2017 UEN Legislative Luncheon UEN Legislative Priorities and Advocacy Resources Nov. 15, 2017

1. 2017 UEN Legislative Luncheon UEN Legislative Priorities and Advocacy ResourcesNov. 15, 2017

2. Presenters:ISFIS Partners Larry Sigel Margaret Buckton

3. Agenda Today • A little bit about State Revenues, the Iowa Economy and State Budget • Status of 2017 UEN priorities still pending • UEN Steering Committee sets 2018 Legislative Session Priorities • UEN Resources

4. LSA report to Fiscal Committee, Oct. 19, 2017 https://www.legis.iowa.gov/docs/publications/IH/864449.pdf Daily Receipts legislative page https://www.legis.iowa.gov/publications/fiscal/dailyReceipts State of State Revenues

5. Summary – Through 11-13-17 • Personal Income Tax: +6.6% • Withholding +7.8% • Estimates –0.5% • Returns +1.6% • Sales Tax: +9.0% • Corporate Income Tax: +24.4% • Refunds: -0.7% • Net Receipts: +9.8% • These are all on a cash basis – accrual basis overall probably closer to +5.7%

6. REC • FY 2018 • Set estimate at 2.4% growth • 4.2% personal income tax growth • 3.8% sales and use tax growth • 7.8% corporate income tax growth • Remember – December estimate is controlling for FY 2019 unless the Spring is lower (next meeting Dec. 11, 2017) • 99% of available revenues*

7. Source: LSA

8. Source: LSA

9. State Budgeting for FY 2019

10. LSA report to Fiscal Committee, Oct. 19, 2017 Assumes repayment of $131 million to reserves. Assumes repayment of $13 million to reserves. Restores CRF and EEF to $731.6 million. Reserves end FY 2019 $22 million short of max allowed.

11. 2018 2019 FY17 actual $605.3M FY18 est. $623.8M FY19 est. $731.6M • Statutory limitations Iowa Code 8.55 and 8.56: Maximum 10% of state General Fund (2.5% EEF & 7.5% CRF) • In FY 2014 Summary of Iowa’s General Fund Budget Analysis, “During budget years that have been negatively affected by economic recessions, the reserve funds have been used to offset General Fund appropriation reductions.” (page 16) SF 516 Standings Approps transferred $131.5 M from cash reserve to balance the FY 2017 budget to avoid another deappropriation bill.

12. Built-in Expenditures (they won’t do all of these, such as ISL, and this doesn’t include SSA for FY 2019.)

13. $100 M revenue cut $28 M revenue cut

14. SSA Legislative Issue Brief: What Legislators See

15. https://www.legis.iowa.gov/docs/publications/BL/864550.pdf

16. Fiscal Impact of 1.1% SSA • $4.631B for the total combined district cost, an increase of $153.6M (3.4%) includes state $, property taxes, AEA funding, special ed/weightings, budget guarantee, everything but PK • Increase of $46.7 million (1.5%) for the regular program. • Increase of $7.5 million (3.9%) for AEAs • Increase of $59.9 million (13%) for categorical supplements (TSS, PD, early intervention and TLC) • $3.189 B for state aid, an increase of $90.2 million (2.9%) compared to FY 2017. This includes: • $9.7 million from SAVE to PTER for property tax relief • An additional $15 million reduction to AEAs in addition to the $7.5 million statutory reduction • $46.8 million in PTRP (state assumes all costs of increased SSA) now $83 PP • $520.5 million in categorical supplements ($295.1M TSS, $33.5 M PD, $34.5 M early intervention, $157.4 M for TLC) • $78.2 million Statewide Voluntary Preschool Program funding • $1.475B in school aid property taxes (including adjustments for C&I valuations) and increase of $53.5 million (3.8%) compared to FY 2017. $34.2M of that is uniform levy as a result of increased valuations. $19.2M of that is additional levy. There are 60 districts on the budget guarantee for a total of $23.6 million, which is funded entirely with property taxes.

17. Fiscal Impact of 1.1% SSA Not mentioned? Enrollment increase: FY 2018 state enrollment is 485,147.3 students, an increase of 1,696.4 compared to the FY 2017 budgeted enrollment. About 1/4th of the total RPDC increase is for these students, or $11.3 million.

18. $$$ include $15M restored to AEAs

19. Economic Conditions

20. Iowa Dept. of Revenue Leading Indicators Index

21. Additional information can be found on the Legislative Services Agency’s Economic Trends webpage at https://www.legis.iowa.gov/publications/fiscal/economicTrends . The page includes links to source sites and the underlying data for each Economic Trends indicator.

22. Since the end of the last U.S. recession, Iowa wage and salary income growth has averaged about 3.6% annually. For the second quarter of CY 2017, wage and salary income increased 1.7% compared to the same quarter of 2016. Wage and salary income growth for the first quarter of 2017 was revised to 1.7%, down significantly from the originally released growth rate of 3.8%.Additional information can be found on the Legislative Services Agency’s Economic Trends webpage at https://www.legis.iowa.gov/publications/fiscal/economicTrends . The page includes links to source sites and the underlying data for each Economic Trends indicator.

23. Education Funding Comparability

24. Education in Iowa gets a Smaller Slice • The National Association of State Budget Officers (NASBO)  State Expenditure Reportanalyze all state expenditures excluding bonds (not just general fund.) In their analysis titled State Spending by Function, as a Percent of Total State Expenditures, Fiscal 2016 • “Iowa Elementary and Secondary Education for FY 2016 was 16.1% of total state spending.” • Both the plains states average (IA, KS, MN, MO, NE, ND, SD) and the national average percentage of total expenditure for FY 2016 was 19.4%. • IA ranks 31st in the nation in percentage of all funds expended for Elementary and Secondary Education FY 2016. • It would take an additional $839.7 Million for Iowa to reach 19.4% of all funds expended to elementary and secondary education (AKA $1,731 per pupil)

25. UEN 2018 Legislative Priorities

26. UEN Steering Committee 2017-18 • Tom Ahart, Superintendent, Des Moines, Chair thomas.ahart@dmschools.org • Arthur Tate, Superintendent, Davenport, Chair-Elect (1) tateart@davenportschools.org • Paul Gausman, Superintendent, Sioux City, Chair-Elect (2) gausmap@live.siouxcityschools.com • Stephen Murley, Superintendent, Iowa City, past Chair Murley.Stephen@iowacityschools.org • Bill Grove, Board Member, Council Bluffs • Mary Meisterling, Board Member, Cedar Rapids • Tami Ryan, Board President, Dubuque • Shanlee McNally, Board Member, Waterloo

27. Invest in Iowa’s Future Adequate funding is required to: • fulfill the goal of restoring Iowa’s first in the nation education status. • deliver world-class learning results for students. • develop a world-class workforce to secure Iowa’s economic future. • attract great thinkers to the field of education, • to recruit, retain and reward Iowa’s excellent educators of today and the future.

28. Invest in Iowa’s Future • Iowa’s investment in public education should mirror Iowa's economic growth and make up for shortfalls when the economy is robust. • A strong school finance system requires commitment to the principles of primacy, adequacy, equity, and flexibility. • New resources from the state should supplement, not supplant existing resources. • Iowa’s future depends on a stable and balanced state revenue policy that generates sufficient revenue to fund Iowa’s priorities, including the education of Iowa’s children. (note: shortened from last year’s priority and adds revenue policy statement)

29. Adequacy There is a cumulative impact to low funding and several years with no time for planning: 7 of the last 8 years, the increase in the cost per pupil has fallen short of cost increases schools typically experience.

30. How do you talk about it? • Review the Issue Brief to get the history • Chapter 20 reform gives management flexibility to balance the budget. If it’s meant to reduce compensation or benefits for school employees, we will far further behind the private sector competition. (see teacher shortage issue brief, too) • What does the money buy? (student attention, programs for students, additional opportunities, lower class sizes, technology, competent staff) and will continued low funding deliver? • Who’s your audience? If it’s the business community, use terms they understand. Return on investment, cost of doing business, lack of state funding shifts costs to local taxpayers, less qualified workforce, lower human capital.

31. SSA%: 4% 4% 4% 4% (ATB) 2% 0% 2% 2% 4% 1.25% LSA Issue Review, State School Aid Funding for Special Education, Dec. 12, 2013: “Despite the additional weighting applied to special education students to provide for additional funding, expenditures for the cost of providing instruction to special education students above the cost of instruction of students in a regular curriculum generally exceeds the amount of funding generated on an annual basis.” Among the reasons for the shortfall, the Issue Review states: “An allowable growth rate of 0.0% in FY 2012 impacted FY 2012 balances negatively.”https://www.legis.iowa.gov/docs/publications/IR/17009.pdf

32. State Penny Extension • Extend State Penny Sales Tax: Eliminate the sunset permanently, allowing districts to maintain facilities and technology without needlessly increasing property taxes. Future state penny revenues should remain dedicated to schools and property tax equity/relief. (no change)

33. State Penny So Far • Progress but not done (never will be –time, weather, migration) • With only 10 years of bonding capacity, we’ve left approximately $700 million dollars of borrowing capacity on the table, compared to a full 20-year period (Piper Jaffrey Inc. estimate in 2013). • With low interest rates and unmet needs, this is the wrong time to turn to property taxes rather than sales taxes to continue facilities repair and construction. Fallback will always be property taxes. • Although others may want part of it, no other entity has achieved voter approval in 99 counties for their purpose. • PTER Fund is moving toward property tax equity, funded with consumer use tax (part of the penny) • Student achievement: STEM, CTE, technology/computer science, fine arts, science labs, collaborative space. Invite your legislators in and show them what you’ve done with state penny so far.

34. School infrastructure local option taxes (SILO) were first available to districts in FY1999. The State Penny was passed in the 2008 Session.

35. What is reasonable? The replacement cost of Iowa schools is estimated to be $16.4 billion (Iowa DE, June 30, 2014). The state penny provides an annual investment of 2.5%, a reasonable amount to maintain and update Iowa schools, lower property taxes, update buses and purchase technology and equipment.

36. What is reasonable? • If you had hundreds or thousands of students creating wear and tear in your home every day, do you think you could maintain it for 2.5%? • What about new technologies, energy efficiency, lighting that promotes better learning, HVAC, roofing, buses, windows, plumbing systems, safe entries, flooring, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

37. The Ask • Many legislators support extension • Some would prefer changing the use or dedicating more to property tax relief • Ask R’s in particular, please make sure your leadership gets the extension on the table for the 2018 session. • One advocacy action every day: send an email, make a call, write a letter, delegate any of the above, recruit a parent, go to a forum. .

38. Resolve Formula and Transportation Inequalities: Commit to a solution that eliminates the $175 different in the district cost per pupil in the school foundation formula and provide resources to close the expenditure gap in school transportation costs. SF 455 passed unanimously in the Iowa Senate, provides a 10-year phase in to eliminate these two inequities, providing resources to every Iowa school district. (new – stated clearly)

39. Student Cost per Pupil Inequality • In FY 2017, the State Cost per Pupil (SCPP) is $6,664. 162 districts (48.6%) are limited to this amount as their District Cost per Pupil (DCPP). • The other 171 districts (51.4%) have a DCPP ranging from $6,665 to $6,839, or $1 to $175 more. This extra amount is funded with property taxes. • Under current law, this $1 - $175 difference continues into the future, accessible to some districts but not others.

40. Range of benefit to different districts if all are raised to max DCPP: SCPP low Medium DCPP High Capacity Capacity/Property Tax relief Property Tax Relief

41. SF 455 UEN Capacity and Property Tax Relief (fully phased in)

42. Advocacy Toolkit: http://www.iowaschoolfinance.com/Legislative

43. Teacher Shortage Although districts have struggled to recruit and retain teachers in shortage area positions such as mathematics and science for years, other areas such as special education, English-language learner, foreign language, music, career and technical, hiring minority teachersand even filling gaps with substitutes has become a routine challenge. Adequate funding is required so school districts can compete with the private sector for instructional staff. Additionally, flexibility in certification (such as a generic special education certification), sufficient time to help existing staff transition to appropriate licensure, additional time to pass the Praxis test or acceptance of another state’s test, and fast-track licensure programs for teachers in their second career are required to help address Iowa’s teacher shortage. (new)

44. 2016-17 Iowa Teacher Shortage Areas • Special Education: • Early Childhood Special Education (PK-K) • Pre K-Grade 3 Regular/Special Education (serving in Special Education or in Early Childhood inclusive classrooms only) • Instructional Strategist I Mild/Moderate • Instructional Strategist II Behavior Disorder/Learning Disabilities • Instructional Strategist II Mental Disabilities • Instructional Strategist II Physical Disabilities • Itinerant Hearing & Visually Impaired (Birth to 21) • Itinerant Visually Impaired Birth to 21 • General Education: • Agriculture (5-12) • English as a Second Language (K-12) • Family and Consumer Sciences (5-12) • Foreign Language (all) • Industrial Technology (5-12) • Mathematics (5-12) • Science (all 5-12) Biology, Chemistry, Earth Science, Physics, All Science, Basic • Professional School Counselor (K-8 and 5-12) • Talented & Gifted (K-12) • Teacher Librarian (K-8, 5-12 and K-12) • Business (5-12)

45. Resources: • Iowa Teacher Shortage coming Des Moines Register Jan. 11, 2017 http://www.desmoinesregister.com/story/news/education/2017/01/11/iowa-readies-teacher-shortage/96257920/ • Wisconsin teacher shortages since Collective Bargaining Changes Des Moines Register Mar. 28, 2017 http://www.desmoinesregister.com/story/news/education/2017/03/27/collective-bargaining-iowa-lessons-wisconsin/99687046/ • Rural Teacher Corps Report, Rural Schools Collaborative/Dakota Wesleyan University http://ruralschoolscollaborative.org/rural-teacher-corps • Schools face tougher task in finding teachers, ACT 10 at FIVE | A Journal Sentinel Special Report http://projects.jsonline.com/news/2016/12/21/schools-face-tougher-task-in-finding-teachers.html • Iowa Department of Education: Teacher shortage areas: http://educateiowa.gov/

46. The pool of teachers isn’t regenerating (DMR January article) • While Iowa in recent years has been insulated from a national teacher shortage that's sent other states scrambling to fill classrooms, Iowa leaders warn that it's coming. And it might already be here. • Iowa colleges are now graduating 400 fewer teachers, counselors and administrators a year, a 16 percent decline, than they did in 2013. Now, about 2,100 graduates are earning education degrees a year, according to Iowa Department of Education data. • The national data are even more concerning. Between 2009 and 2014, enrollments in teacher prep programs dropped 35 percent, from 691,000 to 451,000 students, according to the Learning Policy Institute. • "There's a lot fewer applicants," said Anne Sullivan, chief of human resources in Des Moines schools. "There's just a lot fewer people going into education.“ • Teaching jobs that once drew hundreds of applicants in Creston Schools 20 years ago are now attracting only 10 or 20 applicants, said lower elementary school Principal Callie Anderson. Need 2,115 to replace retirees and the estimated 20% of new teachers who quit in the first 5 years.

47. Collective Bargaining WI Impact (DMR article March 2017 and Sentinel Report) • 5 years after Wisconsin CB overhaul, teachers “are moving from district to district, creating a year-round cycle of vacancies and turnover as fewer people enter the profession. • Some 25% of school districts are reporting an “extreme shortage” of job-seekers for key positions. Teaching is “no longer considered an attractive career path” for many top students, educators warned state Superintendent of Public Instruction Tony Evers. • “Experts say root causes of the drop include tougher training and licensure requirements and tight school district budgets at a time when high student-loan debt and an improved economy are sending graduates into other fields.”

48. Other Pressures • TCL increased demand (25% of teachers have some leadership role) • Funding pressures • Workload and job expectations • General public criticism of the teaching profession • Competition with private sector and low Iowa unemployment (since 2009, Iowa salary and wage growth is up 3.9% annually while education services salary and wages is us 2.9%)

49. Assessment Fund an assessment system aligned to Iowa Standards. Move forward with the recommendations of the State Board of Education for an assessment aligned to the standards we teach, that measures progress along the way, measures both attainment and growth, and focuses attention on closing gaps in outcomes for disadvantaged student groups. (shortened)

50. Assessment Implementation • Appeal to choice of AIR by Pearson – must be decided in 60 days (end of November) and DAS director rules • Cost: DE budget requesting, total increases of $9.7 million (3.6%), includes $8 million for first year assessment cost. • Anticipate new test first used in Spring 2019 • Unsure of impact on DE’s report card • Legislative Rules Committee still in play