Branstad begins review of Iowa Legislature's budget

DES MOINES — Gov. Terry Branstad said Monday he's not ruling anything in or anything out, including a special legislative session, as he begins his 30-day process of wading through policy and spending decisions made in the closing days of the split-control Legislature's 2015 session that ended last Friday.

Branstad said he would review lawmakers' proposed $7.175 billion in general fund spending in fiscal 2016 and an additional $135 million in one-time surplus money that was earmarked for specified uses within the context of his five-year budget projections to make sure they do not pose problems down the road.

However, he told reporters he is not a fan of the $55.7 million in one-time money used to resolve a dispute of next year's state aid to K-12 school districts, and he preferred his proposed funding levels for regent institutions that would have insured that tuition would have been frozen for a full year at Iowa's three state universities. As it is, Board of Regents' officials indicate a third straight yearly tuition freeze may only be possible for the first semester of the next academic year.

'I want to look at the entire budget and what is sustainable over the long term,' Branstad said during his weekly news conference. 'We're going to reserve judgment until we see all these bills and we get to project out what their cost will be in future years.'

Branstad said he was disappointed lawmakers did not set supplemental state aid for schools in fiscal 2017, as is required by law, and he had reservations about next fiscal year, when schools are slated to get the 1.25 percent state aid increase he recommended plus the $55.7 million in one-time money. However, he declined to say whether that piece could fall victim to his item-veto pen.

'I don't like the idea of one-time money,' said Branstad, a sixth-term governor who signed a similar hybrid school funding compromise at the close of the 2013 legislative session. 'The problem with one-time money is you really can't use it for salaries because it's not going to be there for the next year.'

Branstad offered the possibility of holding follow-up discussions seeking 'new ideas and better ideas' for funding schools within a workable bipartisan approach that would avoid 'this constant fight' over education spending.

'Just because there's an impasse and we weren't able to see an agreement reached during this session doesn't mean in the future that we can't come up with better ideas and different approaches,' he said. 'I'm always open to looking at different ways to accomplish things, but I want to make sure that what we do provides stability and predictability and is sustainable and supports the education of our children.'

Asked if that interim discussion might lead to a special session, Branstad told reporters: 'I'm not ruling anything out; I'm not ruling anything in.'

Branstad, who did not include money in his two-year budget plan last January to operate state mental health institutes (MHIs) in Mount Pleasant and Clarinda beyond June 30, declined to say whether he would accept or reject the Legislature's bipartisan compromise to keep the Mount Pleasant facility operating and finding a private company to operate the Clarinda facility by mid-December.

'We're going to review everything in light of what makes sense and how we can provide the best services to the people of Iowa,' the governor said, but added that he favors a redesigned regional mental health that delivers quality services via home or community settings rather than antiquated state institutions.

'We intend to move forward, not backwards,' he said. 'We don't want to go back to the way we delivered mental health services back in the 19th century when we built these big institutions and we warehoused thousands of people. That's not the way you want to deliver services today.'

Branstad also said he has not given up on effort to strengthen anti-bullying efforts in Iowa schools, after his full proposal failed to clear the legislative process for a third straight session due to opposition within the House Republican caucus.

Branstad said his administration's goal is to make certain that all Iowa children feel safe and secure in their schools.

'I'm a very persistent individual,' said Branstad in pledging to continue seeking additional state guidance that would provide uniformity in every school in every circumstance that there is an appropriate course of action to deal with bullying. 'We've made great progress in that, but we're going to continue to pursue that aggressively.'

According to Legislative Services Agency projections, the legislative budget action will leave the state treasury with a $285.4 million surplus fiscal 2015 ending balance at the end of this month with $694 million in the cash and emergency reserves, as is required by state law.

The projected budget plan for the 2016 fiscal year that begins July 1 appropriates $7.175 billion from the general fund, an increase of $46 million over current spending and $185.4 million below the expenditure limitation after the $134.9 million in one-time supplemental spending is taken into account. The estimated surplus fiscal 2016 ending balance was projected to be $262.8 million by June 30, 2016, and the reserve funds were estimated at $718.5 million, or 10 percent of the adjusted revenue estimate as required by state law.

Iowa preliminary general fund report (PDF) Iowa preliminary general fund report (Text)