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Education funding will challenge 2016 legislative session

'We can be bold,' governor says

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DES MOINES — Gov. Terry Branstad said his 2016 education agenda calls for strong action in extending kindergarten-through-grade-12 schools’ ability to meet their future building demands. But the short-term prospects for funding education needs are much more constrained.

“The reality is that we’re facing a challenging and difficult budget, but I believe we can be bold despite that and do some unique, innovative things,” said Branstad in approaching his 22nd legislative session as governor that will gavel in at the Statehouse on Monday.

Branstad, a Republican who faces election-year heat from legislators displeased with his veto of $55.7 million in one-time money for K-12 schools last July, said he plans to push the budgetary envelope by requesting 2.45 percent growth in state aid to public schools for fiscal 2017 and an innovative approach to extending a 1-cent sales tax earmarked for school infrastructure through 2049.

The caveat for extending the infrastructure funding for 20 more years would be that the revenue generated by the sales tax extension would be shared with water quality programs. Under Branstad’s plan, which requires legislative approval, schools would get the first $10 million of the new revenue annually with the remaining proceeds going to water quality programs — which he called a win-win for all parties without raising taxes.

The concept, which Branstad deemed “probably the biggest and boldest proposal I’ve put together in all my years as governor,” has drawn mixed reviews initially and he expected it will take most of the scheduled 100-day 2016 legislative session to inform and educate lawmakers, education groups and Iowans on the merits of his proposal.

Educators such as Sioux City Schools superintendent Paul Gausman have endorsed Branstad’s idea as the tax is scheduled to end in 13 years, which would take away a key tool his school uses as collateral for bonds that generally are repaid over a 20-year period and avoid the need for property taxes to finance school infrastructure needs.

At the same time, he acknowledged the short-term budget needs of schools are of primary concern heading into a session in which state resources are going to be stretched among a number of competing interests.

“They’ve got a pie that has to be sliced into so many pieces and we know that,” Gausman said, noting that significant commitments to property tax relief, school reform and health care expansions in previous sessions will cut into the expected new revenue available to budget.

“We have to work with what’s there,” he said.

Branstad said he is formulating a fiscal 2017 state budget that he hopes can provide a 2.45 percent boost to schools that he recommended last year, but added “it’s going to be extremely hard to get there and I see no way that we can go over that.”

Majority Republicans in the Iowa House point to a 2 percent growth rate they approved last session as a viable option, although House Speaker-select Linda Upmeyer, R-Clear Lake, said she has members who would like to pare that lower and others who would do more. Senate Majority Leader Mike Gronstal, D-Council Bluffs, said legislative Democrats believe a 4 percent increase “is an appropriate number.”

Rep. Brian Moore, R-Bellevue, said he will push his Republican caucus to move closer to the governor’s level or even more — given that the governor voted $55.7 million in one-time money that the split-control Legislature had agreed last session should go to Iowa’s 336 school districts.

That number will drop to 333 districts for the 2016-17 school year.

“I feel since we underfunded them from what the Legislature agreed upon, we kind of owe them a little bit this year,” said Moore, who noted the governor’s veto amounted to about 1.4 percent that was earmarked for schools on top of the 1.25 percent across-the-board increase they received.

“I would support 2.5 (percent) and then do some other policy that they’re wanting” such as the extension of the sales tax for school infrastructure. He said funding levels among the House Republican members range “down to zero” while the Democrats’ 4 percent boost “isn’t reasonable with the amount of the new dollars that are available,” he said.

Lisa Bartusek, Iowa Association of School Boards executive director, said her members sought 6 percent growth in state aid last session because that is the annual level needed to get Iowa back to the national average. But she noted this session they are advocating “absolutely for as much funding as is available” to support public education.

“I would say the state funding picture appears to be grim,” Bartusek said. “The needs of public schools are greater than any of those proposals” being offered at the Statehouse, she added, given actual costs of running a school are outpacing state aid allocations and educators are “landing a plane in very turbulent weather.”

She said school officials are “tremendously appreciative” of the governor’s support for extending the sales tax for school infrastructure to 2049, but they hope the compromise could include more flexibility for schools to address transportation costs or other inequities — a change the Branstad said was not likely to happen.

Senate President Pam Jochum, D-Dubuque, said schools have indicated they need 3 percent to 4 percent “just to keep their head above water,” while Gronstal noted that K-12 education has gone through its “worst five years of state support in history.”

The governor said he plans to seek $50 million as the next yearly installment for the teacher leadership and compensation program and increased funding for early-childhood reading initiatives along with the 2.45 percent boost in supplemental state aid.

But he noted “that’s a big chunk of the state budget, and Medicaid’s the other big chunk and Medicaid is competing with that for what we can do.”

“I want to make sure that we can deliver what we promise,” he said.

If the state is unable to proceed with the planned Medicaid shift to private managed care on March 1 and achieve the $130 million it is projected to save in fiscal 2017, Branstad said, “it will eat up all of the growth in the state budget. There’s nothing for anything — nothing for education, nothing for anything else.

“Even with the savings, the Medicaid costs still go up. Without the savings, they go up so much that it virtually eats up all of the revenue growth, so it’s something that’s got to be done.”

Upmeyer said she was hopeful the split-control Legislature could “come up with the highest responsible number that we can for education” and get it to the governor’s desk early in the 2016 session, “so schools can plan their budgets and not wait such a very long time as they did last year.”

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