Bill Summary – FastDemocracy

Fiscal Note
                                       Fiscal Services Division
SF 2386 – Area Education Agencies (LSB5189SV)
Staff Contact: Ron Robinson (515.281.6256) ron.robinson@legis.iowa.gov
Fiscal Note Version – New
Description and Background
Senate File 2386 relates to education, including modifying provisions related to the duties and
powers of Area Education Agencies (AEAs), the Department of Education (DE), the Department
of Administrative Services (DAS), AEA funding, and the calculation of the teacher salary
supplement (TSS) district cost per pupil (DCPP) and the minimum teacher starting salary.
Division I — Division of Special Education of the Department of Education
Current law requires the Director of the DE to provide guidance and standards to AEAs for
federal and State education initiatives which the AEAs must implement statewide. The Bill
transfers this responsibility to the Division of Special Education (DSE) of the DE beginning with
FY 2026. The Bill also requires the DSE to oversee the operation of each AEA beginning with
FY 2026.
The Bill requires the DE to coordinate with each AEA, and with the DSE, to develop a plan to
transfer certain specified employees of the AEA from employment under the AEA to
employment under the DSE. The Bill requires the DE to compile those plans and submit them
to the General Assembly on or before January 1, 2025.
Division II — Area Education Agencies — General Provisions
The Bill authorizes the AEAs to furnish evidence-based professional development services to
public or nonpublic schools located within the AEA’s boundaries, subject to the approval of the
director of the DE.
The Bill requires AEAs to provide special education services to local school districts that request
to receive such services by February 1 of the preceding school year. The Bill authorizes an
AEA to provide the services to local school districts that request to receive the services after
February 1 of the preceding school year. The Bill also authorizes AEAs to provide media
services for local school districts in the area. The Bill establishes that these provisions are
effective for FY 2026.
The Bill requires AEA boards to charge reasonable costs that are consistent with market rates
for the educational services, special education services, professional development services, and
media services provided by the AEA.
The Bill requires AEA boards to provide an annual report to the General Assembly and the DE
related to student outcomes and use of moneys.
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The Bill limits the salary for an AEA administrator to 125.0% of the average salary of all
superintendents of school districts that are located within the boundaries of the AEA. The Bill
establishes that this provision applies to employment agreements entered or renewed beginning
in FY 2025.
The Bill requires AEAs to prepare and submit to each school district within the AEA’s
boundaries an annual report containing information related to an accounting of payments and a
description of services provided.
The Bill modifies several provisions related to the accreditation of AEA programs to incorporate
the DSE of the DE into the accreditation process and to incorporate additional standards related
to accreditation. The Bill provides that an AEA that was accredited on or before July 1, 2025,
will remain accredited unless and until the DSE takes action to remove accreditation. The Bill
establishes that these provisions are effective in FY 2026.
Division III — Area Education Agencies — Funding
The Bill provides that the funds calculated under Iowa Code section 257.10(7) (Special
Education Support Services District Cost) and received by a school district or an AEA must be
used for special education support services.
Under current law, amounts calculated for special education support services, media services,
AEA teacher salary supplement district cost, AEA professional development supplement district
cost, and educational services are deducted by the Department of Management (DOM) from
State aid for each school district and instead paid to the school district’s AEA.
The Bill provides that beginning in FY 2025, the DOM must deduct the following amounts from
the State aid due to each school district and pay the amounts to the respective AEAs:
• The amount calculated for special education support services for the school district.
• 40.0% of the amount calculated for media services for the school district.
• The AEA teacher salary supplement district cost.
• The AEA professional development supplement district cost.
• 40.0% of the amount calculated for educational services for the school district.
The Bill provides that beginning with FY 2026, and each fiscal year thereafter, the DOM must
deduct the following amounts from the State aid due to each school district and pay the
amounts to the respective AEAs:
• 10.0% of the amount calculated for special education support services for the school district.
• 40.0% of the amount calculated for media services for the school district.
• The AEA teacher salary supplement district cost.
• The AEA professional development supplement district cost.
• 40.0% of the amount calculated for educational services for the school district.
The Bill modifies provisions related to the funding of media services and educational services
provided by a school district or through an AEA. The Bill provides that funds not required to be
paid to the AEA pursuant to Iowa Code section 257.35 (AEA Payments) may be used by the
school district for media services and educational services provided by the district or by contract
through the AEA. The Bill authorizes a school district to use unreserved fund balances for
media services and educational services to best maintain the level of special education services
as determined by the school district.
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The Bill provides that, for purposes of Iowa Code section 257.37 (Funding Media and
Educational Services), “enrollment served” means the basic enrollment of all school districts
within the boundaries of the AEA plus the number of nonpublic school pupils served by the AEA.
The Bill authorizes AEAs and school districts to expend for special education support services
an amount that exceeds the payment for special education support services to maintain the
level of required special education support services in the AEA or the school district.
Division IV — Initial Teacher Compensation
The Bill increases the minimum annual salary for an initial teacher who has successfully
completed an approved practitioner preparation program or holds an initial or intern teacher
license issued by the Board of Educational Examiners (BOEE), as specified in Iowa Code
chapter 284 (Teacher Compensation), from $33,500 to $46,251.
Division V — Area Education Agencies — Required Evaluations and Reports
The Bill requires each AEA, on or before January 1, 2025, to submit a report to the DE and the
General Assembly that contains information related to progress the AEA has made in reducing
executive administration expenses and a proposal for the reorganization of services provided by
AEAs.
The Bill requires the DAS, in coordination with the DE and each AEA, on or before January 1,
2025, to submit a report to the General Assembly that contains an inventory of all real property
and facilities owned by the AEAs, an evaluation of the value of all real property and facilities
owned by the AEAs, and an evaluation of how the real property and facilities owned by the
AEAs are used.
Division VI — Teacher Salary Supplement District Cost Per Pupil
The Bill provides that, for FY 2025, the TSS DCPP for a school district must be the greater of
the TSS DCPP for the school district for the base year plus the TSS supplemental State aid
amount for the budget year or the per pupil amount necessary to allow the school district to
provide a minimum teacher starting salary of $46,251, an increase of $12,751 compared to the
current law minimum of $33,500. Additionally, the Bill provides that for FY 2026 and succeeding
budget years, the TSS DCPP for each school district for a budget year is the TSS DCPP for the
base year plus the TSS supplemental State aid amount for the budget year.
Division VII — State Mandate
The Bill makes inapplicable Iowa Code section 25B.2(3), which would relieve a political
subdivision from complying with a State mandate if funding for the cost of the State mandate is
not provided or specified. Therefore, political subdivisions are required to comply with any State
mandate included in the Bill.
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Assumptions
• Information is not available regarding the cost of real property reporting under Division V.
• The DE and the DSE’s required staffing and responsibilities will be funded with current AEA
   staffing funding.
• The pupil count and attached funding will follow the pupil to the AEA that provides the
   services.
• The market rates for services provided and charged by the AEAs will be comparable to the
   costs and revenues provided under the current system.
• The AEAs will not incur costs for services that are no longer provided by the AEAs.
• The State percent of growth will be 0.00% each year.
• There will not be an additional reduction for the AEAs beyond the $7.5 million reduction
   specified in Iowa Code section 257.35(2).
Fiscal Impact
The estimated fiscal impact of SF 2386, by division, is as follows:
Division I relates to the DE and the DSE’s required staffing and responsibilities and will not
have a fiscal impact since the required staffing and responsibilities will be funded with current
AEA staffing funding.
Division II relates to general AEA provisions. The provision that specifies that AEAs can
furnish services and programs to pupils will not have an overall fiscal impact since the
assumption is that the funding will follow the pupil.
The market rates for services provided and charged by the AEAs will be comparable to the
costs and revenues provided under the current system and will not have an overall fiscal impact.
The reporting required from the AEAs may have little to no fiscal impact and can be completed
within available resources.
The provision relating to AEA administrator salaries will reduce overall AEA expenditures from
all sources by an estimated $251,000 annually, beginning in FY 2025.
The change in the accreditation process will not have a fiscal impact.
Division III relates to AEA funding and will reallocate current AEA funding between AEAs and
school districts. The AEA funding allocation is displayed below.
                                                  Figure 1
                                            AEA Funding Allocation
                                                  (in Millions)
                                                                  FY 2025 Allocation            FY 2026 Allocation
                                            FY 2024
                                              AEA                       School                         School
                                            Funding       AEA          Districts    Total     AEA     Districts    Total
  AEA Special Ed Support District Cost      $ 185.3     $ 185.3        $     0.0   $ 185.3   $ 18.5   $ 166.8     $ 185.3
  AEA Special Ed Support Adjustment              0.6         0.6             0.0       0.6      0.1         0.5       0.6
  AEA Media Services                            32.3        12.9            19.4      32.3     12.9        19.4      32.3
  AEA Ed Services                               35.7        14.3            21.4      35.7     14.3        21.4      35.7
  AEA Sharing                                    0.2         0.2             0.0       0.2      0.2         0.0       0.2
  AEA Teacher Salary Supplement                 18.2        18.2             0.0      18.2     18.2         0.0      18.2
  AEA Professional Development Supplement        2.1         2.1             0.0       2.1      2.1         0.0       2.1
  AEA Statewide State Aid Reduction            -29.6        -7.5             0.0      -7.5     -7.5         0.0      -7.5
  Total                                     $ 244.9     $ 226.1        $    40.8   $ 266.9   $ 58.8   $ 208.1     $ 266.9
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Division IV, relating to increasing the minimum teacher starting salary by $12,751 to $46,251,
will increase General Fund expenditures for the TSS by an estimated $19.9 million in FY 2025,
compared to estimated FY 2024, and General Fund appropriations will increase each year
thereafter by the increase in the categorical State percent of growth.
Division V, relating to AEA evaluation reporting, may have a minimal fiscal impact and can be
implemented with available resources. Information is not available regarding the cost of real
property reporting and, therefore, a fiscal estimate cannot be made.
Division VI, relating to the TSS DCPP, will not have any additional fiscal impact other than the
fiscal impact estimated for Division IV.
Division VII relates to the inapplicability of a possible State mandate and will not have a fiscal
impact.
Sources
Department of Education, Certified Enrollment and Enrollment Projections File
Department of Management, School Aid File
Legislative Services Agency analysis and calculations
                                                                               /s/ Jennifer Acton
                                                                                 March 4, 2024
Doc ID 1446746
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in developing this
fiscal note is available from the Fiscal Services Division of the Legislative Services Agency upon request.
                                                 www.legis.iowa.gov
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Statutes affected: 
Introduced: 256.9, 273.1, 273.2, 273.3, 279.20, 257.35, 256B.3, 257.37, 257.10, 284.15, 256.145, 284.17