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Capitol Corner
 email Edition
for week ending
April 4, 2015

News from the State Capitol
Rep. Sandy Salmon

We enjoy hosting visitors from District 63
and from around Iowa:

Happy Easter!

Matt and I inside the Garden Tomb in Israel – But we found out! – “He is not here for He is risen!”
School Funding Challenges
 I have received much communication regarding K-12 school funding and want to explain that here plus address some misleading claims I have heard.
Our local schools play a critical role in our communities and in the development of our children.  Our teachers and support staff members are more than just teachers; they’re mentors, friends.  Our principals and superintendents are more than just administrators; they’re counselors, friends.  Those of us from rural Iowa know that our schools are the lifeblood of our small towns; they are the glue that holds us together. 
Together we are all facing budgetary challenges at this time.
Living within your means is a shared Iowa value.  It forms the foundation of every discussion in the legislature on budgetary matters.  That includes the discussion over Supplemental State Aid.  I am listening to your concerns regarding the House-approved level of 1.25 percent and the possible effects it could have on class size, teachers, per pupil spending levels, and programs.   

Tripoli High School Government Class

I hosted the Tripoli High School government class along with their teacher Ray Carlson at the Capitol! The group visited the Statehouse to learn more about their state government by touring the Capitol, attending a committee meeting, and making the trek to the very top of the Capitol dome!

Some say we’re unwilling to put more money towards education. They should consider that we have supported even higher increases in the past. It was only two years ago we supported 4 percent supplemental state aid.  The driving factor in that decision was that the state revenue was there to fulfill that commitment.  Our proposed 1.25 percent increase in aid isn’t due to us not caring or a malicious need to punish schools or some secret plan to shut down rural Iowa. School funding levels, like everything in the state’s budget is about the money, or lack thereof.
The Revenue Estimating Committee (REC) outlined a specific projection at their meeting on March 19th.  The legislature is required to use that estimate.  This new estimate for Fiscal Year 2016 is $7.175 billion.  Last year (FY 15) the state spent $6.995 billion.  Simple math tells us there is $180.9 million of revenue above what was spent last year.  That is 2.6 percent growth.  While the state budget is complicated, the constraints legislators must operate within isn’t.  It is simple math. We are not the federal government. We cannot print money if we want to have more.

Others have said, “Just give schools the spending authority of 4 percent even if the state cannot fund it all and we will fund the rest ourselves.” This only perpetuates a dismal trend as it will result in higher property taxes sooner or later. Many have been alarmed at the dramatic increases they have seen in property taxes over the years and wonder when it will stop. We cannot continue to always use our property taxpayer as our fallback taxing source. Property taxes are one of the worst of all the types of taxes because no matter what your income you have to pay it. In contrast, at least income taxes rise and fall with income and sales tax you can control to some degree by what you buy. But property taxes are the most insistent, unyielding, and relentless of all taxes. Saddling the folks in our communities with higher property taxes and more debt is a destructive financial course for our local schools and taxpayers.

Bremer County Corn Growers

Bremer County Corn Grower members Charlie and Wilda Albrecht of Readlyn and Iowa Corn Growers staff John Finley came to advocate for issues of concern for farmers at the Capitol!

Some say that the state is experiencing 6 percent revenue growth, instead of the 2.6 percent outlined above, and therefore, a 4 percent supplemental state aid level easily fits.  This is misleading.  Last spring, the REC’s revenue estimate for Fiscal Year 2015 was $6.983 billion.  Actual spending for FY 2015 was $6.959 billion.  When the legislature adjourned last May, we had approved a spending level just under the estimate.  Then economic factors worsened and ACTUAL revenue dropped but spending levels did not because the budget had already been set, leaving the state in a position where expenditures exceeded revenue.  Thankfully the ending balance was healthy enough to absorb this situation. The latest estimate for Fiscal Year 2015 (this year) final revenue is $6.767 billion.  The new Fiscal Year 2016 estimate is 2.6 percent more than actual spending and 6 percent higher than the current Fiscal Year 2015 estimate.  That FY 2015 estimate is irrelevant since the actual FY 15 spending level was higher.
Our current SSA proposal combined with teacher leadership dollars is a $85 million commitment, about half of the $180.9 million in new revenue to K-12 schools. The increases in the rest of Iowans’ priorities like Medicaid, public safety, Regents schools, community colleges, mental health, state workers’ salaries, and economic development have to fit within the remaining $80.9 million in new revenue.  The increase in Medicaid alone is projected at over $200 million.  It’s easy to see the problem.

Tripoli Government Class

Teacher Ray Carlson giving some instruction to the class.

A 4 percent increase in SSA funding ($210 million) that some want has no regard for the state’s projected revenue numbers.  Simple math tells you:   that’s more than the state can afford.  Some say, “Fund schools then figure out the rest of the state budget.”   This kind of short-term thinking without considering what the state can actually afford is the same type of haphazard budgeting that led to the crippling of school funding and across the board cuts in the past.
Even further, there are some who are now advocating the legislature take money from the state’s emergency reserve account to address what they perceive as a funding “emergency.”  The state’s reserves were tapped during two periods of time over the past 20 years; the first, during the early 2000’s: in Fiscal Year 2001, when revenue growth was just $60.9 million.  The state was experiencing the effects of the end of the dot-com bubble and also a precipitous drop in hog prices impacting Iowa livestock producers.  The reserves were also used in FY 2002 when revenue dropped $16.5 million, FY 2003 when it dropped another $128.5 million, and FY 2004 when growth was $82.2 million.  This period was during the recession in the aftermath of the September 11th terrorist attacks.

More from Tripoli

I enjoyed sharing with the class about what it’s like being a state representative.
Fiscal Year 2009 was the next time the reserve funds were tapped, when revenue fell by $190.4 million as a result of the start of the great recession and the aftermath of the 2008 floods.  Fiscal Year 2010 saw General Fund revenue drop another $300.1 million.  At that time you may recall there were billions of dollars from the Federal government to bail us out. This time we will simply have to be frugal.
Compared to those times in the past, the FY 15 increase of $180.9 million does not constitute an emergency where the state should be dipping into its reserve funds. Those reserve funds need to remain where they are in case a real emergency should arise.
Furthermore, tax revenue does not come in at a steady rate.  The state receives the largest share of tax revenue in the last few months of the fiscal year.  In the 1980’s, the state did not have a cash reserve fund and payments to schools, local governments, and service providers were not made on time.  Sometimes schools were forced to borrow money to make payroll as they waited for school aid payments from the state.  Schools were forced to incur additional costs because of the state’s lack of fiscal responsibility.
When the Legislature decided to reform the budget process in the early 1990’s, one of the key elements was ensuring that payments were made in a timely manner.  That’s the purpose of the Cash Reserve Fund.  It has an amount equal to 7.5 percent of that year’s budget to help cash flow the state during the year.  Right now, the state holds $522.3 million in this fund. It is important for the state to maintain the Cash Reserve Fund so that schools get their state aid payments on time, instead of districts having to borrow money like back in the 1980’s.

More from Tripoli

I enjoyed the question and answer conversation with the Tripoli students.

Some are also saying that the state is sitting on a $1 billion surplus and that money should be used for school funding.  Again, this is misleading.  Back in 2013 the state had an ending balance of roughly $900 million.  Since then that revenue has been used to pay off state debt, invest key infrastructure projects at our Regents institutions, and improve water quality.  The ending balance is estimated to be $420 million at the end of Fiscal Year 2015 on June 30.  Once money from this source is spent it is not automatically replenished.  That means using it for on-going expenses like school aid this year forces school districts into the unenviable position of having to cut all of that money out of their budgets next year.  Why?  Because it is money the state gets one-time with no guarantee it will be replenished the following year. School programs that are obviously ongoing need a stable, sustainable source of funding.
K-12 schools will be unique in Iowa because they are receiving an increase, and not a decrease like many areas in Iowa government will see. Additionally, arbitration has delivered substantial pay raises to state employees, but the departments will not be granted increased funding to pay for those raises; they will have to absorb the salaries within their budgets.
We have made significant increases in education spending in the past few years. In the next fiscal year we’ll be spending more than a half billion dollars more on K-12 education than we did just 4 years ago. We have worked to ensure K-12 funding is getting the first (and biggest) bite of the apple.  The problem is the apple isn’t as big as we’d hoped.

Easter at Trinity Bible Church

Our son Peter is an assistant pastor at Trinity Bible Church in Cedar Falls and preached the Easter message this past Sunday!
Feel free to contact me with ideas, thoughts, and concerns. My phone is 319-987-3021 or you can email me at I want to hear what you are thinking and will listen to your input. Together we will work to make a difference for the future of Iowa. Thank you very much for the honor of representing you! 
For more details on the session you may click below for past Newsletters from the House Republicans:

3-12-2015 House Republican Newsletter
3-19-2015 House Republican Newsletter
3-26-2015 House Republican Newsletter
4-2-2015 House Republican Newsletter

2015 Second Funnel Survivors

*Some pictures may appear distorted depending on which email service you use.  I apologize for any inconvenience!*
Sandy Salmon
State Representative
Iowa House District 63

     9711 Streeter Rd .
     Janesville, IA  50647


Rep. Sandy Salmon is honored to serve her community in the Iowa House.  Please feel free to contact Sandy if you have questions or comments.