available in the secure an advanced vision for education fund in the fiscal year. 
   (a)  For the fiscal year beginning July 1, 2017, the equity transfer percentage is two and one-tenths percent.
   (b)  For each fiscal year beginning on or after July 1, 2018, the equity transfer percentage is equal to the equity transfer percentage for the immediately preceding fiscal year, unless the amount of moneys available in the secure an advanced vision for education fund in the fiscal year equals or exceeds one hundred two percent of the amount of moneys available in the fund for the immediately preceding fiscal year, in which case the equity transfer percentage shall be the equity transfer percentage for the immediately preceding fiscal year plus one percent subject to the limitation in subparagraph division (c).
   (c)  If the equity transfer percentage calculated under subparagraph division (b) exceeds twelve percent, the equity transfer percentage for that fiscal year shall be twelve percent.
   (3)  For purposes of this subsection, the foundation base transfer amount equals the equity transfer amount for the fiscal year under subparagraph (2) minus the sum of the following:
   (a)  Two and one-tenths percent of the amount of the moneys available in the secure an advanced vision for education fund in the fiscal year.
   (b)  Two-thirds of the product of the equity transfer percentage for the fiscal year minus two and one-tenths percent multiplied by the moneys available in the secure an advanced vision for education fund in the fiscal year.
   (4)  (a)  For purposes of this subsection, the career academy transfer amount for the fiscal year beginning July 1, 2018, is one million dollars.
   (b)  For each fiscal year beginning on or after July 1, 2019, the career academy transfer amount is equal to the lesser of five million dollars or the amount of the career academy transfer amount for the immediately preceding fiscal year, unless the amount of moneys available in the secure an advanced vision for education fund in the fiscal year equals or exceeds one hundred two and one-half percent of the amount of moneys available in the fund for the immediately preceding fiscal year, in which case the career academy transfer amount equals the lesser of five million dollars or the sum of the amount of the career academy transfer amount for the immediately preceding fiscal year plus one-half percent of the amount of moneys available in the secure an advanced vision for education fund in the fiscal year following the deposit of revenues in the property tax 
Sect. 12 
Amends Revenue Purpose Statement process: 
Strikes the 60-days reference in current law. 
Adds a new subsection 2 to 423F.3 (3) (b)
Terminates existing revenue purpose statements on the earlier of Jan 1. 2030 or upon their individual expiration as approved by voters.

Allows school districts to use funds for property tax relief without an approved revenue purpose statement (reference to paragraph “a) but requires voters to approve a new RPS to use funds after the expiration of the existing RPS. 

Requires notice of election published in the paper to include a specific statement that SAVE funds will buy down existing levies in the district first before expenditure on other purposes.
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equity and relief fund and the foundation base supplement fund.
    Sec. 12.  Section 423F.3, subsection 3, paragraph b, Code 2018, is amended to read as follows:
   b.  (1)  If the board of directors intends to use funds for purposes other than those listed in paragraph “a”, or change the use of funds to purposes other than those listed in paragraph “a”, the board shall adopt a revenue purpose statement or amend an existing revenue purpose statement, subject to approval of the electors, listing the proposed use of the funds. School districts shall submit the statement to the voters no later than sixty days prior to the expiration of any existing revenue purpose statement or change in use not included in the existing revenue purpose statement.
   (2)  (a)  Notwithstanding any provision of law to the contrary, for each school district with an existing revenue purpose statement for the use of revenues from the secure an advanced vision for education fund adopted under this paragraph or adopted under another provision of law before July 1, 2018, such revenue purpose statement shall terminate and be of no further force and effect on January 1, 2030, or the expiration date of the revenue purpose statement, whichever is earlier. If such a school district intends to use funds for purposes other than those listed in paragraph “a” and does not intend to operate without a revenue purpose statement on or after January 1, 2030, or the expiration date of the revenue purpose statement, whichever is earlier, the board of directors shall submit a revenue purpose statement for approval by the electors under subparagraph (1) on or after July 1, 2018, and such revenue purpose statement submitted to the electors shall include all proposed uses including those previously approved by the electors, if applicable. The following, in substantially the following form, shall be included in the notice of the election published under paragraph “d” and published on the school district’s internet site:
   If a majority of eligible electors voting on the question fail to approve this revenue purpose statement, revenues received by the school district from the secure an advanced vision for education fund shall first be expended for . . . . (State the purposes in the order listed in subsection 1 and as required by subsection 4 of this section for which the revenues received by the school district under this chapter will be expended.)

Sect. 12 continued: 
Keeps RPS in place unless new one is adopted by voters or old one expires. 
If RPS is terminated, bonding and other obligations of the district in effect prior to termination date are protected. 

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Sect. 13 and 14: Amends certificate of need, applies to districts below 100 in a high school or 250 in the district (no change to current law thresholds) to include a cost-benefit analysis of remodeling or repairing. NEW: Requires the CON to include a consideration of benefits and effects of new construction on student learning. 
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Sect. 15 NEW: Includes school safety and security infrastructure and defines what it is but excludes the cost of personnel, development of security plans or training. 
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Sect. 16: NEW if revenues are used for athletic facilities, the board must adopt a resolution setting forth the proposal, hold an additional public hearing on the athletic facility proposal. Publishing requirements. Must wait 14 days after the public hearing for a petition. 

   (b)  Unless a new revenue purpose statement is adopted by the electors, the existing revenue purpose statement remains in effect until January 1, 2030, or the expiration date of the revenue purpose statement, whichever is earlier. If a revenue purpose statement is terminated under the provisions of this subparagraph, such termination shall not affect the validity of or a first lien on bonds issued under section 423E.5, Code 2018, or section 423F.5 prior to the date the revenue purpose statement is terminated under subparagraph division (a), or the validity of a contract or other obligation of the school district secured in whole or in part by or requiring the payment of funds received under this chapter in effect prior to the date the revenue purpose statement is terminated under subparagraph division (a).
    Sec. 13.  Section 423F.3, subsection 5, paragraph b, Code 2018, is amended to read as follows:
   b.  The infeasibility cost-benefit analysis of remodeling, reconstructing, or repairing existing buildings.
    Sec. 14.  Section 423F.3, subsection 5, Code 2018, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  i.  Benefits and effects of the new construction on student learning.
    Sec. 15.  Section 423F.3, subsection 6, Code 2018, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  0d.  Additionally, “school infrastructure” includes school safety and security infrastructure. For purposes of this paragraph, “school safety and security infrastructure” includes but is not limited to safe rooms, remote entry technology and equipment, security camera systems, card access systems, and communication systems with access to fire and police emergency frequencies. For purposes of this paragraph, “school safety and security infrastructure” does not include the cost of personnel, development of safety and security plans, or training related to the implementation of safety and security plans.
    Sec. 16.  Section 423F.3, Code 2018, is amended by adding the following new subsection:
   NEW SUBSECTION.  6A.  a.  Prior to approving the use of revenues received under this chapter for an athletic facility infrastructure project within the scope of the school district’s approved revenue purpose statement or pursuant to subsection 4 for a school district without an approved revenue statement, the board of directors shall adopt a resolution setting forth the proposal for the athletic facility infrastructure project and hold an additional public hearing on the issue of construction of the athletic facility. Notice of the time and place of the public hearing shall be published not less than ten nor more than twenty days before the public hearing in a newspaper which is a newspaper of general circulation in the school district. If at any time prior to the fifteenth day following the hearing, the secretary of 
Petition must have the required number of signatures to require the athletic proposal to be submitted to the voters. 

Board may either rescind the proposal or hold a special election. 
Minimum signatures required the greater of 100 or 30% of those voting in the last preceding election of school officers. 
Simple majority determines the outcome. 

If no petition in 14 days, the board may approve the use of revenues for the athletic facility without voter approval.
Prohibits an action after the 14 days expires or after the election questioning the board’s authority to use SAVE funds for athletic facilities. 
Defines Athletic facility and Athletic facility infrastructure project. 
Excludes repair or maintenance of an existing facility from “construction” definition. 
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Sect. 17: Bonding 
To anticipating proceeds from existing revenue purpose statement, may issue bonds following sub. 2. 

the board of directors receives a petition containing the required number of signatures and asking that the question of the approval of the use of revenues for the athletic facility infrastructure project be submitted to the voters of the school district, the board of directors shall either rescind the board’s resolution for the use of revenues for the athletic facility infrastructure project or direct the county commissioner of elections to submit the question to the registered voters of the school district at an election held on a date specified in section 39.2, subsection 4, paragraph “c”. The petition must be signed by eligible electors equal in number to not less than one hundred or thirty percent of the number of voters at the last preceding election of school officials under section 277.1, whichever is greater. If a majority of those voting on the question favors the use of the revenues for the athletic facility infrastructure project, the board shall be authorized to approve such use by resolution of the board. If a majority of those voting on the question does not favor the use of the revenues for the athletic facility infrastructure project, the board of directors shall rescind the board’s resolution for the use of revenues for the athletic facility infrastructure project. If a petition is not received by the board of directors within the prescribed time period, the board of directors may approve the use of revenues for the athletic facility infrastructure project without voter approval.
   b.  After fourteen days from the date of the hearing under paragraph “a” or fourteen days after the date of the election held under paragraph “a”, if applicable, whichever is later, an action shall not be brought questioning the board of directors’ authority to use funds for the athletic facility infrastructure project or questioning the legality of any proceedings in connection with the authorization of such use.
   c.  For purposes of this subsection:
   (1)  “Athletic facility” means a building or structure, or portion thereof, that is not physically attached to a student attendance center.
   (2)  “Athletic facility infrastructure project” means a school infrastructure project that includes in whole or in part the construction of an athletic facility.
   (3)  “Construction” does not include repair or maintenance of an existing facility.
    Sec. 17.  Section 423F.4, Code 2018, is amended to read as follows:
   423F.4  Borrowing authority for school districts.
   1.  A Subject to the conditions established under subsection 2, a school district may anticipate its share of the revenues under section 423F.2 by issuing bonds in the manner provided in section 423E.5, Code 2018. However, to the extent any school district has issued bonds anticipating the proceeds of an extended local sales and services tax for school infrastructure 

Sect. 17 Continued:
Requires notice and public hearing to sell bonds at public sale or private sale. Publishing requirements included. 
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Wait 14 days for petition requiring the issuance of bonds to be approved by voters.  If a petition arises with enough signatures, the board may either rescind the resolution or hold a special election. 

Same petition requirements as above: the greater of 100 or 30% of those voting in the last school board election. Simple majority rules. 
After 14 days, if no petition arises, the board may proceed and action questioning the board’s authority to proceed shall not be brought. 

Repeals the SAVE extension January 1, 2050. 

Typical language that says nothing in this bill is considered a state mandate since school districts receiving state foundation aid. 

purposes imposed by a county pursuant to former chapter 423E, Code and Code Supplement 2007, prior to July 1, 2008, the pledge of such revenues for the payment of principal and interest on such bonds shall be replaced by a pledge of its share of the revenues under section 423F.2.
   2.  a.  Bonds issued on or after July 1, 2018, shall not be sold at public sale as provided in chapter 75, or at a private sale, without notice and hearing. Notice of the time and place of the public hearing shall be published not less than ten nor more than twenty days before the public hearing in a newspaper which is a newspaper of general circulation in the school district.
   b.  For bonds subject to the requirements of paragraph “a”, if at any time prior to the fifteenth day following the hearing, the secretary of the board of directors receives a petition containing the required number of signatures and asking that the question of the issuance of such bonds be submitted to the voters of the school district, the board shall either rescind its adoption of the resolution or direct the county commissioner of elections to submit the question to the registered voters of the school district at an election held on a date specified in section 39.2, subsection 4, paragraph “c”. The petition must be signed by eligible electors equal in number to not less than one hundred or thirty percent of the number of voters at the last preceding election of school officials under section 277.1, whichever is greater. If the board submits the question at an election and a majority of those voting on the question favors issuance of the bonds, the board shall be authorized to issue the bonds.
   c.  After fourteen days from the date of the hearing under paragraph “a” or fourteen days after the date of the election held under paragraph “b”, if applicable, whichever is later, an action shall not be brought questioning the legality of any bonds or the power of the authority to issue any bonds or to the legality of any proceedings in connection with the authorization or issuance of the bonds.
    Sec. 18.  Section 423F.6, Code 2018, is amended to read as follows:
   423F.6  Repeal.
   This chapter is repealed December 31, 2029 January 1, 2050.
    Sec. 19.  STATE MANDATE FUNDING SPECIFIED.  In accordance with section 25B.2, subsection 3, the state cost of requiring compliance with any state mandate included in this Act shall be paid by a school district from state school foundation aid received by the school district under section 257.16. This specification of the payment of the state cost shall be deemed to meet all of the state funding-related requirements of section 25B.2, subsection 3, and no additional state funding shall be necessary for the full implementation of this Act by and enforcement of this Act against all affected school districts.

Summary of SAVE Extension Provisions: 

1)	Extends the penny through January 1, 2050.
2)	Guarantees more property tax relief through increase to PTER and new Foundation Base Percentage Fund. Currently 2.1% goes into PTER (+ $24 M appropriation). Total through extension is 12% (+ $24 M appropriation).
3)	Creates a new Career Academy Fund and Grant program, max of $5 million.
4)	Adds transparency and public input into Revenue Purpose Statement, athletic facilities new construction and bond issuance.  Public notice, public hearing, reverse referendum, vote to extend RPS beyond 2030 or current expiration. 
5)	Adds to certificate of need: DE must consider cost benefit analysis of repair and impact on student learning of new construction. 
6)	Adds safety and security infrastructure/equipment to allowable expenses but prohibits use for staff or emergency planning. 
7)	Repeals SAVE chapter 423F on January 1, 2050.

Advocacy Actions: 
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