Allowance time. Iowa legislators setting spending limits for state agencies, schools and services. Perspective from appropriation committee chairmen Senator Bob Dvorsky and Representative Scott Raecker on this edition of Iowa Press.
Borg: Iowa's economy is showing more strength. Slowly recovering from the nation's economic downturn the state's revenue estimating conference now forecasting Iowa's economy to continue growing, albeit modestly, predicting state revenues increasing less than one half percent in the fiscal year beginning July 1st. Democrats and republicans though are interpreting that differently and that is what we're exploring with our guests who are chairing the legislative committees determining next year's allowance, who gets what and how much. Republicans controlling the House of Representatives have Urbandale's Scott Raecker chairing that appropriations committee. Senate democrats have Coralville's Bob Dvorsky in that strategic chair. Gentlemen, you've been here before. Welcome back to Iowa Press. This is always the time of the session when we like to talk to those who are doling out the funds.
Raecker: Thank you.
Dvorsky: Thank you.
Borg: And across the Iowa Press table Associated Press Senior Political Writer Mike Glover and Radio Iowa News Director Kay Henderson.
Glover: Mr. Raecker, let's start with you. As Dean has said, we have been through a lot of issues throughout the past two years of this General Assembly. Are we now down to just money? It's all dollars and cents now?
Raecker: Actually there's really four critical issues that we have to resolve this session. The budget is directly linked to all of them. But there's ongoing discussion, as you know, on the property tax reform, the Governor's initiative on education reform and I think the bipartisan work on the mental health reform that started last year is very close to being finalized. And those four issues will need to be addressed I believe in some fashion before we adjourn this session.
Glover: Senator Dvorsky, same question to you. Are we really down -- all those issues are policies but they are dollar and cents issues -- is that what we're down to now, dollars and cents?
Dvorsky: Well, we're down to dollars and cents in terms of all those issues have some sort of fiscal impact so I think they're all sort of tied together.
Glover: And how deep is the divide up there? We have a divided legislature, we've had a divided legislature for a couple of years. How deep is the divide as you sort through these final couple of weeks?
Dvorsky: I think the divide is fairly deep in the numbers. The House republicans have a really, really low number, the Governor has a slightly higher number and the Senate democrats have a higher number.
Glover: What are those numbers, Representative Raecker? And how is the divide in your view?
Raecker: Well, the House republican budget is a $6.06 billion budget. The Governor's budget is about $6.24 billion. And the Senate republican budget is about $60 to $80 million higher than that. So that is the difference that we have and we'll work those differences out as we move the budgets forward through the conference committee process in the next couple of weeks.
Glover: Isn't that a relatively simple problem to solve because it is dollars and cents, you can always split the difference?
Raecker: It is simple but not easy, it is very complex. There's not just a matter of splitting the differences, there are some very significant differences that we have within those dollars. An example would be our budgeting principles have been that we did not want to spend more money in ongoing expenses than we had in ongoing revenue. We did not want to balance the budget by knowingly underfunding commitments that we have made to Iowans. And we wanted to align appropriate expenses with the appropriate revenues. So in our budget one of the commitments that we have this year is to fully fund the property tax credits which is an additional $55 million from the prior year budget. That is not in the Senate republican or the Governor's budget and that is a significant issue that will need to be resolved.
Henderson: Do you mean Senate democrat budget?
Raecker: Yes, I apologize, Senate democrat budget.
Glover: Senator Dvorsky, your take on those differences? Do you see the same differences? And how do you solve them?
Dvorsky: Well, we're all subject to the 99%, you can't spend more than 99% of what you take in and everyone wants under that, the Governor, the House republicans and the Senate democrats are all under that number. In fact, we're all under 97%.
Borg: And that 99%, just to set a perspective for our viewers, is to set aside one percent for what we call a rainy day fund.
Dvorsky: Right and the rainy day fund will be full in that situation. But all three budgets are under 97% so we're clearly not overspending, we're fiscally sound in all three budgets. But I think the House republican budget is way too low in a number as far as education, health and human services, corrections, across-the-board.
Henderson: Well let's talk about a few of the individual budget decisions that need to be made before legislators can adjourn for the year. First of all, workforce development. It seems as if when July 1st starts republicans and democrats have a different vision for how that agency operates. Representative Raecker, has it come down to the fact that republicans just don't think you need an office into which a jobless Iowan walks to get help in their job search?
Raecker: I think one of the things we have to be cognoscente of with workforce development issues is in 2009 workforce development of all funds, federal funds and state funds, was about a $21 million agency. Right now, depending on which budget you look at, the budget proposal the Governor laid out would be about an $11 million agency because the federal funds have declined so much. So the fact of what does the state pick up that the feds had not going to continue to pick up is an ongoing issue. But that department has already seen significant reductions because of the federal funds reducing. So one of the things that w need to make sure is what is the best delivery of services for Iowans so that we get those core services in their hands that they can get the access to the jobs. And I think there has been a movement with Governor Branstad coming in and looking at how do we deliver those services. So certainly there is change and part of that change is because we don't have the same amount of federal money spent in that area that we did three years ago.
Henderson: Senator Dvorsky, I'll let you weight in on this. What philosophically should that agency be doing to help jobless Iowans find a new job?
Dvorsky: Well, I think they should provide as many services as possible. I mean, that is one of the things that we need to deal with in this sort of climbing out of this recession is to help Iowans who are unemployed and need to find jobs or maybe find better jobs. What type of training do they need? So I think it does give us an opportunity to look at various different ways to deliver those services. There has been some talk of talking about doing it with community colleges since they offer a lot of workforce development programs and that type of thing. And we're using the kiosk in the libraries. I think it would be good if we put more effort into helping librarians and libraries to make sure they can operate with that. And then the individual offices, we have the regional offices, I think fifteen regional offices and I think there are four other offices, so-called satellite offices also that are in place now and after the Governor vetoed that and the Supreme Court struck down the veto we had to go back in and fund that. We did that, by the way, in a bipartisan fashion, worked together on that and we're trying to keep those offices open for the rest of this fiscal year, the fifteen regional ones and then four additional offices.
Borg: Representative Raecker, I just heard him say community colleges are a cog in workforce development. Enrollments burgeoning at the community colleges, tuition though is among the highest in the nation now at Iowa's community colleges. Are you going to reflect what we have just been talking about here, what I've said, what you've heard the Senator say -- are you going to reflect that in increased funding for community colleges?
Raecker: I think our budget does account for the significance of community colleges not only with the funds that are distributed in the general fund budget but also with the Rebuild Iowa infrastructure fund budget where we get some infrastructure dollars. There's no question that our community colleges are playing a key role. Higher education in and of itself, we have to look at not only the community colleges, the Regents institutions and our private institutions and what are those resources that they have? How are they best being deployed to educate the youth of Iowa so that we can fulfill these job demands?
Borg: Senator Dvorsky, are community colleges getting enough?
Dvorsky: No, no and the Regents aren't either in the House republican budget. It's something like $115 million less than the Senate democrats. That vast a difference is something that we really have to work on.
Glover: Representative Raecker, let's step back a second. I know you're wrapped up in the last couple of weeks in the session but let's look at the big picture for this General Assembly. As an outgoing chair of the committee what is the biggest yes you have been able to say in the state's budget, the biggest single program you are able to say yeah, we can do that and we ought to do that?
Raecker: The biggest yes is that we're not going to spend more money than we take in. I think that is the biggest yes.
Glover: Senator Dvorsky, same question to you. What is the biggest single thing you've been able to say yes to state government for?
Dvorsky: I think we have been able to try and keep funding for education at a decent level although we haven't succeeded as well in this current fiscal year as we should have but I hope this next fiscal year we'll be able to do that.
Glover: Turn it on its ear -- what is the biggest single no you've been able to say to state government? What is the one thing you have been able to say we just can't do that, we can't afford it?
Dvorsky: I think in a number of areas we have tried to make in roads there. We have a reorganization bill that is -- there's one in the House and one in the Senate also -- and we had a prior one a few years ago and so we're continually making progress in a lot of different areas.
Glover: Representative Raecker?
Raecker: I think the things that we have had to say no to have been priority line items and that is where we really do get into some of the differences is that we really have tried to look a the budget line by line in the last two years and we have had to eliminate some of the costs that may have been nice but not necessary while we still provide core services to Iowans.
Glover: Give me some examples.
Raecker: Of those items that we have eliminated? Well the study that just came out recently that we had been working on for several years on the fleet study and we have downsized the number of fleet cars that we have had. We have done some things in the area of health and human services where we're combining services. I think one of the most significant things that is going to be looked at from this legislative session five, ten and twenty years down the road is the massive overhaul of mental health service delivery. It was an unsustainable amount of money that we are having to look at, at the state level with 99 different county delivery systems, with the state share growing every year and with federal match money coming down at a lower rate and I think one of the great things that is going to come out of this session is that we will have redesigned that delivery system and that Iowans, regardless of where they live, will have the opportunity to know that they will get equitable services in a fashion that will be sustainable. Iowans shouldn't be on a wait list.
Glover: Senator Dvorsky, do you agree with that?
Dvorsky: I agree they have really been working in a bipartisan fashion. Senator Hatch on the Senate side and others and Representative Schulte on the House side and others have been working a lot for a long time on those issues. And they're getting very, very close to coming up with some ideas that we hope can work.
Henderson: Before we get too far down the road you both have talked about Regents funding. That is state support of the three universities in Ames, Iowa City and Cedar Falls. Representative Raecker, republicans in the House are even going so far as to suggest a tuition freeze at those institutions. The Governor has said he doesn't like that, that the Board of Regents should set that policy. Do you plan to pursue that?
Raecker: The funding in the House republican budget is about $600 million for the Regents institutions. It is a reduction of two percent of their state general fund and overall funding a reduction of less than one percent. And we believe that there are still efficiencies as the Regents themselves I really commend are working to find those efficiencies and that that can be done without raising the tuition. When the tuition comes into discussion the other thing that we also need to discuss with tuition is the tuition set aside. The proposed tuition increase, the 3.75% would be about $250.
Borg: That tuition set aside, just for our viewers, is taking tuition money from -- if I'm going to the University of Iowa, taking some of my tuition money and setting it aside for scholarships for those who couldn't afford it.
Raecker: For other students either by need or by merit as well.
Borg: Now continue.
Raecker: And I really think that it is -- I really commend the Board of Regents for their look at this and the disclosure that they are going to put on the statements moving forward and they are addressing this policy. But my point is this -- when we talk about a tuition increase, right now the proposed 3.75% increase in tuition if that is around $250 at the University of Iowa if you are an in-state resident $190 of that goes to your cost of education and $60 goes to the cost of somebody else's education. So even that we need to look at -- if we're going to raise tuition should it be for just the cost of the student or should we be raising the cost on our tuition paying students to pay scholarships for other students?
Henderson: So should the state of Iowa provide scholarship money for students at the Regents institutions? They do for private colleges and universities. Should you change that policy?
Raecker: We subsidize the Iowa Tuition Grant program about $40 million and the Regents institutions we offset their cost about $600 million.
Henderson: For tuition you have provided $600 million?
Raecker: For overall costs, the cost for the student to go to those universities. So I do think the Regents are looking at this and they are going to identify is it better to use those general fund dollars to offset the question of what should a student be paying for. If I have a student paying tuition at a university should 22% of that be used for somebody else's scholarship? If I'm borrowing money to pay tuition then I'm paying over ten years to pay that back for somebody else's tuition. I just think it is a legitimate issue. And I do want to say this -- I really commend the Board of Regents and the presidents of the institutions for looking at this issue, it's really a critical issue.
Henderson: Senator Dvorsky?
Dvorsky: I think the Board is looking at it and trying to deal with it. I have an interesting number here -- you talked about private Iowa Tuition Grant program for private schools. It is about $46 million. Strangely enough the undergrad tuition set aside for the Regents are about $46 million also. So I think it's pretty clear here we're not subsidizing the Regents to do these scholarships. Should they have scholarships? We have them for private schools, we should have for the Regents also. I think the program has worked well for years and I commend the Regents for doing that and I commend them for working together on this issue.
Borg: In your hometown there's been quite a challenge over the way the city of Coralville has employed, TIF, tax incremental financing in way of reducing taxes for infrastructure for bringing new business into town. People have said -- there was a court challenge on it -- that there are loopholes there that ought to be closed. Are they going to get closed?
Dvorsky: Well the TIF people have been working, scrambling working a lot. I know there is a bill in the House and there's probably going to be a bill in the Senate also dealing with TIF situations. So I think we haven't looked at that in a number of years and I think there certainly is a need to look into doing some more transparency, doing some more reporting, that type of thing. Then it gets a little bit dicey as to whether or not, how long do you have TIF depending on blight or is it for economic development, all sorts of issues and details there? But I think the general principles of having transparency and reporting, that type of thing, I think we'll get something done in that area.
Glover: Representative Raecker, I'd like to take this question starting with you because it'll have less impact on you because you're not running for re-election -- but it strikes me that this legislature, in fact state government for the past couple of years has been pretty deeply divided, at odds, republican House, democratic Senate, republican Governor. Is it time to go to voters to get some sense of what direction they want the state to head?
Raecker: Well, we get that opportunity every two years to go to the voters and have them give us direction and the last direction they gave us was divided government. And I actually think if you look at the totality of what we'll accomplish in the two years by the time we adjourn you'll have far more things that we agreed on than we disagreed on. And we will have moved forward in Iowa a lot of progress in many areas that we had and so while it may be easy to pick one or two issues that we are divided on there's a lot more work that takes place in the legislature over this two year period that we have been in concert on together that we will move Iowa forward and I think we've got a strong record to take back to the voters for those that are running for re-election.
Glover: So divided government works?
Raecker: It appears to. It works in the sense that we have to come together and resolve our differences and I think this is as much about process as it is about the results because without a good process you can't have a result that meets the needs of Iowans.
Glover: Senator Dvorsky, what is your take on that? We're heading into an election year, we've got a divided state government. Are you looking to voters for some sense of where they'd like this legislature? Or do you agree with Representative Raecker that divided government might just be what the voters want?
Dvorsky: I'm not certain what the governors do want -- excuse me -- the voters do want. I think they vote for whoever is on the ballot and they determine who that person is and what they think of that person. I don't think they make grand strategies saying if I vote for this person as a democrat or that one for republican, democrats will be in control, this one or that one. I think it is mostly on an individual matter. So it's going to depend on the mood of the voters I think this fall as to what is going to happen. I think divided government in Iowa whatever type of government we have we make it work, if it is divided or if we have one party in control of all three or part of those. I've been through all sorts of renditions here. We were even tied in the Iowa Senate, we made that work. I saw Senator Angelo, former Senator Angelo the other day and he said maybe the last best budget we had was when we were tied.
Henderson: One of the budget issues still unresolved was something the Governor wants. The Governor would like an economic development grant fund in the range of $20 to $25 million. Representative Raecker, some of your fellow republicans in the House are diametrically opposed to that idea. What in the end will the legislature do on this?
Raecker: Well, we're still working on that issue and that is not in the original budget that we brought off of the House floor as you well know. But there's still time to work that through. I think that people that are working and vetting through that proposal and we'll address that, that's part of the negotiation process that is going to take place between the Governor's office and the House republicans and the Senate democrats to resolve the budget issue.
Henderson: But how do you resolve it internally as republicans because some republicans say it is picking winners and losers and we should no longer do that?
Raecker: It is like any other issue that you would have whether it be a family issue or a legislative issue. You need to sit down, you need to talk about it, you need to be frank and candid and you nee to see what is in the best interest of the greater good and see what we can move forward if in fact we can.
Henderson: Senator Dvorsky, one of the issues that you both have mentioned is this mental health redesign. One of the unresolved issues is how do you pay for it. It appears republicans have one proposal, democrats have another proposal. In the end will the state completely take over the way that the mental health services for poor Iowans are delivered? Or will there be sort of a ramp up approach?
Dvorsky: I think there's going to be a ramp up approach, I think that is what the groups have been working on and there has been a lot of bipartisan work on this and I think they're trying to look at a ramp up approach here. And as Representative Raecker said, we want to make certain that everyone across the state has an equal opportunity for really good mental health services. I think that is the main goal of this whole situation.
Glover: Representative Raecker, as I mentioned earlier you're leaving after this term in the state legislature. Tell us why you're leaving. And what is your message to others in the state legislature?
Raecker: Well, the message is that it is one of the greatest honors and privileges any person could ever have to have the opportunity to put your name before the voters and have them select you to represent them and then to walk into the Capitol every day and try and do your best to provide them service. The choice for me, like any other legislator that makes the choice on their own, is when to know when the right time is. For me 14 years is a significant amount of time. I am one of the legislators, while many of us have full-time real world jobs in a citizen legislature, I am one of the few in the House chamber that is still working that job full-time while I'm serving in the legislature. So I'm still getting my 40 plus hours a week in with my work with Character Counts in Iowa and as that work continues to grow across Iowa as well as the legislative responsibilities there comes a time when there are only so many hours in a day. So after 14 years of serving it has just been a tremendous privilege and opportunity and it is the right time for my family.
Glover: Senator Dvorsky, let's take the question to you in a slightly different manner. Should there be term limits for people serving in the Iowa legislature? Is this turnover a regular thing? Or are term limits something that voters ought to impose?
Dvorsky: Representative Raecker is in his fourteenth year, I'm in my 26th. I'd say we probably are not in favor of term limits. I don’t think it really works. I think if you have term limits then the people that control it are probably lobbyists who don't have term limits and others. So I don't think that situation really works very well. And we do have term limits -- every two years or every four years. You've seen a lot of change in the House and the Senate over the years, it works in Iowa.
Henderson: Gentlemen, this past week the auditor issued another report of the finances of the Iowa Association of School Boards. At issue was how they spent essentially taxpayer money since school districts submit membership fees to that association and school districts are operating with taxpayer money. Representative Raecker, do you think the legislature has taken enough steps to ensure that there's transparency and outside review of how associations such as this and even state government operate with taxpayer dollars?
Raecker: I think in this specific case I know that we have taken some action to require that those records become open. I know the auditor's report was only focused on one year and there's probably a broader range that needs to be look at with that, specifically as I read the report some of the investments that were made with the money on public funds would not necessarily be those that would fall, as the auditor indicated, within the guidelines of sound fiscal management. So I do think we need to continue to look at this, I think we need to continue to focus on open processes and make sure that Iowans have the transparency they need to understand what is happening with their tax dollars through not only direct state government but also indirectly.
Glover: Representative Raecker, there was a distraction in the Iowa House during this past week when a letter was delivered to a legislator that contained some white powder and some threatening remarks. How big of a distraction was that? And are there steps that the House needs to take to protect itself more?
Raecker: It was a distraction, it is a very unfortunate situation. It is really a despicable act very honestly for anyone to send that type of information and what may not be -- obviously it's a hoax -- but it is a credible threat any time something like that happens, not just for the legislators that are there but the clerks, the media, anyone that is in the building and we do need to take it seriously and I do think there needs to be a review, as the Speaker has indicated, post-session of what are the policies and procedures so that we're all informed if something happens like that what we need to do. I would say that we live in a different society today where those things happen and we've got first responders that come and take care of those issues and we need to all be vigilant about understanding the real threats that we have.
Borg: 26 years, what do you think about what happened?
Dvorsky: Well, I think they really need to go and review what is going on and how you deal with that sort of situation. It didn't seem like anyone really understood what the situation was and how to deal with it.
Borg: What is going to happen, increased security?
Dvorsky: Well maybe increased security but also a plan. They should have had some sort of a plan on how you deal with those sorts of situations.
Henderson: Speaking of a plan, at some point in this past spring Governor Branstad has suggested reworking the way K-12 public schools are financed with state support. Right now it is based on a per pupil funding formula. Senator Dvorsky, can that be accomplished over the summer and fall or is this a multi-year idea of completely revamping the school aid formula is what it is called --
Borg: Just briefly if you will because we've got less than a minute.
Dvorsky: The school aid formula has served really well for the state in terms of equity and the per pupil cost and that sort of thing. And I think it will take a long time to figure that out. It has been in place for a long time. We want to make certain if we do another formula that it is just as equitable as the current formula is.
Henderson: Do you think it is equitable, Representative Raecker?
Raecker: I think we're spending just about $3 billion out of that formula right now and we need to make sure that we do have equitable funding for our students across the state and we'll continue to focus on that.
Borg: Quick one, Mike?
Glover: And it needs to be changed?
Raecker: The school aid formula, it needs to be reviewed. We need to make sure that we continue to fund equitably those students so they'll have equal access to educational opportunities in Iowa and I believe that will happen.
Borg: Thank you gentlemen.
Dvorsky: I have one bipartisan announcement and Scott will make it.
Raecker: Well we did want to announce in a bipartisan fashion that both republicans and democrats will miss Mike Glover in his retirement and we congratulate you on your significant career.
Glover: Thank you.
Borg: And we join in that. Thanks so much. We'll be back with another edition of Iowa Press at the same times next weekend, 7:00 Friday night, second change to see Iowa Press Sunday at noon. I'm Dean Borg. Thanks for joining us today.