Forwarded by Jane Clark

From:
Elisabeth Buck
Office of the Governor
State Capitol Building
Des Moines, IA  50319
515/281-0201 (tel)
515/281-6611 (fax)
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 <<class sizes $ restored, 5.22.01.doc>>      <<item veto standings bill HF
755 May22.01.doc>>

For immediate release For more information
Tuesday, May 22, 2001 Joe Shannahan, 515-281-0173

May 22, 2001

The Honorable Chester Culver
Secretary of State
State Capitol
LOCAL

Dear Secretary Culver:

I hereby transmit House File 755, an Act relating to public expenditure and
regulatory matters, making and reducing appropriations, and including
effective date and retroactive applicability provisions.

I will, reluctantly, approve this legislation with the exceptions noted.  I
do so for two reasons.  First, I have come to the conclusion that a
significantly better bill is unlikely to be approved by the legislature in
the time remaining before fiscal year 2002 begins.  Secondly, I believe that
by careful use of the item veto, this bill can be somewhat improved through
executive action.

House File 755 contains 82 distinct operations making numerous last-minute
changes in laws and appropriations considered by the legislature in the
closing hours of the 2001 regular session.  The most important of these are
sections making reductions to ongoing statutory appropriations, generally
known as "standing appropriations."  While much attention is focused on the
legislative appropriations subcommittee process for state agency budgets,
the fact remains that standing appropriations comprise nearly half of the
state general fund budget.

The most critical standing appropriations - both for their financial size
and their importance for state policy - are those that support local K-12
schools in our state.  This includes the basic funding for local schools
provided by the school aid formula, as well as other assistance, such as the
class size reduction initiative for Iowa elementary schools, and educational
excellence programs supporting local educators.  These are critical to
efforts to improve our local schools and re-shape our education system.

When declining revenues made it necessary for me to revise my fiscal year
2002 general fund budget, I made a conscious decision not to try to balance
the budget on the backs of our local school children.  Because the education
standing appropriations make up forty percent of the state general fund
budget, I determined that it was necessary to use a portion of the state's
reserve funds to ensure that K-12 education had the funding necessary to
maintain and build upon vital initiatives that help students learn.

Unfortunately, the legislature chose instead to make deeper cuts to balance
the budget, and made significant reductions to support for public schools.
At a time when we are embarking on an historic effort to re-shape our
teacher compensation system to ensure student achievement and teacher
quality enhancements, I believe it would be counterproductive to reduce
other targeted resources for our local schools to the extent this
legislation suggests.  There are significant reductions in this bill, for
example, in the standing appropriations made to Area Education Agencies, the
School Technology program, Child Development grants, Accelerated Career
Education credits, Educational Excellence programs, the Class Size reduction
program, and Transportation for non-public students.

The fact remains that this legislature chose not to act on several of my
recommendations that would have provided greater resources for our local
schools.  As a consequence, it is not possible to restore all of the unwise
education cuts that the legislature approved.  Consistent with my
responsibility to balance the budget within the expenditure limit in state
law, I will be able, at this time, to restore only some of the items that I
would under other circumstances.  In the future, I will continue to press
the legislature to restore these education budgets to appropriate levels.
In the meantime, I will exercise my item veto authority on House File 755 in
the following areas.

I disapprove the item designated as section 7 in its entirety.  This would
reduce the standing appropriation for the early intervention block grant,
popularly known as the class size reduction initiative, by $10,000,000.
This initiative to reduce class sizes and improve reading scores for
students in grades K-3 has already demonstrated success across Iowa.  It
makes no sense to embark on a new, promising initiative focused on student
achievement while cutting an existing, promising initiative that helps
students achieve and puts more skilled teachers in the classroom.  This
initiative deserves to be funded at the planned level in the coming year,
and will be as a result of this action today.

I disapprove the item designated as section 10 in its entirety.  This would
reduce the standing appropriation for nonpublic school transportation by an
estimated $505,000.  Besides providing necessary services for the efficient
operation of schools in our state, this would require the department of
education to prorate the amount of claims and would be a costly and time
consuming exercise.  This action is not necessary at this time.

I disapprove the item designated as Section 11 in its entirety.  This would
reduce by $2,000,000 the amount appropriated for Phase III moneys under the
Educational Excellence program.  This initiative provides additional
resources for teachers who add value to the regular school program and
upgrade their skills.  While a review of this program and how it may, over
time, be refocused to better coordinate with other teacher quality
initiatives may be of value, an arbitrary reduction at this time is not
wise.

As I noted previously, it is not possible to restore all of the unwise cuts
made by the legislature in the area of K-12 education.  I have carefully
considered the reductions in this bill for school technology, at-risk early
childhood grants, and the AEAs, and found a good case could be made to
restore each of them as well.  In the final analysis, however, the
legislature has chosen not to provide the resources necessary to support all
of these initiatives.

I am unable to approve section 34 in its entirety.  This section would
require the Iowa Finance Authority to use its reserve funds to support
mental illness special services.  Moody's Rating Service has indicated that
the use of reserve funds will adversely impact the Authority's bond rating.
A reduced bond rating will result in increased borrowing costs which will
increase costs to first time home buyers.  It is more appropriate for the
Authority to leverage these assets and address Iowa's housing needs through
established housing assistance programs.

I am also unable to approve section 39 and section 44 of this bill.  The
effect of these two sections is to totally re-write state law regarding the
allocation of resources for textbooks for students at Iowa's nonpublic
schools.  These changes were added to this bill late in the legislative
session, and did not receive adequate discussion or analysis.  I am
concerned about the unintended consequences of these provisions.  I do not
believe legislators intended to reduce funding to large public, private, and
parochial schools.  I do not support that result.  I am not persuaded that a
compelling case has been made to totally change the law in this way.

Additionally, I am unable to approve section 42 and section 48 of this bill.
The effect of these two sections is to amend the Code presuming passage of
Senate File 514, the property tax limitation bill related to counties.  This
bill was not passed in the 2001 legislative session, therefore these
provisions are not necessary.

I am also unable to approve section 58 of this bill.  This section was
designed to resolve a potential conflict between two other bills passed by
the legislature.  One of those will not receive my approval, so no conflict
will exist and this section of HF 755 is therefore unnecessary.

I hereby approve House File 755, with the exceptions noted.

Sincerely,

Thomas J. Vilsack
Governor

TJV:jmc

CC:  Secretary of the Senate
         Chief Clerk of the House

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