Iowa House and Senate lawmakers started state budget negotiations for the state’s next budget this week — including a 2.5 percent increase for Iowa’s public universities.

Gov. Kim Reynolds proposed an $8.5 billion budget for fiscal 2024 following her Condition of the State address early this month. Lawmakers will begin meeting this week to discuss the state’s appropriation package. The governor’s proposal is a 3.3 percent increase from the current state budget with a notable 2.5 percent increase in state Board of Regents funding.

The proposal also leaves an estimated $2 billion in unspent general fund dollars, according to Legislative Services Agency projections. The $2 billion in unspent funds are allocated to the state’s Economic Emergency Fund and Cash Reserve Fund, totaling 10 percent of the state’s general fund revenue — the maximum allowed under Iowa code.

Reynolds’ proposal would allocate approximately 56 percent of the state’s spending to education, 26 percent to health care programs, 9 percent to state justice systems, and 7 percent to other programs and agencies.

The state’s budget will be finalized during the legislative session, which typically lasts until early May.

K-12 education spending increases by 2.5 percent under Reynolds’ proposal.

Under the governor’s proposal, the state supplemental state aid fund would receive an increase of 2.5 percent or $80.2 million. Supplemental state aid would total $3.6 billion under the proposal or 42 percent of the state’s general fund spending.

Last year, the House and Senate passed the same growth rate percentage after negotiations raised the rate from the 2.25 percent initially proposed in the Senate.

Democrats have criticized Republicans for the small percentage of allowable growth they have approved in recent years. House Minority Leader Jennifer Konfrst, D-Windsor Heights, said the increase in state funding is barely enough to keep up with inflation.

“It is often not enough to keep up with inflation or with the rising expenses at the schools, and we’ve been doing that for more than a decade now,” Konfrst said. “So, it’s time that we fully fund our public schools.”

Democrats introduced legislation in 2022 to increase the allowable growth rate to 5 percent or $300 million for the current budget. However, the measure did not gain Republican support and failed in the Republican-controlled statehouse.

Reynolds argues that increasing funding isn’t the only solution to aid public education. Rather, she said the state should find more creative solutions.

“But if your only idea is ‘more funding,’ then you’re not putting in the work, and you’re not really focused on our children,” Reynolds said in her Condition of the State Address.

Reynolds’ solution is to give schools more flexibility in their spending.

Her proposed school choice legislation includes a provision allowing schools to have flexibility in categorical spending. This provision would allow districts to use leftover dollars in state-allocated funds for teacher salary increases.

Reynolds’ proposal also would allocate approximately $1,200 in funds to Iowa schools for every child attending a school in the district, regardless of their enrollment in public school or nonpublic school.

Governor proposes 2.5 percent increase to regents funding.

Reynolds’ proposal also included $588 million in funding for the regents that administer Iowa’s three public universities including the University of Iowa.

The proposal would increase the regent’s funding by $12 million compared to the current budget year’s funding for general fund appropriations — a 2.5 percent increase overall.

The regents proposed a $35 million increase in state funding to the regents because of the cost of inflation on Iowa’s universities. The regents requested a total appropriation of $610.5 million from the state.

Reynolds’ proposal is noticeably lower than the regents requested total appropriations

Iowa’s three public universities pledged to use the extra funds requested to help fill state-wide worker shortages and aid first-generation students in navigating university life.

Currently, the largest increase in the state’s proposed regent funding is a $5.5 million increase in state funding to the UI, a total increase of 2.5 percent for general fund appropriations.

The University of Northern Iowa and Iowa State University also saw a general education fund increase of 2.5 percent of their previous state funding.

Regents President Mike Richards said the regents appreciate the state’s continued support for Iowa’s public universities with the overall increase in state spending on regent universities.

“The Board appreciates the significant state support our institutions have received over the years,” Richards said in a written statement to The Daily Iowan. “Iowa’s public universities are key drivers of the state’s economy and need the appropriate level of resources to continue to provide an outstanding education.”