Fiscal Note
Fiscal Services Division
HF 438 – Supplemental State Aid (LSB2433HV)
Staff Contact: Michael Guanci (515.725.1286) michael.guanci@legis.iowa.gov
Fiscal Note Version – New
Description
House File 438 modifies and establishes provisions related to the funding of school districts,
including establishing a State supplemental aid (SSA) amount based on a State percent of
growth rate and the categorical State percent of growth rate for the budget year beginning
July 1, 2021 (FY 2022), and provides for other changes to the school aid formula.
House File 438 has four provisions with a fiscal impact:
• Establishes a 2.50% State percent of growth rate to be applied to the State cost per pupil
(SCPP) for FY 2022 for an SSA of $176 per pupil.
• Establishes a 2.50% State percent of growth rate to be applied to each of the State
categorical cost per pupil amounts for FY 2022. The General Fund appropriation to the
Transportation Equity Program will grow at the same rate.
• Provides an additional increase of $10 to the FY 2022 regular program SCPP separate from
the SSA.
• Provides additional property tax replacement funding based on the per pupil increase that
results from the establishment of the State percent of growth in FY 2022. The Act requires
the additional levy portion of the FY 2022 SCPP amount to be frozen at $750 per pupil,
regardless of the per pupil increase for FY 2022.
The Bill takes effect upon enactment.
Background
State Cost Per Pupil. The school aid formula provides funding to school districts and Area
Education Agencies (AEAs) through a mix of State aid and property taxes. In general, funding
is generated on a per pupil basis, with the per pupil amounts providing an overall budget
limitation (or spending authority). There are five SCPP funding levels that would be increased
by a 2.50% State percent of growth for FY 2022 with the enactment of this Bill.
Table 1 provides the supplemental State aid amounts (also referred to as per pupil growth
amounts) and SCPP amounts for FY 2022 based on a 2.50% growth rate. The SSA amounts
will be applied to all corresponding district and AEA cost per pupil amounts. In addition to a
2.50% growth rate, Section 2 of the Bill adds an additional $10 to the SCPP separate from the
SSA.
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Table 1 — HF 438
FY 2022 State Cost Per Pupil Calculations
FY 2021 FY 2022 FY 2022 FY 2022 FY 2022
State Cost State Percent Supplemental Additional State Cost
Per Pupil of Growth State Aid SCPP Dollars Per Pupil
Regular Program $ 7,048 2.50% $ 176 $ 10 $ 7,234
Special Education Program 7,048 2.50% 176 10 7,234
AEA Special Education Services 308.56 2.50% 7.71 - 316.27
AEA Media Services 57.53 2.50% 1.44 - 58.97
AEA Education Services 63.48 2.50% 1.59 - 65.07
In addition to the State percent of growth and SSA amounts for FY 2022, enrollments,
weightings, and taxable valuations within each school district have an impact on the amount of
total school aid funding, including the amount of State aid and local property tax required to
generate the total funding amount.
State Categorical Supplements. The State categorical supplements are funded entirely
through State aid and generate funds for each school district and AEA through the school aid
formula on a per pupil basis. The FY 2022 SCPP funding levels for the teacher salary
supplement (district and AEA), professional development supplement (district and AEA), early
intervention supplement (district only), and Teacher Leadership and Compensation (TLC)
(district only) supplement would be increased by a 2.50% State percent of growth for FY 2022.
Table 2 provides the per pupil growth amounts and SCPP amounts for FY 2022 based on
this Bill.
Table 2 — HF 438
FY 2022 State Categorical Cost Per Pupil Calculations
FY 2021 FY 2022 FY 2022 FY 2022
State Cost State Percent Supplemental State Cost
Per Pupil of Growth State Aid Per Pupil
Teacher Salary - Districts $ 605.58 2.50% $ 15.14 $ 620.72
Professional Development - Districts 68.58 2.50% 1.71 70.29
Early Intervention - Districts 74.71 2.50% 1.87 76.58
Teacher Leadership and
340.89 2.50% 8.52 349.41
Compensation - Districts
Teacher Salary - AEAs 31.69 2.50% 0.79 32.48
Professional Development - AEAs 3.70 2.50% 0.09 3.79
Additionally, there is a budget guarantee provision for each of the State categorical
supplements, which provides each district and AEA with a minimum of the previous fiscal year’s
level of funding (net of the previous year’s budget guarantee amount). This provision for the
State categorical supplements is funded entirely through State aid.
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Property Tax Replacement Payment (PTRP). 2013 Iowa Acts, chapter 121 (Education
Reform), included the creation of the PTRP provision to replace local property tax amounts with
State aid. The provision froze the additional levy portion of the SCPP at $750; based on the
State percent of growth enacted during the intervening fiscal years, this provision created $15
per pupil in property tax relief in FY 2014 and up to $131 per pupil in FY 2021. The continual
growth is a result of the requirement that the per pupil property tax relief of previous fiscal years
carry forward into future fiscal years. Enactment of this Bill maintains the additional levy portion
of the SCPP at $750 in FY 2022. The per pupil property tax relief amount will be based on the
State percent of growth enacted for FY 2022. Table 3 provides detail regarding the SCPP
funding levels as provided by a 2.50% growth rate for FY 2022 in this Bill.
Table 3 — HF 438
FY 2022 Property Tax Replacement Payment Calculation
Increase Due to Increase Due to
Supplemental Additional Dollars
FY 2021 State Aid Rate to the SCPP FY 2022
Regular Program $ 7,048 $ 176 $ 10 $ 7,234
Unadjusted Additional Levy 881 22 1 904
PTRP Portion 131 22 1 154
Fixed Additional Levy Portion 750 0 0 750
Transportation Equity Program. Iowa Code section 257.16C establishes the Transportation
Equity Program. The Program was created to provide additional funding to school districts for
public school transportation costs that exceed a statewide adjusted average cost per student.
Transportation equity payments may buy down transportation costs to the statewide average
cost per student for providing transportation to public schools. If funding permits, school
districts with transportation costs per pupil below the statewide average will receive
transportation base funding payments on a per capita basis. The General Fund appropriation to
the Transportation Equity Program may grow at the same rate as the State categoricals.
Assumptions
• Estimates are based on October 2020 certified enrollments and supplementary weightings
for FY 2021, which were approved by the School Budget Review Committee (SBRC) in
December 2020.
• A statewide taxable valuation growth rate of 3.88% for FY 2022 was previously agreed upon
by the Legislative Services Agency (LSA) and the Department of Management. Based on
this assumed rate, the statewide total for the uniform levy is estimated to account for
$39.0 million (+3.94%) of the school foundation property tax change in FY 2022 (including
the uniform levy portion of the commercial/industrial rollback replacement payment). The
estimated increase in the uniform levy amount is not affected by the establishment of the
State percent of growth rate. Property tax adjustment aid amounts are based on the
statewide taxable valuation growth factor applied to each school district’s FY 2022 taxable
valuation amount.
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• Total State aid includes funding from the State General Fund and other funds appropriated
or deposited in the Property Tax Equity and Relief (PTER) Fund, which is used to provide
additional property tax relief through the school aid formula.
• Establishing an FY 2022 State percent of growth will also affect the amount of funding
generated for the Statewide Voluntary Preschool Program. Funding for the Program is
provided by State General Fund dollars and is included in the overall State aid total.
• Districts eligible for the 101.00% budget adjustment will approve use of that provision.
• Other legislation may have an impact on the amount of State aid and property tax generated
through the school aid formula.
• The General Fund appropriation to the Transportation Equity Fund will increase by
approximately $667,000.
Fiscal Impact
Table 4 provides the estimated fiscal impact of the four provisions of this Bill. These provisions
include:
• A $7.5 million reduction in State aid to the AEAs (current statute).
• $87.2 million in PTRP funding, an increase of $12.1 million (16.15%) compared to FY 2021.
• $560.9 million for the State categorical supplements for school districts and AEAs, an
increase of $8.1 million (1.46%). This includes:
• $318.0 million for the teacher salary supplement at the district and AEA levels.
• $36.1 million for the professional development supplement at the district and AEA levels.
• $37.1 million for the early intervention supplement.
• $169.7 million for the Teacher Leadership and Compensation supplement.
• $81.0 million for preschool formula funding, a decrease of $7.3 million (8.29%) compared to
FY 2021. The preschool formula funding is included in the State aid amount but is not
included in the combined district cost total.
• $24.4 million in budget adjustment funding for 135 qualifying districts, an increase of
$16.1 million (195.28%) compared to FY 2021. The budget guarantee adjustment is
calculated at the school district level so that school districts receive 101.00% of their
previous year’s funding. The budget guarantee adjustment is funded entirely through
property taxes.
• The total property tax funds generated through the school aid formula are estimated to be
$1.659 billion, an increase of $45.6 million (2.83%) compared to FY 2021.
• The total State aid from the General Fund (reflecting the total school aid funding level for
school districts and AEAs generated through the school aid formula) is estimated to be
$3.422 billion, an increase of $40.9 million (1.21%) compared to FY 2021. Any legislative
action affecting FY 2022 school aid provisions will have an impact on school aid amounts.
Additionally, any variations in the assumptions noted may result in changes in the FY 2022
estimates provided in Table 4.
The total General Fund appropriation in Table 4 provides the additional fiscal impact of HF 438.
This also includes:
• The additional increase in the FY 2022 SCPP of $10 for a total of $5.8 million, which is
included in the total State aid estimate.
• The FY 2022 General Fund appropriation of $27.4 million to the Transportation Equity Fund,
which is not included in the total State aid estimate.
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Table 4 — HF 438
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Sources
Iowa Department of Education, Certified Enrollment and Enrollment Projections File
Iowa Department of Management, School Aid File
Iowa Department of Revenue
LSA analysis and calculations
/s/ Holly M. Lyons
February 10, 2021
Doc ID 1212057
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: 257.8