1. Iowa Economic and Education Comparability: Education Coalition Data and Advocacy for Adequate and Timely School Funding In Preparation for the 2015 Legislative Session

2. Policy Question: Can Iowa afford to adequately and timely fund public education? Agenda for this recording: – State’s general fund health – Iowa Economic Health – Trends in Iowa education funding

3. State of Iowa General Fund 3

4. CRF = $522.3M EEF = $174.1M Source: Iowa Legislative Services Agency Graybook, end of session analysis https://www.legis.iowa.gov/do cs/publications/EOS/26076.pdf https://www.legis.iowa.gov/do cs/publications/EOS/26076.pdf

5. Source: Iowa Legislative Services Agency Graybook, end of session analysis https://www.legis.iowa.gov/docs/publications/EOS/26076.pdf https://www.legis.iowa.gov/docs/publications/EOS/26076.pdf FY2015 Surplus: $660.0 million

6. State’s Cash Position aka “don’t panic” Cash position: north of $1B – CRF full at $522.3 million – EEF full at $174.1 million – Surplus for FY 2015 $660.0 million LSA details $350 million May 2014 revenue dip – $100 million due to deposit of cig taxes in Health Care Trust Fund – $80 million deposit into Taxpayer Trust Fund – $32 million due to expansion of Earned Income Tax Credit – Behavior changes as taxpayers made financial decisions at the end of 2012 calendar year, impacting 2013 revenues

7. Future Revenue Estimate 7

8. REC Oct. 9 Revised FY 2015 to 5.6% ($361.5 million) Set FY 2016 growth of 4.8% ($328.2 million) – +5.3% Personal Income Tax – +4.5% Sales Tax – +8.2% Corporate Income Tax – 0% Refunds Through Oct 30, 2014, 4.2% net revenue growth compared YTD to FY 2013. Overall, healthy if not spectacular revenue growth 8

9. Economic Comparability 9

10. Per Capita Personal Income 20132012201120102003 Iowa$45,114$43,935$40,470$42,040$29,828 National$44,543$43,735$41,663$39,937$31,472 Iowa Rank 2224252833 www.bea.gov Highest ranking among the states for Iowa in years and two consecutive years higher than national average.

11. Iowa’s growth of 3.2% (2012- 13) ranked 9 th in the nation and is in the highest quintile.

12. In 2011, Iowa ranked 24 th in the nation in Median Household Income, with two consecutive years above the national average. LSA FACTBOOK quoting U.S. Bureau of the Census

13. 13

14. 14 Source: www.taxfoundation.org Tax Foundation calculations based on data from the Bureau of Economic Analysis, the Census Bureau, the Council on State Taxation, the Travel Industry Association, Department of Energy, and others.www.taxfoundation.org

15. Iowa’s economic index shows growth in July (DMR 9.7.14) An Iowa DOR look at the future of the state’s economy improved in July, increasing for the 10 th straight month. The state’s economic index rose to 109.3 in July, up from a revised 109.2 in June. Index looks at 8 factors, such as residential building permits, to forecast the direction of Iowa’s economy. A year ago, the index was at 106.3 A separate DOR index measures employment. That index rose by.08 in July, marking the 46 th consecutive month of gains.

16. Condition of the Economy (March 10 Education Coalition Funding Fact of the Week) Des Moines, Iowa, tops Forbes list of best places for business and careers. “It is the only place that ranks among the top quartile in at least nine of the 12 metrics we graded the cities on. Highlights for the Des Moines metro area include business costs that are 17% below the national average and an educated workforce where 36% of the population has a college degree and 92% possess a high school diploma.” Forbes also cites tech sector growth (Facebook and Microsoft expansions) and low energy costs in Iowa, stating, “a big carrot in Iowa for data centers and other businesses with heavy energy usage: Energy costs are 22% below the national average, according to Moody’s Analytics; Iowa has a AAA bond rating by all three bond rating agencies, Moody’s and Fitch, and also Standard and Poor’s, for many years running. The highest rating is AAA, or triple-A, which indicates an “extremely strong capacity to meet financial commitments.”

17. Condition of the Economy (March 10 Education Coalition Funding Fact of the Week) Iowa: The June RMI (Rural Mainstreet Index) for Iowa expanded to 56.8 from May’s 55.8. The state’s farmland-price index for June advanced to 57.8 from May’s 44.1. Iowa’s new-hiring index for June soared to 73.9 from May’s 61.1. Ernie Goss, a Creighton University economist, compiles the report http://www.gossinstitute.com/?q=node/129 ;http://www.gossinstitute.com/?q=node/129 The June farm-equipment sales index inched forward to 35.0 from 33.6 in May. The index has been below growth neutral for 12 straight months. “Despite improving economic activity on the regional farm, agriculture equipment and implement dealers in the region are experiencing very weak sales to farmers in the region. On the other hand, farm equipment manufacturers continue to experience positive growth due to healthy sales abroad,” said Goss.

18. Talking about low crop prices? Doesn’t that mean the economy will tank? REC had info on the ag economy when they set the estimate of 5.6% for FY15 and 4.8% for FY16. Low price per bushel of corn lowers income for corn producers (depending on yields), however.. Cost of feed for livestock goes down, increasing profit potential Cost of corn for ethanol production goes down Equipment manufacturing is experiencing layoffs but long term investments (grain driers and bins) are steady to increasing

19. Sum it Up Is this Heaven? No, it’s Iowa. We’ve recovered from the economic downturn better than most states. Revenue dip appears to be one-time. Education funding will keep the economy moving along and build a solid workforce. So remember that policy question? Do you think Iowa can afford to commit to funding education adequately (and timely)?

20. Education Funding Comparability 20

21. Public Education Coalition Funding Fact of the Week Joint effort of AEAs, IASB, ISEA, SAI and UEN April 24 Issue has link to the entire set http://us5.campaign- archive1.com/?u=e0acb6236d9a5dbd136a38e f4&id=948ddcee87&e=2570288da8 http://us5.campaign- archive1.com/?u=e0acb6236d9a5dbd136a38e f4&id=948ddcee87&e=2570288da8 Let’s take a look at some of the data:

22. Source data: Iowa Legislative Services Agency 2013 FACTBOOK https://www.legis.iowa.gov/docs/publications/FCT/2014/25037/25037.pdf https://www.legis.iowa.gov/docs/publications/FCT/2014/25037/25037.pdf $1,647 below the national average

23. Poverty Iowa’s funding for at-risk students and dropout prevention resources, combined with targeted grant funds for high- needs schools soon to be appropriated in July 2015, translates into a 9.8% additional funding commitment for low-income students. The national average investment is an additional 29% funding per pupil beyond the base for low-income students. Most states provide an additional 20-25%. Source data: Free and Reduced Lunch Percentage Count data from Iowa Department of Education BEDS data collection. Iowa Department of Education National statistics from American Institutes for Research, Study of New Funding Method for Nevada Public Schools, Sept. 25, 2012.

24. English-Language Learner Funding During the 2013 interim, an ELL task force met and studied needs of students, best practice and funding considerations. In their report, they recommended “weighted funding closer to the national average by increasing from.22 to.39 through a phase-in formula over a three-year period.” Source: Iowa Department of Education, Bureau of Information and Analysis, Basic Educational Data Survey and EASIER

25. As Special Education Costs Increase, So do Deficits LSA Issue Review: “An allowable growth rate of 0.0% in FY12 impacted FY12 balances negatively.” The FY13 special education deficits in this chart shows the trend continues. Legislative Services Agency, Fiscal Division, Issue Review, Dec. 12, 2013, State School Aid Funding for Special Education

26. Education in Iowa gets a Smaller Slice The National Association of State Budget Officers (NASBO) State Expenditure Report analyze all state expenditures excluding bonds (not just general fund.) In their analysis on Table 5, page 11, titled State Spending by Function, as a Percent of Total State Expenditures, Fiscal 2012State Expenditure Report Iowa Elementary and Secondary Education for FY 2012 was 16.8% of total state spending. That compares with an average of 18.9% in the plain states region in which Iowa is categorized and well below the national average of 20.0% for all states.

27. Education in Iowa gets a Smaller Slice The National Association of State Budget Officers (NASBO) State Expenditure ReportState Expenditure Report

28. Increase in Iowa Per Pupil Funding Since 2008: Is it really more than 10%? Digging deeper into a study that showed Iowa posted more than a 10% increase in formula funding: A study titled “NO RECOVERY HERE” is from the Center on Budget and Policy Priorities, Sept. 2013.NO RECOVERY HERE It reports most states’ funding for schools is less than before the 2008 recession. – The report stated that at least 34 states are providing less funding per student for the 2013-14 school year than they did before the recession hit, with 13 of these states having cut per- student funding by more than 10 percent. – At the opposite end of the spectrum, per-pupil spending grew in 14 states, but only two states posted an increase of more than 10 percent. Those two states? North Dakota and Iowa.

29. How did they conclude 10%? Iowa’s biggest increase in formula funding since 2008 occurred when the legislature rolled over $300 million for teacher salary supplement, professional development and early intervention class size funds into the formula beginning in FY 2010. These funds were previously a categorical fund, which this methodology states they did not consider. From the LSA’s per pupil funding analysis, footnote #6 explains: “FY 2010 is the first year of K-12 funding of the State Categorical Supplements through the school aid formula and accounts for $648 per pupil.” Adjustment for this item alone would show Iowa’s per pupil funding formula adjusted for inflation at a reduction of $96 per student since 2008, not the $552 increase cited in the report.per pupil In simple terms, the 10% increase in state foundation aid in Iowa is visible only on accounting forms, not more funding available for schools and classrooms.

30. Iowa’s % change in spending per student, inflation-adjusted, FY08 to FY14, is down $641 per student Iowa experienced -11.7% change in spending per student, inflation –adjusted, since 2008 Only 10 states lowered spending more than Iowa Study concludes Iowa has lost $641 per student, inflation-adjusted, since 2008 Increases in per student spending this year don’t fully compensate for the prior cuts: Iowa’s change in spending per student, inflation-adjusted, FY 13 to FY 14 is $23 Center on Budget and Policy Priorities, May 20, 2014 New study looking at all spending. http://www.cbpp.org/cms/?fa=view&id=4011

31. Source: NCES data adjusting for cost of living differences

33. It’s not the Money, it’s what you do with it.... We often hear push back on the request for adequate funding with the statement, “we shouldn’t just throw more money at the problem.” What does education spending buy? Or put it this way, If your district had $1,657 more per pupil, what would you be doing with it to make a difference for students?

34. Share this information Hopefully, this presentation has prepared you communicate with state policy makers, stakeholders, parents and other school leaders about the condition of education funding in Iowa. Engage others, share and let us know how we can help. Thanks for listening in!

35. Contact Us Office 515-251-5970 www.isfis.netwww.isfis.net Larry SigelMargaret Buckton Jon Muller Susie Olesen larry.sigel@isfis.netmargaret.buckton@isfis.netlarry.sigel@isfis.netmargaret.buckton@isfis.net jon.muller@isfis.net susie.olesen@isfis.netjon.muller@isfis.netsusie.olesen@isfis.net Cell: 515-490-9951Cell: 515-201-3755 Cell: 515.577-2136Cell: 641-745-5284 Josie GerriettsTraci Giles Sean Gibson James Passick josie@skillsiowa.orgjosie@skillsiowa.org traci.giles@isfis.net sean.gibson@isfis.net james.passick@isfis.nettraci.giles@isfis.netsean.gibson@isfis.netjames.passick@isfis.net ISFIS Staff Contacts