Bill to let Iowa schools tap reserves to make up for budget shortfalls considered

DES MOINES - School districts could use their cash reserves to compensate for a perceived inequity in state school funding under new legislation being considered by a panel of state lawmakers.

Three Iowa House members considered a bill Wednesday that would permit districts with available cash reserves to match others that are allowed to spend more per pupil.

The issue gained statewide attention when Davenport Superintendent Art Tate announced his plan to violate state law by using a portion of the district's nearly $30 million in reserve funds to help offset what he says is low state funding and avoid staff and program cuts.

'When funding levels are inadequate, we look to other ways to generate revenue,” said Iowa Rep. Cindy Winckler, D-Davenport. Winckler was not a panel member but attended the hearing.

'All but a few of the (state's) school districts, they have the capacity within their existing accounts today to resolve this issue, money in hand to resolve this issue,” Winckler said. 'If we don't give them the authority to spend, it is really unfortunate when they're looking at so many cuts.”

Part of Iowa's complicated school funding formula includes a limit on how much money districts can spend per pupil. That rate varies by $175 per student between the districts with the highest and lowest per-pupil spending authority.

Davenport is among the do zens of districts with the lowest level of per-pupil spending authority. An extra $175 per Davenport pupil would translate to $2.8 million.

'This is the right thing to do for the kids in Scott County,” said Brad Hudson, a lobbyist for the Iowa State Education Association.

But two Republican legislators on the subcommittee expressed concerns with districts using cash reserves in what they deemed non-emergency situations. They said although using cash reserves would not immediately result in an increase in property taxes, that would happen eventually when districts replenish those reserves.

'My main concern is making this an ongoing source of funding for the school. I'd rather not do that,” said Rep. Greg Forristall, R-Macedonia, chairman of the subcommittee. 'A reserve account, to me, the purpose is for bad times. If we use that for permanent funding, it defeats the purpose. I would rather come up with a permanent solution for everyone.”

Despite those and other concerns aired at Wednesday's hearing, Rep. Ross Paustian, R-Walcott, said he is hopeful the legislation will continue to receive consideration.

Forristall said he plans to discuss the proposal with House leadership and may schedule a second subcommittee hearing for next week. 'There was some good discussion. … It's probably going to take some

amendments to keep it moving forward,” Paustian said. 'I'm still optimistic. It's still hanging in there.”