Iowa Policy Points

Ongoing mistake in ‘one-time’ rhetoric

The Governor appears to be missing his own point.

Vetoing one-time funding for one-time uses — as Governor Branstad did last week — goes against what the Governor himself has been saying. And Iowa students will suffer for it.

Set aside for a moment that it can be quite sensible to use one-time funds for ongoing expenses. It depends on the circumstances. Set aside the fact that Iowa revenues and projections are strong and that state money seems to be available on an ongoing basis for corporate subsidies if not for restoring repeated shortfalls in education funding.

In the case at hand, the Governor vetoed one-time funds — for public schools, community colleges and the three regents universities — that ironically would have been spent in line with his own stated concern. The $55.7 million in one-time funds for local schools and area education agencies would have supplemented regular funding, set at 1.25 percent growth per pupil, all part of a package negotiated by the split-control Legislature.

Here’s the oft-stated concern about one-time funds, in a nutshell: You don’t spend one-time money on things that commit you to the same or greater spending in the future, because you don’t know whether the funds will be there later on.

The compromise on school funding negotiated and passed by legislators (part of HF666) reflected that concern:

So, you can add to one-time expenses that you would have had to leave out, for purposes such as textbooks, library books, other instructional materials, transportation costs or educational initiatives to increase academic achievement. You can’t plan on having the same funds available in the following budget year.

In his veto message, the Governor stated, “Funding ongoing expenses with one-time money is unsustainable.” In neither case did the Legislature propose doing so.

The larger problem with one-time funding is that such a cautious approach was unnecessary, because funds are available for more ongoing spending on education than what either the Governor or the House leadership permitted. The latest estimates are for 6 percent revenue growth in the coming year.

With or without the one-time funds that would have helped school districts, the legislative compromise ensures the continued erosion of the basic building block for school budgets, the per-pupil cost.

Supplemental State Aid (formerly termed “allowable growth) defines the percentage growth in the cost per pupil used to determine local school district budgets, which are based on enrollment. For FY2016, the Legislature and Governor have set the growth figure at 1.25 percent. Though state law requires this figure to be set about 16 months before the start of the fiscal year, the issue was not resolved until last week, when the Governor signed the legislation, and the fiscal year had already begun. The Senate passed 4 percent growth for FY2017 and the House 2 percent, but no compromise emerged and that remains unsettled. The education funding vetoed last week by the Governor affects separate one-time spending that would not have affected future budgets.

For the last six budget years, per-pupil budget growth has been above 2 percent only once. Once it was zero, and schools for the coming year are at 1.25 percent. This does not come close to meeting the costs of education at the same level year after year.

Ultimately, that is the test of what is, or is not, sustainable.

Posted by Mike Owen, Executive Director of the Iowa Policy Project

 

See the Iowa Fiscal Partnership statement from July 2