Tuesday, July 7, 2015

$8 Billion

Governor Branstad took final action on school funding July 2nd, right before the long holiday weekend. For those conspiracy theorists out there it sure seemed like purposeful timing. Perhaps the thought was the general public would have a short memory after a patriotic weekend celebrating the 4th of July with fireworks and outdoor barbecues with family. After all, the news cycle generally lasts about 24 hours before something more interesting takes the main headline of the day.

In the final analysis, State Supplemental Aid (SSA) was set at 1.25%, which I have shared before equates to $25,895 for Hudson Schools. To remind you all once again, that doesn't begin to cover the increase in costs that we will incur the next fiscal year. The $55 Million in one-time funding would have added another approximate $70,000+ to our general fund. While it would not have covered our expected cost increase it certainly would have helped. For those of you wondering, we expect our increase in expenditures to be somewhere in the vicinity of $250,000 for the next fiscal year.

Indeed this veto is disappointing. For starters, it is contrary to a bi-partisan compromise that was hammered out between Democrats and Republicans. A compromise that took almost a year and a half of negotiations resulting in the legislative session being drug out much longer than it should have. Yes, this question should have been answered well over a year ago. Further, the question of funding for the next fiscal year was not resolved--and by the time the legislature convenes in January they will be a year late on that decision as well. In his veto message the Governor scolded the legislators for not setting SSA for the next fiscal year. I might suggest the Governor use this opportunity to recall the members for a special assembly. It is clear they have not yet finished their work!

Further perplexing in this decision is the fact that the state's economy appears to be in really good shape. The Cedar Rapids Gazette reported that our state had gross tax collections of $8 Billion for the first time ever. The Revenue Estimating Conference (REC) expected growth at 5.5%, when in actuality it ended up closer to 6%. In their article, the WCF Courier shared that the 'better than average growth was fueled by a 5.8% increase in personal income tax collections'. Arguably, if this news came out after the veto, at least the point could have been made it was tied to the previous and more conservative REC estimate. The timing of the news on gross tax collections coupled with this veto really make me question the wisdom of this decision. It is as though these two (very much related variables) were resolved in a vacuum and became the antithesis of one another.

The Governor suggests a pathway to resolution for the perpetual school funding debate: "The key is to grow the Iowa economy and bring more businesses and jobs here, and higher income to the state", he said recently. Perhaps the fact that revenue projections beat the REC estimate by a half percentage point wasn't quite good enough. Then again, maybe that is why we are investing over $100 Million in a fertilizer plant. When all said and done, they estimate the plant will employ about 240 people.

If we want to bring more businesses and high paying jobs to Iowa, we can start by investing in public education. We would also be quick to remember that in most Iowa communities the local school district is the largest employer, and the jobs that the local school district provide are the economic engine that enables those towns to thrive. Just look what happens when a local school district dissolves or closes an attendance center. That battle was waged not too far from here just this year.

So, here is the deal. Instead of a $100 Million investment that will employ 240 people and produce nitrogen fertilizer, how about a $10 Million investment and we'll employ about 100 people. We'll even provide them with a decent middle income wage to raise a family. No, we won't produce nitrogen fertilizer--but we will educate the populace (and do an outstanding job of it, I might add). That is an investment with dividends that will compound for generations to come. 

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