Lawmakers in both parties disappointed by shortfalls in $8.5 billion state budget

Iowa’s $8.5 billion budget sets aside money to address worker shortages in areas like maternal health care, schools and indigent defense — but lawmakers from both sides questioned whether the money will be enough to address problems like nursing home closures or Iowa’s backlog of court cases.

The budget, a 3.7% total increase from last year, will provide more funding in fiscal year 2024 for the governor’s private school scholarship program, Medicaid reimbursement rates for nursing homes and mental health facilities, and higher education programs for high-demand fields.

But many of the appropriations fall short of the budget targets House Speaker Pat Grassley outlined at the end of March.Reaching a compromise at the end of the session meant House Republicans had to sacrifice some of their spending goals.

House Republicans repeatedly told Democrats they understood concerns about underfunding, but that they were committed to the agreed-upon budget. The plan spends 88% of available general-fund revenues and leaves more than $2 billion unspent that GOP lawmakers plan to put toward future tax cuts.

While Republicans said the governor’s office was involved in budget negotiations, these figures could still change. Gov. Kim Reynolds has the power to strike individual spending provisions from spending bills before signing them into law.

Here are some highlights of the budget:

Standings and K-12 schools

The “standings” bill, short for standing appropriations, included the majority of state spending for the upcoming year at just under $4.4 billion. Most of the spending goes toward Iowa’s K-12 public education system, but the bill also appropriates funding for the governor’s private school scholarship program.

That figure includes the 3% increase to State Supplemental Aid approved in February, giving roughly $107 million more in per-pupil dollars to Iowa’s public schools. It also allocates roughly $116 million for the first year of Reynolds’ education savings account program and non-public school transportation costs.

The program, Reynolds’ top priority for the session, allows current public school students, incoming kindergartners and private school students with family incomes 300% or below the federal poverty line to open an ESA, with roughly $7,600 in public funds to pay for private school tuition and associated costs.

The standings bill also reduced funding for Iowa’s Area Education Agencies, which provide special education services to students in both public and private schools. Rep. Taylor Collins, R-Mediapolis, said eight of Iowa’s nine AEAs will still receive more money in the upcoming year despite the $30 million cut, through the increase to SSA. Only Mississippi Bend AEA will see less funding in the upcoming fiscal year, with a $32,000 reduction.

Rep. Beth Wessel-Kroeschell, D-Ames, asked if AEAs were being “punished” in the budget.

“I wouldn’t say they’re spending too much money,” Collins said. “I would actually say many of this caucus, we’re fine with just keeping the $15 million that is the usual amount that we have reduced our funding by.”

Collins said the cut is one of the “consequences” of negotiations for the 3% increase in SSA, as Senate Republicans originally called for a 2% increase.

In earlier debates, Democrats said the 3% increase is still not enough for public schools to keep up with rising costs of labor, materials, and make up for underfunding in previous years. Republicans said it’s important to keep in mind that roughly $3.65 billion is appropriated to the public schools overall for the upcoming year.

Education

Iowa’s Department of Education and higher education institutions, as well as the Department of the Blind, received $982.9 million in funding for the upcoming year. Iowa’s public universities — University of Iowa, Iowa State University and University of Northern Iowa — received a $7.1 million increase.

It falls almost $25 million short of the Iowa Board of Regents’ budget request, and appropriates funds to specific university programs for fields facing worker shortages. The University of Iowa’s nursing program and Iowa State University’s Future Ready Workforce Program each got a $2.8 million bump, for hiring instructors and improving STEM program offerings respectively. The University of Iowa’s Educators for Iowa program saw an increase of $1.5 million for recruitment.

A provision in the education spending bill also requires the three institutions conduct studies into their diversity, equity and inclusion programs. The universities will not be allowed to spend money on DEI programs, hiring or training until the study is done. This plan is already moving forward, with Board of Regents President Michael Richards announcing in March that the board is conducting a study and halting funding for DEI programs.

The Board of Regents raised tuition at Iowa’s public universities in 2022, saying the $300 increase was needed to meet rising costs of labor, goods and services. Democrats criticized Republicans for years of cutting or keeping status quo funding for public universities, but Republicans said the budget figures reflect responsible spending.

“I do want to reassure everyone, Republican or Democrat, that this budget is not starving anyone or anything,” Sen. Jeff Taylor, R-Sioux Center, said during floor debate. “It’s not defunding education, it’s actually an increase of what we do have.”

In addition to the increases to Regents’ programs, roughly $7.2 million more was allocated to Iowa’s community colleges, which Republicans said is intended to address workforce shortages. Another $6.5 million goes to a grant program for students going to regents’ institutions in high-demand fields.

Health and human services

More than $2 billion of Iowa’s spending for fiscal year 2024 will go to Iowa’s health care and public assistance services, with House Republicans winning some of the spending goals proposed in April. The HHS budget bill incorporates some of Reynolds’ proposals from her health care omnibus bill focused on addressing Iowa’s rural and maternal health care shortages.

Lawmakers approved putting $560,000 toward creating a new OB-GYN fellowship program, funding four family medicine and obstetrics fellowships annually for doctors required to stay in Iowa for five years after completion. The budget also increases funding for the More Options for Maternal Health program from $500,000 to $1 million, below Reynolds’ $2 million request. The MOMS program funding goes toward “crisis pregnancy centers,” maternal health care nonprofits that discourage abortion.

Iowa nursing homes will receive $15 million more in funding than last year through raising Medicaid reimbursement rates. House Republicans requested $25 million, calling for more support as Iowa faces a surge of nursing home closures, but settled for Reynolds’ original proposal during negotiations with the Senate.

Rep. Joel Fry, R-Osceola, told Democrats in a subcommittee meeting that he “echoed (Democrats’) concerns” about not reaching the $25 million target for raising nursing home support, but said he has had discussions on how to make sure all of Iowa’s available nursing home beds were being utilized.

“It was pretty clear that I was the only negotiator in the building that was going to be pushing for that,” Fry said. “And so my job became making sure that we got funding that would not be vetoed, ultimately and that would sustain in the budget.”

Mental health services are also seeing a boost, with $13 million allocated to raise the Medicaid reimbursement for mental health and substance abuse treatment services.

Republicans voted down a $5.6 million amendment by Democrats to expand postpartum Medicaid coverage from 60 days to 12 months, allowed under the 2021 American Rescue Plan. Nearly 40 states have implemented the extension, which is available to states for five years.

Sen. Pam Jochum, D-Dubuque, criticized Republicans for voting down the Medicaid expansion and another Democratic proposal to expand child care assistance, saying 2023 will be remembered as one of the Legislature’s “most anti-child sessions.”

“This brings tears to my eyes and makes my heart heavy,” Jochum said. “It is sad what we are doing to children in this state right now. A budget defines our priorities, and by the way, taxes are a part of that budget. And I want you to keep that in mind.”

Republican lawmakers said they may consider expanding postpartum Medicaid coverage in 2024.

Justice systems

More than $669 million is allocated for Iowa’s justice system, funding eight departments including the Departments of Corrections, Public Safety, and the Iowa State Patrol. Some of the provisions, like the DPS increase of $20 million, are reflecting organizational changes through the governor’s agency restructuring plan.

Other increases addressed a problem Iowa Supreme Court Chief Justice Susan Christensen laid out in her January address: Iowa’s shortage of indigent defense attorneys. Lawmakers approved adding $2.6 million to raise pay for contract attorneys representing indigent defendants and providing travel time and mileage pay.

The budget also includes a $1.25 million increase for the Iowa Attorney General’s Office to hire 11 new full-time employees, and gives more than $1 million for raising salaries and bonuses for Department of Corrections officers. Democrats said the increase is not enough to help correctional facilities struggling with understaffing and poor work conditions.

Democrats also called for the state to use money in the Iowa Opioid Settlement Fund, comprised of money from settlements with opioid manufacturers, distributors and pharmacies over the opioid crisis. The fund currently holds $20 million, but will have $345 million in total in the next 18 years.

Rep. Elizabeth Wilson, D-Marion, presented an amendment to use the funds for training and supplying first responders, community centers and recovery spaces with naloxone, a drug used to prevent overdose deaths, as well as provide funding for substance abuse treatment facilities. The discussion was tabled for future sessions, with Republicans saying they were still figuring out the best path forward.

Judicial branch

The $212.5 million budget approved by the Legislature includes a $3.2 million increase to Iowa’s courts — less than the $5.4 million requested initially by House Republicans. Rep. Brian Lohse, R-Bondurant, said this shortfall is the reason why the budget does not include money to hire four new district associate judges to work through Iowa’s backlog of cases.

Lohse said “this is not necessarily the budget I’d hoped for.” The courts system requested he remove the hiring provision, he said, as the $3 million increase does not give them enough funding to pay for those hires.

Republicans voted down an amendment from Rep. Ross Wilburn, D-Ames, to spend an extra $1.4 million for hiring the additional judges. Wilburn said the funding is needed as 19% of pending cases in Iowa are more than a year old, far above the national average of 2%.

Lohse said he agreed that the problems Wilburn brought up exist, saying there is a “crisis” in Iowa’s district associate judges system, but that he could not exceed the spending agreed upon with the governor and Senate.

“It is what it is,” Lohse said. “We won what we could win. And we survive to live another day. We will continue to work and fight for the resources that the judicial branch needs in order to provide justice to Iowans.”

Administration and regulation

Iowa lawmakers approved $135.2 million for the offices of elected officials including the governor and state auditor, as well as the Departments of Administrative Services and Inspections, Appeals and Licensing.

The bill includes a nearly $500,000 increase to the governor’s office but no increase in staffing. Rep. Sharon Steckman, D-Mason City, said it was unfair that lawmakers denied requests from other departments asking for funding designated for specific needs, but the bump to Reynolds’ office was approved without details.

“Almost every division in this budget is status quo, some are less,” Steckman said. “Yet the governor’s office is receiving $500,000, and nobody seems to be able to tell us what that’s for.”

Reynolds’ deputy communications director Kollin Crompton said the funds will be used to “help recruit and retain the talent necessary to support the significant whole-of-government work that Iowans expect the governor to lead.”

The budget also includes funding for new hires: $1.4 million for the Iowa Utilities Board to hire five new full-time equivalent positions “to support their work with utilities and pipelines,” and $2.5 million for 10 new member support and financial investment employees at the Iowa Public Employees’ Retirement System.

Agriculture and natural resources

More funds will go to addressing livestock diseases in the $43.5 million agriculture and natural resources departments budget, but less will go to addressing Iowa’s water quality issues. The bill includes $500,000 for euthanasia equipment and vaccine research protecting Iowa livestock from diseases like avian influenza, which killed nearly 16 million chickens and turkeys in Iowa last year.

The bill also redirects $500,000 from the Iowa Nutrient Research Center to the Department of Agriculture’s Water Quality Initiative Fund. The funding currently is used by the Iowa Flood Center, at the University of Iowa, in tracking and research of Iowa’s water quality.

While part of that money will be used by the ag department to implement new water quality practices, Sen. Janice Weiner, D-Iowa City, expressed concerns because the new funding system does not require funding for the water quality program.

“The water quality measurement program will be reduced and could be axed altogether,” Weiner said. “We know that water quality is a problem. We know that Iowans deserve better. But without data, it will be easy to say there’s no problem or we don’t know how to measure the problem.”

The bill also includes a contentious provision on public lands, removing the goal for Iowa to have at least 10% of land area under public open-space protection by 2000. A bill failed in the Iowa House following significant public opposition for limiting the acquisition of public lands.

The Iowa Farm Bureau Federation and cattle farmers supported limiting public land acquisitions in meetings with lawmakers, saying the land acquired by the DNR could be used by beginning cattle farmers. Sen. Dan Zumbach, R-Ryan, said the Department of Natural Resources should focus on maintaining current public land over new acquisitions.

“We have a lot of land in public use that’s not getting taken care of the way that it could be,” Zumbach said. “I think we’re all aware, we’ve driven through the park that’s not mowed the way it used to be, we’ve looked at a new piece of property over there that hasn’t been touched yet. And we moved some dollars around so the DNR is in a position to take care of that property.”

Reynolds has 30 days from the end of the legislative session to sign bills. The state budget year ends June 30.