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Legislative Report (Vol XXIV No.5) Feb 7, 2005 House Education Committee Passes 100% Foundation Level

February 15, 2005

The House Education Committee passed HF 139 (now HF 288) a bill raising the school foundation formula aid level to 100% over a number of years. The bill would provide that under the formula school aid would depend upon 100% state funding rather than the current mix of state aid and property tax. The vote was 17-6. This bill does nothing to provide additional funding for schools, only a shift in where the funding originates. The greater reliance on only state aid could seriously impact the growth rate for schools in the future.

The bill gradually phases out the additional levy but does nothing to the $5.40 uniform levy. This creates an estimated $473 million cost for the state, without raising the uniform levy to provide more state revenue. In addition the first $50 million for the next 8 years goes to property tax relief and is off the table for educational program needs.

The bill will now be rereferred to the Ways and Means Committee which deals with tax issues.

IPERS Legislation

There is a good chance that the legislature will break precedent and debate a major IPERS bill during the course of this session. Previously IPERS issues were debated only during even year sessions. The bill, HSB 166 is based on recommendations of the IPERS board and contains the following provisions:

  • Provides that the base employer rate will increase from the current rate by .6 percentage points per fiscal year beginning July 1, 2006, until reaching 8.15 percent on July 1, 2009.
  • Provides that the base employee rate will increase from the current rate by .4 percentage points per fiscal year beginning July 1, 2006, until reaching 5.3 percent on July 1, 2009.
  • Provides, beginning July 1, 2010, the total employer percentage shall be 8.15 percent and 50 percent of the total adjusted required percentage, and the total employee percentage shall be 5.3 percent and 50 percent of the total adjusted required percentage.

Currently, the employer rate is 5.75 percent and the employee rate is 3.7 percent of a member's covered wages.

Siegrist Presentation

As previously written a bi-partisan committee of 12 legislators (3 Republicans and Democrats each from the House and Senate) are working with and at the request of the governor to consider the issues of governance, tax revenues, and school finance. The group is divided into 3 subcommittees; Education Finance, Governance and Taxes and Revenue.

On Tuesday of this coming week Director of AEA Services Brent Siegrist will be making a presentation to the education subcommittee on the Iowa Educational Coop and on current sharing that is taking place between AEAs and LEAs.

LEGISLATIVE UPDATE

A Summary of Bills Introduced during the Week of 2-7-2005

House Files:

HF 221 - This bill requires the director of the department of administrative services and the commissioner of insurance to jointly conduct a feasibility study concerning the creation of a statewide public employee health benefit system. By Mascher

HF 229 - This bill requires the director of the department of education to develop a program to annually identify and honor elementary and secondary schools that succeed in reducing achievement gaps, and secondary schools that increase the number and diversity of students enrolled in advanced science, mathematics, and reading programs; to establish criteria for the recognition of exemplary schools and programs; to establish a process to publicly honor the recipients chosen; and to create a noteworthy symbol or certificate of honor suitable for public display in the community by the recipient schools. By Ford

HF 239 - This bill appropriates approximately $8.76 million annually to the school budget review committee for transportation assistance aid to school districts, in an amount up to 50 cents for each dollar by which the district's average transportation costs exceed the state average transportation costs per pupil. The moneys appropriated are to supplement, not supplant, moneys appropriated to the committee from the sale of vehicle registration plates with an education emblem. By Wise

HF 258 - This bill makes a school district eligible for supplementary weighting for pupils attending a class taught via the Iowa communications network. The bill also eliminates a provision in the postsecondary enrollment options Act that permits a high school student to enroll in a postsecondary course only when the school district does not offer a comparable course, and requires the board of directors of a school district to publicize the opportunities available to students under the postsecondary enrollment options Act in the school district's student handbook and on its web page. By Wise

HF 288 – Successor to HF 139. 100% foundation level.

HF 295 - This bill reinstates language creating and funding the school improvement technology program, and extends repeal of the Code chapter creating the program, Code chapter 256D, to July 1, 2007. Though the program was amended and combined with the early intervention block grant in 1999, the basic program was in place and funded from FY 1995-1996 through FY 2001-2002. By Mascher

House Study Bills:

HSB 139 - This bill provides that a border city may vote to exempt the residents of the city from the state individual income tax. A border city is one that is contiguous to a city or town in another state or is within five miles of a city or town in another state. The vote taken must be a citywide election at which a majority votes in favor of the exemption as well as in favor of reimbursement to the state from a specified source of the estimated loss to the state attributable to the exemption. The funding for the reimbursement is optional and may consist of a local option sales and services tax with no rate limit, a special property tax with no rate limit, or any other funds available to the city which are not otherwise dedicated to another purpose. Only the sales tax must be on the ballot if that is to be one of the funding sources and the rate must be specified. The bill provides that income surtaxes for schools and emergency medical services are not affected by the exemption provided border city residents. By Hoffman

HSB 143 - This bill makes changes to the Iowa public employees' retirement system (IPERS) relating to contributions made to the system by employers and employees. Code section 97B.11, governing contributions to the retirement fund, is amended. Currently, the employer rate is 5.75 percent and the employee rate is 3.7 percent of a member's covered wages. The bill provides that the employer rate will equal 5.75 percent plus 60 percent of the total additional required percentage and the employee rate will equal 3.7 percent plus 40 percent of the total additional required percentage. The bill provides that the total additional required percentage shall be 1 percentage point for the fiscal year beginning July 1, 2005, and this rate shall increase by 1 percentage point a year until reaching 4 percent for the fiscal year beginning July 1, 2008. Beginning for each fiscal year on or after July 1, 2009, the total additional required percentage shall equal the total required percentage minus 9.45 percent. Proposed Governors Bill

HSB 166 - This bill makes changes to the Iowa public employees' retirement system and the judicial retirement system. The bill may include a state mandate as defined in Code section 25B.3. The state mandate funding requirement in Code section 25B.2, however, does not apply to public employee retirement systems. The bill amends Code section 97B.11 relating to the contributions made to the system by employers and employees. Currently, the employer rate is 5.75 percent and the employee rate is 3.7 percent of a member's covered wages. The bill provides that the base employer rate will increase from the current rate by .6 percentage points per fiscal year beginning July 1, 2006, until reaching 8.15 percent on July 1, 2009. The bill further provides that the base employee rate will increase from the current rate by .4 percentage points per fiscal year beginning July 1, 2006, until reaching 5.3 percent on July 1, 2009. Beginning July 1, 2010, the total employer percentage shall be 8.15 percent and 50 percent of the total adjusted required percentage, and the total employee percentage shall be 5.3 percent and 50 percent of the total adjusted required percentage. By Elgin

Senate Files:

SF 115 - This bill provides for the election of the directors of local school districts and merged areas on the general election day in November in even-numbered years. In order to accomplish these purposes, the bill changes the terms of these directors from three to four years and provides for a transition period. The bill also changes the date of the organization meeting of the board of directors of a school district. The bill provides that the organization meeting shall be at the regular board meeting in January following the election rather than at the first regular meeting after the canvass of votes of the election. The bill also provides that new members of school district boards, merged area boards, and area education agency boards shall be sworn in at the organization meeting of each of the boards of directors. The bill takes effect upon enactment for purposes of making the transition from annual election to three-year terms to biennial election to four-year terms. By Boettger

SF 133 - This bill authorizes the sale of Iowa communications network (ICN) capacity under specified circumstances, and provides for other changes relating to the operation of the network. Dvorsky and Weick

SF 135 - This bill requires counties that have not imposed local option sales and services taxes for school infrastructure purposes pursuant to an election by January 1, 2006, to do so, without an election, effective January 1, 2006, for a period of 10 years. The school districts located in these counties will receive revenues according to the formula used for those districts located in counties that had approved the tax on or after April 1, 2003. By Kibbie

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