Friday, January 28, 2011

What Branstad's Budget Means

A lot has happened the last couple of weeks. I will start with the most recent event and that is the release of the Governor's budget. We are still checking facts but these are some basic items pulled from his two year budget that have our attention:

1. The Governor is proposing elimination of the Statewide Voluntary Preschool Program as it currently exists and establishing a new funding stream to provide means-tested preschool funding to benefit economically disadvantaged four-year-olds. The proposal is funded in FY 2012 and FY
2013 by:

*Eliminating the Statewide Voluntary Preschool Program formula funding (estimated to total $69.9 million in FY 2012).
*Reducing the Child Development standing appropriation by $4.6 million to eliminate funding for the Shared Visions Preschool Programs for at-risk children.
*Reducing the annual appropriation to Early Childhood Iowa for Preschool Tuition Assistance by $4.5 million.

A new General Fund appropriation to the Department of Education would be used to reimburse school
districts for issuing vouchers to families meeting income guidelines. The Governor is proposing a $43.3
million appropriation for the Program in FY 2012 and FY 2013.
2. Early Childhood Iowa School Ready dollars are reduced $343,794 from $6,729,907 to $5,356,113 and the Parent Support dollars are reduced 759,219 from $13,693,096 to $12,364,434.
3. Child Care Assistance (CCA) - The CCA Program is facing a significant funding gap in FY 2012. The funding need falls in a range of $24.0 to $30.0 million with a midpoint of $27.0 million. This is in addition to the $32.3 million base appropriation for FY 2011. The following are factors involved:

*Caseloads continue to grow in FY 2011 although the rate of growth is slower than originally projected. Based on this information, it is projected that caseloads will continue to grow slightly in FY 2012.

*One-time ARRA funding of $15.8 million will not be available for FY 2012.

*One-time funding of $9.6 million carried forward from FY 2010 to FY 2011 will not be available in FY 2012.

For FY 2012, the Governor has recommended a funding increase to the CCA Program of $27.5 million for a total General Fund appropriation of $59.0 million. This is really good news!

Current caseload can be met!

4. Child Health Care coverage is maintained and a commitment to improving Iowa's mental health system is made. Some more good news!

5. Reducing Iowa's current corporate income tax rate from a set of tiered rates ranging from 6.0% to 12.0% to a flat corporate tax rate of 6.0%. This is estimated to reduce revenue by $36.6 million. (This happens to be around the amount that preschool funding is reduced). Not good news - cutting taxes for big corporations while cutting essential services......

The Iowa Fiscal Partnership released the following statement yesterday regarding the Governor's budget message to the Iowa General Assembly:

Iowa's budget challenges are quite manageable and do not require the cuts to essential services that the Governor has proposed. At the same time, the Governor's budget shows the budget gaps being suggested in the Iowa House are heavily overstated.

A responsible budget for the coming fiscal year can be accomplished if a "hold the line" approach extends to providing additional tax breaks for business. Businesses already are taxed at a low rate in Iowa compared with other states and the cut to Iowa's corporate income tax rate in the Governor's budget is not needed or fiscally responsible..... Read rest of statement here.

We don't know the details of how the Governor plans to set up the new preschool voucher program through the Dept of Education. Many of you know that Iowa currently has a voucher system through Early Childhood Iowa. We anxiously await a bill with the details. I will let you know what I hear!

I know we all have a lot of questions as to how this will all play out. We are working on documents and talking points for you to use for the upcoming weeks and will get those out to you soon! In the meantime, it is imperative that you continue to communicate with your legislators that a 35 million dollar cut to early childhood is unacceptable.