Schools paying the price for Iowa legislative dysfunction

Nearly a week after the deadline for school districts to certify their budgets for the coming year, Iowa lawmakers are still not close to a deal on K-12 education funding. Some 300 teachers have been laid off in anticipation of no increase or only a minimal increase in state aid.

Statehouse Republicans who are resisting the obvious compromise on school funding claim Iowa doesn’t have the money Democrats want to spend on K-12 schools, let alone the amount educators asked for. Reality: money could be found for an adequate increase in state aid to schools if not for an expensive commercial property tax cut lawmakers approved two years ago, adding some $277 million in fiscal year 2016 alone to other costly tax breaks for Iowa business interests.  

If Iowa House Republicans and Governor Terry Branstad deigned to follow state law on school budgeting, the Iowa legislature would have agreed on an “allowable growth” rate for the 2015/2016 academic year in February 2014. Mike Owen of the Iowa Policy Project observed last week,

If schools were really getting the “first bite at the apple,” as some are so fond of saying, this number would have been set. Instead, schools are left wondering how much of the core of the apple will be left when legislators finally get their act together.

Those first bites are already gone – to backfill property-tax cuts, or to provide giant subsidies to multistate corporations that pay no income taxes to our state, or to let millions slip through corporate tax loopholes while our Legislature looks the other way.

The budget deadline is here, and schools don’t know how much they will be permitted to spend, how much of it will be state aid, or how much to levy in the property tax share of that budget. […]

Because [school district] budgets are a mix of state aid and property tax, and you’re assuming no state aid increase, you’ll be setting a levy at its highest amount. If state aid comes in higher, you will lower your levy to the authorized amount – but your overall budget may still be too low to meet the needs you have identified.

Branstad’s draft budget called for a 1.25 percent increase in education funding. House Republicans embraced that number, which would represent the third-lowest increase in allowable growth in four decades. Senate Democrats initially called for a 4 percent increase in education funding for fiscal year 2016, dropping their offer to 2.625 percent late last month. House Speaker Kraig Paulsen insists that his caucus won’t go any higher than 1.25 percent. According to the Des Moines rumor mill, some House Republicans would be willing to go higher on school funding, but so far none has publicly challenged leadership on the issue.

Branstad speculated yesterday that the budget impasse may not be resolved before the end of May. Meanwhile, school districts plan for layoffs, program cuts, and larger class sizes.

In an outstanding guest editorial for the Sunday Des Moines Register on April 19, Richard Doak highlighted the “insidious shift in priorities” for state spending. You should click through to read the whole piece, but here are some excerpts:

[L]awmakers will be less than truthful about why they failed to invest strongly in the two areas that are most crucial to Iowa’s future. “There just wasn’t enough money for schools and clean water,” they’ll say. They’ve already started making that excuse.

What makes it untrue is that the paucity of funds didn’t just happen. Lawmakers over the years chose to make it so.

They chose to give away public money perpetually in the form of grants and tax credits to their buddies in business and industry. They decided to forgo collecting certain taxes that influential people otherwise would have had to pay. They handed out tax cuts, mostly for the benefit of the affluent.

They forfeited a huge chunk of the tax base. The result is a revenue stream that might be sufficient to sustain state government, more or less, but not strong enough to allow quantum improvement in big-ticket future-shapers such as education, natural resources and infrastructure. […]

One of the biggest cuts was back in 1998, when state income tax rates were slashed by 10 percent on the promise it would trigger an unprecedented economic boom. The boom never happened, but the forgone revenue did constrain the state’s ability to keep up with rising costs for functions such as education. In ensuing years, Iowans paid lower income taxes, but they paid higher – staggeringly higher – university tuition because state support for universities declined relative to what it had been before the tax cut.

A fully GOP-controlled legislature sent Branstad that 1998 tax cut package during the final year of his first stint as governor. When times are good, Republicans cut taxes. When times are bad, Republicans cut spending on services or offer minimal increases, which would not even cover school districts’ rising costs.

Iowa’s state government may never be small enough to drown in Grover Norquist’s fantasy bathtub, but schools could be looking at many lean years to come, based on current projected costs of the 2013 commercial property tax cut.

Even worse, administrators and school board members are flying blind as they certify and start to implement next year’s budgets. I see no sign that Republicans feel any political pressure to end the dysfunction.  

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