Branstad to begin budget focus this week

DES MOINES - Gov. Terry Branstad said Monday he is looking at ways to revamp the state's education financing approach that could end the forward-funding concept that called for the governor and Legislature to set the K-12 “allowable growth” rate well in advance of the affected school year to give administrators some lead time in knowing how much money they could expect from the state.

“We're looking at reforming the education process. We're going to do a comprehensive review of the whole process,” Branstad told reporters during his weekly news conference. “We are looking at a whole new way of doing things.”

The governor has conceded that his plan to overhaul Iowa's teacher pay system will have to wait at least until the 2013 legislative session to give Iowans more time to understand the changes he envisions there. He said Monday that he may not be coming with a proposed “allowable growth” increase for fiscal 2014 as prescribed by Iowa's current forward-funding law – an approach he championed in previous terms as governor – given that his education experts are still compiling cost estimates for his proposed reforms.

“We want to make sure the resources we have are focused on things we think are critically important to grow the economy and create jobs and to revitalize our education system. That's where we're looking at putting the additional resources,” he said.

Branstad also told reporters his biennial budgeting concept was not intended to be a rolling approach but instead would only cover two fiscal years. That being the case, he expects the 2012 session to be relatively short given that lawmakers already have completed work on 86 percent of the fiscal 2013 budget and he will not be coming with a fiscal 2014 spending plan for them to begin work on.

The governor and Lt. Gov. Kim Reynolds intend to begin holding departmental hearings this week that will focus on the remaining 14 percent of next fiscal year's budget, but the big issues like providing a 2 percent increase in base budgeting for K-12 schools and Medicaid funding for fiscal 2013 already have been decided and won't be revisited.

“I'm sure there are those who want to spend less and those that want to spend more, but as far as we're concerned we resolved those things for the big items and we don't want to revisit the old fights,” the governor said. “We intend to provide supplemental appropriations in those areas where they did not pass a full appropriation for the second year.”

Branstad his guiding principle heading into the new state budgeting cycle is that the state will not commit to spend more money than it collects in taxes, but beyond that “we don't have a magic number” like House Republicans set for the current fiscal year where general fund spending could not top $6 billion. The governor said budget-makers are not facing a large projected deficit like past year although the nonpartisan Legislative Services Agency estimates a $115.6 million gap between available revenue and spending commitments already made for the 2013 fiscal year that begins next July 1.

Next fiscal year's budget projections from LSA experts include nearly $296 million in built-in and anticipated increases that will top the $6.397 billion spending limitation threshold if the Legislature and Branstad restore state appropriations at the current funding levels without making adjustments.

The fiscal 2013 projections include a previously enacted 2 percent increase in base K-12 education funding, a $102 million jump in anticipated Medicaid costs, $102.6 million to cover salary hikes for state employees covered by collective bargaining contracts, $30 million for mental health allowed growth, $19.1 million to staff additional community-based corrections and prison beds, and other commitments, according to the LSA budget analysis.

Branstad said there will be a clearer picture of the fiscal 2013 budget once the state Revenue Estimating Conference makes its December projections – estimates that form the basis for how much general fund money is available for budgeting under the state's 99 percent spending limitation law.

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