Here’s what lawmakers approved in Iowa’s $8.9 billion budget and what they cut (2024)

In their final days of the 2024 legislative session, Iowa lawmakers approved $8.9 billion in state spending for the upcoming year, financing the state government and public services. Most of those decisions now await a thumbs up or down from the governor.

Appropriations bills included funding for topics discussed often this session, like increasing pay for Iowa judges, as well as spending cuts to Area Education Agencies, the provider of special education and other school support services in Iowa.

Budget bills can also include policy components. This year, language restricting on diversity, equity and inclusion programs at the state’s public universities was passed as part of the education spendings bill.

Democrats repeatedly emphasized that the Republican-controlled Legislature was underfunding many government services and amenities that Iowans rely on — despite having excess funds available. Iowa ended Fiscal Year 2023 with a $1.83 billion surplus in the general fund, in addition to $2.74 billion in the state’s Taxpayer Relief Fund and $902 million in reserve funds,according to the March Revenue Estimating Conference.

Republicans, however, argued they were budgeting responsibly, working to rein in the size and cost of state government — as well as returning more money to Iowans through lower taxes. Lawmakersapproved a bill lowering Iowa’s individual income taxto a single 3.8% rate beginning in 2025, speeding upincome tax cuts passed in 2022.

The tax cut is financed in part by the state’s surplus, as well as a withdrawal from the Taxpayer Relief Fund. If state revenues fall below state spending in a fiscal year,Senate File 2442includes a measure taking half of the funding shortfall directly from the relief fund. That language would be repealed July 1, 2029 under the bill.

Republicans said these tax cuts will be financed using excess tax revenue from this year’s budget plan, in addition to a withdrawal from the Taxpayer Relief Fund. The bill includes language stipulating that if state revenues fall below state appropriations for a fiscal year, the funding needed to make up the difference would come, at least in part, from the relief fund. This language would be repealed July 1, 2029.

Democrats said this is not the best use of Iowa taxpayer dollars, arguing that lowering income taxes to a flat rate will disproportionately benefit wealthier Iowans. House Minority Leader Jennifer Konfrst also said depending on the current surplus and Taxpayer Relief Fund to make up for losses that come from income tax cuts could put the state in a bad situation in the future, especially if faced with an economic downturn.

“We know that the tax cuts that we continue to pass will continue to impact Iowa’s budget, and you know, are very aggressive in an economy that is not as predictable,” Konfrst said. “And we’re jumping ahead before we have all of the information.”

House Speaker Pat Grassley, however, said Iowa is in a sound economic position to make these tax cuts. He also said the income tax proposal passed at the end of session makes smaller changes than other proposals discussed in 2024, likeReynolds’ billlowering the state’s current 5.7% rate retroactively to 3.65% in 2024, with another drop to 3.5% in 2025.

“We’re really proud of the way we’re able to do (tax cuts) in a fiscally sound way,” Grassley told reporters. “I think that’s something that we’ve really championed — as we’re looking at tax policy, making sure we can do it responsibly and sustainably.”

Reynolds must approve the spending bills before the money is officially allocated. Iowa’s governor has the ability to line-item veto portions of bills signed — meaning that if there are certain programs or groups that the Legislature approved funding for that Reynolds disagreed with, she has the power to override lawmakers’ decision. Though there were points of contention between the governor and legislators during the session, a majority of the appropriations passed were reached as a consensus among the Republican trifecta at the Statehouse.

Here are some of the highlights from this year’s state spending:

Education

The education budget bill for the upcoming year,Senate File 2435, allocates nearly $1 billion for the the Iowa Department of Education, the state’s public universities under the Iowa Board of Regents, as well as the Department for the Blind and other education-related programs.

The budget included a 2.5% increase for Iowa’s university system, representing roughly $35.4 million. The bill allocates more than $223 million for the University of Iowa, $178 million for Iowa State University and $101 million for the University of Northern Iowa, in addition to increasing the Iowa tuition grant funding by more than $52 million. These increases, alongside other approved expenditures, bring the state’s funding for public universities to more than $573 million.

The bill also has changes to the way state funds are distributed to Iowa community colleges. In floor debate, Sen Tim Kraayenbrink, R-Fort Dodge, said the legislation increases appropriations for community colleges by $7 million, with half of that funding going to the current aid distribution formula and the other $3.5 million dedicated to providing “more equity” to the six community colleges with the lowest average state funding per student.

Another measure included in the appropriations bill prohibits the establishment, maintenance and funding of diversity, equity and inclusion offices at state universities. DEI initiatives and programs that are required by state or federal law, or to meet accreditation requirements, are still allowed. As the Iowa Board of Regentsadopted similar measuresin 2023, many of the requirements by this measure have already been enacted at Iowa universities.

The legislation also requires school districts adopt rules related to chronic absenteeism and truancy, setting up a required procedure for schools to work with parents and students through an ““absenteeism prevention plan.” If further intervention is needed, the county attorney would be involved in addressing the problem.

New funding, $10 million, is also given to the Department of Education for the Division of Special Education. As part of the AEA legislation, this new division will take over oversight and supervision work currently performed by AEA agencies internally. The funding would go toward 62 full-time employee positions in the division.

Health and Human Services

The Legislature approvedHouse File 2698, a $2.2 billion budget funding the Iowa Department of Health and Human Services and the Iowa Department of Veteran Affairs, an $88.6 million increase from the current fiscal year.

Some of this new funding, $14.6 million, goes toward increasing reimbursem*nt rates for Home and Community-Based waiver services, Medicaid programs that provide in-home and community-based health care services for adults with disabilities and older Iowans not in care facilities. This allocation, in part, backfills federal American Rescue Plan funding previously used to finance the program.

Additional funding for reimbursem*nt rates are in the bill — $2.1 million will go toward raising mental health care Medicaid reimbursem*nt rates, and $3 million will go to adjustments for home health provider rates working with older Iowans. The bill also creates 70 additional waiver slots for Iowans with disabilities seeking long-term services and supports.

The legislation also incorporate aspects of previous bills that did not advance earlier in the session. One provision in the HHS budget bill wouldestablish joint training sessions with nursing home staff and inspectors. and add registration requirements for temporary staffing agencies that employ workers at Iowa nursing homes. These provisions do not include languageestablishing a cap on maximum allowable chargesfor workers with staffing agencies in nursing homes.

House Democrats introduced amendments, requesting funding for measures like increasing theMedicaid personal needs allowance for people in care facilitiesfrom $50 a month to $75, and adding $1.5 million in new funding for the University of Iowa Hospitals and Clinics for childhood cancer research. These amendments were voted down.

Administration and regulation

Democrats criticized the GOP majority on several occasions for not properly funding nursing homes — particularly providing ways to address ongoing staff shortages and reports of substandard care. This topic came up again in the debate onSenate File 2433, this year’s funding for agencies dealing with administration and regulation.

Lawmakers included a $260,000 increase in funding in the bill for the Iowa Department of Inspections, Appeals, and Licensing (DIAL) and the ability to hire another full-time employee. Lawmakers said this funding is a way to increase fund oversight of nursing homes in the state, though the funding is not mandated for hiring inspectors.

Sen. Claire Celsi, D-Des Moines, offered an amendment that would include $2.4 million in new funding for DIAL to hire 30 additional nursing home inspectors. This Democratic proposal comes as the state departmentfaces hundreds of uninvestigated complaintson issues like substandard care and safety concerns. A lack of inspectors has been brought up as a factor behind the ongoing backlog of complaints.

“We know that this problem is not taking care of itself, no surprise,” Celsi said. “… It’s time to protect our senior citizens and do something about it.”

Sen. Dave Rowley, R-Spirit Lake, said Iowa currently has 46 nursing home inspectors on staff, funded in conjunction with the federal government — more inspectors than other states currently have. Celsi argued against this point, saying Iowa does not have the dedicated inspections staff of other states — Iowa ranked 49th in the nation in ratio of nursing home inspectors to care facilities. The amendment failed.

The bill provides roughly $72 million in funding, increase of $1.3 million from Fiscal Year 2024, to DIAL, the Department of Administrative Services and Department of Revenue, as well as multiple other state agencies and offices including the Secretary of State’s Office and Office of the Chief Information Officer. Other spending components include $600,000 increase for the Secretary of State’s Office to improve cybersecurity and election integrity efforts, and $600,000 for the Iowa Insurance Division, dedicated to pharmacy benefit manager oversight.

Judicial Branch

House Republicans and Democrats celebrated increases to judicial pay and changes to the judicial retirement system — requested by Chief Justice of the Iowa Supreme Court Susan Christensen in herCondition of the Judiciary address— that were included in this year’s judicial branch budget bill,Senate File 2436.

The bill in total represents a $220 million allocation, an increase of $7.6 million. The bill increases salaries of judicial officers by 5%, a cost of roughly $2.4 million, in addition to raising pay for contract and non-contract employees, costing more than $4.4 million.

The bill also delivers — partially — on another request from Christensen on the judicial retirement system. The retirement system moved from a fixed contribution rate to a variable contribution rate in 2022, leading to judges putting more money into their pension and driving down pay, Christensen said.

While the retirement system was not returned to a fixed contribution rate, it made adjustments to the variable contribution rate system. The bill sets a 1% limit on how much contribution rates can vary in rate from the previous year, and sets a 35%-65% split in contributions from judges and from the state.

Measures discussed in negotiations between the House and Senate, like increasing pay for jurors and giving the governor the power to appoint six of the judicial nominating commission’s 11 members, were not included in the final legislation.

Justice system

The justice system budget,House File 2693, provides $24 million in additional funding for the Department of Justice, Department of Corrections and other law enforcement-related state agencies and offices as part of the$693.3 spending bill.

The bill includes $2.8 million in new funding for the Attorney General’s office to hire six new employees to assist county attorneys with investigating and prosecuting crimes. It also includes pay raises for correctional workers, increasing minimum starting pay to $24 per hour, and increasing indigent defense rates for attorneys by $3 per hour throughout the state.

Rep. Brian Lohse, R-Bondurant, said this year’s budget did not include changes to current federal funding for victim services. Iowa currently receives more than $5 million annually from the federal Victims of Crime Act (VOCA), to provide services to victims of human trafficking, sexual assault, domestic violence, and violent crimes.

Congress is considering cuts of more than 40% to VOCA for the 2024 fiscal year, putting funding for Iowa services at risk. Lohse said Iowa victim advocates, state Attorney General Brenna Bird and others are working with federal lawmakers to reverse course or find short-term funding solutions for services and programs funded through VOCA — but that if these efforts do not succeed, Republicans will provide emergency funding to make up for the loss of federal dollars as soon as the legislature reconvenes in 2025.

Agriculture and Natural Resources

Senate File 2443appropriates $46 million for Iowa’s Department of Agriculture and Land Stewardship, Department of Natural Resources and related farm and wildlife services — a $2.4 million increase from this year’s budget. An additional $97 million in other funding is also appropriated to these departments and programs.

The budget included $7.2 million for state park maintenance, $296,000 from the Blufflands Protection Revolving Fund for improving park accessibility and requires the DNR dedicate at least 50 employees to seasonal maintenance and upkeep. But Democrats said this funding is not enough to address the accessibility improvements and repairs needed at state parks.

Rep. Sami Scheetz, D-Cedar Rapids, said the DNR has estimated needed repairs will cost at least $17 million.

“So this is obviously still a drop in the bucket,” Scheetz said, but expressed appreciation for Republicans including some funding for maintenance, repair and accessibility improvements.

Standings

Senate File 2443, the appropriations bill for statutory commitments the state has made, implements several of the components signed into law as part of the measurechanging the Area Education Agencies.

The bill appropriates a total of $4.6 billion — a majority, $3.8 billion, going to fund Iowa’s public K-12 schools at a per-pupil basis. This amount, a 2.5% increase in State Supplemental Aid funding, was agreed upon and passed in the earlier bill. It also provides funding for the increases to teacher salaries and $14 million to raise pay for education support personnel that were included in the law.

Additionally, the bill cuts funding for AEAs by $32.5 million. Kraayenbrink said a portion of this cut, $10 million, is made up for in the education budget bill, as it represents the transfer of oversight and supervision employees now under the Department of Education’s Division of Special Education. Another $7.5 million is a dedicated annual statutory reduction.

Also featured in the standings bill was a $2 million allocation for the Iowa Department of Public Safety, funding a task force on“the rise in illegal immigration and related criminal conduct” like drugs and human trafficking.

Economic development

In this year’s budget, $42 million in funding is allocated to the Iowa Economic Development Authority, Iowa Finance Authority, Public Employment Relations Board, Iowa Department of Workforce Development and Iowa Board of Regents throughSenate File 2432, in addition to allocating $34.4 million from other funds to these state bodies.

While the general fund appropriations increases by $184,000 from the previous year in this budget, the bill also includes decreases to funding for several programs. Under the Iowa Economic Development Authority, a total $1 million in appropriations is cut to the Butchery Innovation and Revitalization Program, while funding increases for the World Food Prize by $150,000 and for the Iowa Arts Council by $50,000.

The bill also includes more funding for the Iowa Department of Workforce Development, with $120,000 dedicated to vocational rehabilitation services and $227,000 for the department’s field offices, while also cutting $1.5 million in spending on theStatewide Work-Based Learning Intermediary Network, a state program connecting businesses and employees through the state’s community college system with a focused on work-based learning opportunities.

Rep. Jerome Amos Jr., D-Waterloo,introduced an amendmentto return Iowa’s unemployment compensation to 26 weeks, and raise the timeframe for unemployment benefits to 39 weeks in situations when a factory or employment shuts down. Amos said that as a person who has suffered from layoffs, he understood the importance of unemployment in helping families stay afloat during unexpected unemployment. This is an experience many Iowans are currently facing, he said, pointing to layoffs at John Deere facilities and theupcoming closure of the Tyson Foods pork processing facilityin Perry.

“We need to make sure the workforce of this state is taken care of,” Amos said. “… We need to up the weeks for individuals so that they have the ability to take care of their families.”

The amendment was ruled not germane.

Transportation

Senate File 2422, making appropriations through state spending as well as the Road Use Tax and Primary Road funds, reduces spending by roughly $1.8 million from the current fiscal year. The cuts in the $453.1 million budget come from areas with lower costs — like a $2.3 million decrease in funding for producing driver’s licenses due to factors like the timeline for license renewal changing from five to eight years.

Rebuild Iowa Infrastructure Fund

House File 2691appropriates $222.4 million for the upcoming fiscal year, with the majority — $223.7 million — going to the Rebuild Iowa Infrastructure Fund. $112 million of this spending goes to improvements through the Department of Administrative Services for maintenance and repairs of state facilities over the next five years.

Other spending highlights include $14 million for the Renewable Fuels Infrastructure Fund, and at total $21.1 million appropriation for Technology Reinvestment Fund, going toward improving and upgrading computers, databases and other technologies used by the state government.

Here’s what lawmakers approved in Iowa’s $8.9 billion budget and what they cut (2024)
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