Iowa state budget

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Iowa state budget

Flag of Iowa.png
Budget calendar:  Annual
Current fiscal year:  2015
State credit rating:  AAA (as of 2014)
Current governor:  Terry Branstad
Financial figures
GF expenses[1]:  $6.2 billion
All funds expenses:  $19.6 billion (FY 2013 estimate)
Spending % change:  Green Arrow Up Darker.svg3.2%[2]
% from federal funding:  33.27%
State debt:  $37,783,060,000
Per capita state debt:  $12,290
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Between fiscal year 2009 and fiscal year 2013, Iowa's total expenditures increased by approximately $2 billion, from $17.6 billion in 2009 to $19.6 billion in 2013. This represents a 10.2 percent increase, outpacing the cumulative rate of inflation during the same period (9.06 percent, calculated using the Consumer Price Indices for January 2009 and January 2013).[3][4]

This page contains information about budget processes and policy issues in Iowa, including:

  • a summary of the budget drafting process
  • trends in expenditures and revenues
  • current and past fiscal year budget developments
  • financial transparency measures

Budget process

The state operates on an annual budget cycle. The sequence of key events in the budget process is as follows:[5][6]

  1. Budget instruction guidelines are sent to state agencies in June or July.
  2. Agency requests are submitted to the governor by October 1.
  3. Agency hearings are held in November and December.
  4. Public hearings are held in December.
  5. The governor submits his or her proposed budget to the Iowa State Legislature by February 1.
  6. The legislature adopts a budget in April or May.
  7. The fiscal year begins in July.

Iowa is one of 44 states in which the governor has line item veto authority.[6]

The governor is constitutionally and statutorily required to submit a balanced budget. In turn, the legislature is statutorily required to adopt a balanced budget.[6]

Expenditures

Definitions

Although each state executes its budget process differently, the National Association of State Budget Officers (NASBO) breaks down state expenditures into four general categories. This allows for comparisons among the 50 states. NASBO's categories are as follows:[7]

  • General fund: "The predominant fund for financing a state’s operations. Revenues are received from broad-based state taxes. However, there are differences in how specific functions are financed from state to state."[7]
  • Other funds: "Expenditures from revenue sources that are restricted by law for particular governmental functions or activities. For example, a gasoline tax dedicated to a highway trust fund would appear in the “Other funds” column. For Medicaid, other state funds include provider taxes, fees, donations, assessments, and local funds."[7]
  • Federal funds: "Funds received directly from the federal government."[7]
  • Bonds: "Expenditures from the sale of bonds, generally for capital projects."[7]

2013 expenditures

Breakdown of expenditures in FY 2013.
Source: National Association of State Budget Officers

The table below breaks down expenditures for fiscal year 2013 (comparable figures from surrounding states are provided to give additional context).[7] Figures for all columns except "Per capita expenditures" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita expenditures" have not been abbreviated.

Total state expenditures, FY 2013 ($ in millions)[7]
State General fund Federal funds Other funds Bonds Total Per capita expenditures**
Iowa $6,231 $5,682 $7,539 $157 $19,609 $6,345.10
Kansas $6,198 $3,599 $4,193 $415 $14,405 $4,977.61
Minnesota $20,056 $8,637 $6,263 $810 $35,766 $6,598.43
Missouri $8,022 $7,209 $7,712 $0 $22,943 $3,795.89
South Dakota $1,302 $1,487 $1,307 $35 $4,131 $$4,670.31
**Per capita figures are calculated by taking the state's total expenditures and dividing by the number of state residents according to United States Census estimates.[8]
Source: National Association of State Budget Officers

Expenditures by function

Breakdown of expenditures by function in FY 2012.
Source: National Association of State Budget Officers

State expenditures in Iowa can be further broken down by function (elementary and secondary education, public assistance, etc.). Fiscal year 2012 data is included in the table below (information from neighboring states is provided for additional context). Figures are rendered as percents, indicating the share of the total budget spent per category.

Expenditures by function, FY 2012 (as percents)[7]
State Elementary and secondary ed. Higher ed. Public assistance Medicaid Corrections Transportation Other**
Iowa 16.8% 25.0% 0.6% 19.6% 2.7% 7.5% 27.8%
Kansas 25.8% 16.9% 0.3% 18.6% 2.5% 8.8% 27.1%
Minnesota 23.8% 9.7% 1.4% 27.6% 1.5% 8.3% 27.7%
Missouri 22.6% 4.7% 0.7% 35.0% 2.6% 10.4% 23.9%
South Dakota 14.3% 17.7% 0.8% 20.9% 2.7% 15.9% 27.7%
Source: National Association of State Budget Officers
Note**: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."[7]

Expenditure trends

From 2008 to 2012, expenditures on elementary and secondary education, higher education and public assistance decreased, with expenditures on elementary and secondary education decreasing the most at 1.3 percentage points, a 7.2 percent decrease in the share of the budget. During the same time period, expenditures on Medicaid, corrections and transportation increased, with Medicaid increasing the most at 1.7 percentage points, a 9.5 percent increase in the share of the budget. The table below details changes in expenditures from 2008 to 2012.[7][9][10][11][12] Figures are rendered as percents, indicating the share of the total budget spent per category.

Expenditures from 2008 to 2012 (as percents)
Year Elementary and secondary ed. Higher ed. Public assistance Medicaid Corrections Transportation Other**
2012 16.8% 25.0% 0.6% 19.6% 2.7% 7.5% 27.8%
2011 17.7% 24.6% 0.7% 19.4% 2.2% 7.8% 27.6%
2010 17.3% 24.4% 0.7% 18.6% 2.4% 9.1% 27.5%
2009 17.6% 25.6% 0.7% 17.9% 2.4% 7.8% 28.0%
2008 18.1% 25.2% 0.8% 17.9% 2.6% 6.4% 29.0%
Change in % -1.30% -0.20% -0.20% 1.70% 0.10% 1.10% -1.20%
Source: National Association of State Budget Officers
Note**: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."[7]

Revenues

2013 revenues

Breakdown of general fund revenue sources in FY 2013.
Source: National Association of State Budget Officers

The table below breaks down general fund revenues by source in fiscal year 2013 (comparable figures from surrounding states are also provided to give additional context).[7] Figures for all columns except "Per capita revenue" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita revenue" have not been abbreviated.

Revenue sources in the general fund, FY 2013 ($ in millions)[7]
State Sales tax Personal income tax Corporate income tax Gaming tax Other taxes and fees Total Per capita revenue**
Iowa $2,109 $3,315 $448 $120 $645 $6,637 $2,147.61
Kansas $2,525 $2,931 $371 $0 $514 $6,341 $2,191.12
Minnesota $4,817 $8,649 $1,165 $39 $2,786 $17,456 $3,220.44
Missouri $1,872 $5,489 $415 $0 $307 $8,083 $1,337.32
South Dakota $776 $0 $0 $1 $587 $1,364 $1,614.44
**Per capita figures are calculated by taking the state's total revenues and dividing by the number of state residents according to United States Census estimates for 2013.[8]
Source: National Association of State Budget Officers

Revenue trends

The table below details the change in revenue sources in the general fund from 2009 to 2013.[7][9] Figures for all columns except "Per capita revenue" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita revenue" have not been abbreviated.

Revenue sources in the general fund, Iowa ($ in millions)[7][9]
Year Sales tax Personal income tax Corporate income tax Gaming tax Other taxes and fees Total Per capita revenue**
2013 $2,109 $3,315 $448 $120 $645 $6,637 $2,147.61
2012 $2,052 $3,030 $426 $142 $661 $6,311 $2,052.33
2011 $1,941 $2,852 $251 $133 $722 $5,899 $1,925.20
2010 $2,243 $2,633 $189 $121 $448 $5,634 $1,847.02
2009 $2,284 $2,720 $272 $116 $542 $5,934 $1,972.83
Change in % -7.66% 21.88% 64.71% 3.45% 19.00% 11.85% 8.86%
**Per capita figures are calculated by taking the state's total revenues and dividing by the number of state residents according to United States Census estimates.[8][13]
Source: National Association of State Budget Officers

State budgets by year

Fiscal year 2015

DocumentIcon.jpg See budget bill: Signed budget bills for fiscal year 2015

Governor Terry Branstad announced his fiscal year 2015 budget proposal on January 14, 2014. Under the governor's proposal, total general fund spending for fiscal year 2015 would have equaled approximately $7 billion, a 7.9 percent increase over fiscal year 2014. The budget included an additional $170 million in K-12 education aid over fiscal year 2014, as well as $120 million for property tax replacement.[14]

On May 29, 2013, Branstad signed into law the bills comprising the fiscal year 2015 budget. The enacted general fund budget for 2015 totaled approximately $6.9 billion.[14]

Fiscal year 2014

DocumentIcon.jpg See budget bill: Signed budget bills for fiscal year 2014

Iowa state budget -- 2014
Iowa State Legislature
Text:HB 648 (This is only one of nine bills comprising the budget)
Legislative history
Introduced:May 8, 2013
House:May 22, 2013
Vote (lower house):95-0
Senate:May 22, 2013
Vote (upper house):28-22
Governor:Terry Branstad
Signed:June 20, 2013
Vetoed:Item veto

Iowa's FY 2014 budget set up the state general fund with approximately $6.48 billion, which is about a three percent increase compared to FY 2013. This figure was only $6 million less than Governor Terry Branstad's proposed general fund budget that was unveiled in January 2013.[15] The budget was signed into law by the governor on June 20, 2013.[16]

Fiscal year 2013

See also: Iowa state budget (2012-2013)

Fiscal year 2012

See also: Iowa state budget (2011-2012)

Fiscal year 2011

See also: Iowa state budget (2010-2011)

Fiscal year 2010

See also: Iowa state budget (2009-2010)

Historical spending

State budget historical spending below was compiled by the National Association of State Budget Officers. Figures reflect the reported "Total Expenditures" in Table 1. Figures for all columns are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000).[7][10]

Historical state budget spending in Iowa ($ in millions)
Fiscal year General Fund Other funds Federal funds Bonds Budget totals
Total % of Budget Total % of Budget Total % of Budget Total % of Budget
2011-2012 $6,010 31.7% $6,072 32.1% $6,551 34.6% $307 1.6% $18,940
2010-2011 $5,354 29.8% $6,258 34.8% $6,147 34.2% $229 1.3% $17,988
2009-2010 $5,302 30.1% $6,050 34.3% $6,174 35% $111 0.6% $17,637
Averages: $5,555.33 31% $6,126.67 34% $6,290.67 35% $215.667 1% $18,188.33
General Fund: The predominant fund for financing a state’s operations. Revenues are received from broad-based state taxes. However, there are differences in how specific functions are financed from state to state.
Other funds: Expenditures from revenue sources that are restricted by law for particular governmental functions or activities. For example, a gasoline tax dedicated to a highway trust fund would appear in the “Other funds” column. For Medicaid, other state funds include provider taxes, fees, donations, assessments, and local funds.
Federal funds: Funds received directly from the federal government.
Bonds: Expenditures from the sale of bonds, generally for capital projects.

State debt

According to a January 2014 report by the nonprofit organization State Budget Solutions, Iowa had a state debt of over $37 billion. Its state debt per capita was $12,290. The report revealed that state governments faced a combined $5.1 trillion in debt, 33 percent of annual gross state product. The obligation amounts to $16,178 per capita in the nation. A bulk of the state debt -- 79 percent -- was linked to unfunded public pensions.[17][18]

Total state debt in Iowa[19]
Type Totals U.S. rank
Total state debt $37,783,060,000 35
Per capita debt $12,290 38
State and other fund expenditures $12,082,000,000 38

Public pensions

See also: Iowa public pensions and Iowa public employee salaries

A 2012 report from the Pew Center on the States noted that Iowa's pension system was funded at 81 percent at the close of fiscal year 2010, just above the 80 precent funding level experts recommend. Consequently, Pew designated the state's pension system as being in need of "improvement."[20]

The funding ratio for the state's pension systems decreased from 89.57 percent in fiscal year 2007 to 79.10 percent in fiscal year 2012, a drop of 10.47 percentage points, or 11.7 percent. Likewise, unfunded liabilities increased from approximately $3.7 billion in fiscal year 2007 to more than $6.8 billion in fiscal year 2012.

Credit ratings

See also: State credit ratings

Credit rating agencies, such as Standard and Poor's, assign grades to states that take into account a state's ability to pay debts and the general health of the state's economy. Generally speaking, a higher credit rating indicates lower interest costs on the general obligation bonds states sometimes sell to investors in order to finance large-scale undertakings (e.g., road construction and other public works projects). This is turn results in lower interest costs, thereby lowering the cost to taxpayers.[21][22]

The table below lists the Standard and Poor's credit ratings for Iowa and surrounding states from 2004 to 2014. Standard and Poor's grades range from AAA, the highest available, to BBB, the lowest.[23]

State credit ratings, 2004 to 2014
State 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Iowa AAA AAA AAA AAA AAA AAA AAA AA+ AA+ AA+ AA+
Kansas AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+
Minnesota AA+ AA+ AA+ AAA AAA AAA AAA AAA AAA AAA AAA
Missouri AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA
South Dakota AA+ AA+ AA+ AA+ AA AA AA AA AA
Source: Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2014," June 9, 2014.

Federal aid to state budget

See also: Federal aid to budgets in the 50 states

The chart below notes how much of the state’s general revenues come from the federal government. Figures were calculated by dividing each state’s federal intergovernmental revenue into its general revenue. The number in the rightmost column indicates the state's ranking in relation to the rest of the nation (e.g., if "1," the state receives the highest percentage of federal funding in the nation). Figures from neighboring states are included to provide additional context.[24]

State governments receive aid from the federal government to fund a variety of joint programs, such as Medicaid. Federal aid varies considerably from state to state. For example, Mississippi received approximately $7.7 billion in federal aid in 2012, which accounted for more than 45 percent of the state's general revenues. By contrast, Alaska received roughly $2.9 billion in federal aid in 2012, just under 20 percent of the state's general revenues.[24]

Federal aid to state budgets in 2012
State Federal aid as % of general revenue Total federal aid National rank
Iowa 33.27% $6,073,376,000 25
Kansas 26.95% $4,061,217,000 41
Minnesota 28.13% $9,608,018,000 39
Missouri 39.42% $10,440,927,000 5
South Dakota 40.85% $1,630,220,000 4

Stimulus

According to Recovery.gov, the official government website for the Recovery Accountability and Transparency Board, under the American Recovery and Reinvestment Act, Iowa received $2 billion in federal stimulus funding between February 2009 and June 2013.[25]

Budget transparency

Transparency evaluation
Iowa Purchasing
Searchability N
600px-Red x.png
Grants N
600px-Red x.png
Contracts Y
600px-Yes check.png
Line item expenditures N
600px-Red x.png
Dept./agency budgets N
600px-Red x.png
Public employee salaries N
600px-Red x.png
Last evaluated in 2008.
See also: Evaluation of Iowa state website and Constitutional provisions regarding reading of bills

Government tools

The table to the right is helpful in evaluating the level of transparency provided by the government website Iowa Purchasing.

Support for creation of the database

Although State Representative Jamie Van Fossen supported transparency legislation in 2008, House File 2439 failed to pass, according to the Public Interest Institute.

Independent transparency sites

Although there is currently no state spending database in Iowa, the following links are related to Iowa's level of transparency:

Multi-measure budget transparency profile

The Institute of Government and Public Affairs at the University of Illinois created a multi-measure transparency profile for Iowa, which measured state transparency as of September 2011 using indicators from a range of organizations. These indicators measured both website transparency and other recognized facets of governmental transparency. In addition, IGPA presented four unique indicators of non-transparency based on the observation that transfers or reassignments between general and special funds can obscure the true fiscal condition of a state.[26][27]

IGPA devised a budget transparency index based on information available from the National Association of State Budget Officers. Iowa tied for first in the nation with two other states, earning eight out of eight possible points.[27]

Iowa - IGPA score for budget process, contents and disclosure
Budget transparency indicator Yes or no?
Performance measures
{{{1}}}
"Generally Accepted Accounting Principles" budget
{{{1}}}
Multi-year forecasting
{{{1}}}
Annual cycle
{{{1}}}
Binding revenue forecast
{{{1}}}
Legislative revenue forecast
{{{1}}}
Nonpartisan staff
{{{1}}}
Constitution or statutory tax/spend limitations
{{{1}}}
TOTAL 8

In addition to the individual state profile, IGPA offers a 50-state comparison and profiles for other states.[27]

U.S. PIRG "Following the Money" report

See also: Following the Money 2014 Report

The U.S. Public Interest Research Group, a consumer-focused nonprofit organization based in Washington, D.C., released its annual report on state transparency websites in April 2014. The report, entitled "Following the Money," measured how transparent and accountable state websites are with regard to state government spending.[28] According to the report, Iowa received a grade of A- and a numerical score of 90, indicating that Iowa was "leading" in terms of transparency regarding state spending.[28]

Accounting principles

See also: Iowa government accounting principles

The Iowa State Auditor is Mary Mosiman. The Auditor of State is a constitutional official, elected every four years. The Auditor is required to annually make a complete audit of the books, records and accounts of every department of state government. Iowa’s audit reports are published online.[29][30]

Contact information

Iowa Department of Management
State Capitol
Des Moines, IA 50319
PHONE: 515-281-3322
FAX: 515-242-5897

See also

External links

Additional reading

References

  1. Refers to General Fund spending. Typically in state budgets the General Fund is spending that is most directly controlled by state legislators.
  2. This figure is derived by calculating the percent difference between the prior two years' spending levels according to the National Association of State Budget Officers.
  3. Bureau of Labor Statistics, "CPI Detailed Report Data for February 2014," accessed April 9, 2014
  4. InflationData.com, "Cumulative Inflation Calculator," February 28, 2014
  5. National Conference of State Legislatures "State Experiences with Annual and Biennial Budgeting," updated April 2011
  6. 6.0 6.1 6.2 National Association of State Budget Officers "Budget Processes in the States, Summer 2008," accessed February 21, 2014
  7. 7.00 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10 7.11 7.12 7.13 7.14 7.15 National Association of State Budget Officers "State Expenditure Report, 2011-2013," accessed February 21, 2014
  8. 8.0 8.1 8.2 United States Census Bureau, "Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2013," accessed February 26, 2014
  9. 9.0 9.1 9.2 National Association of State Budget Officers, "State Expenditure Report, 2009-2011," accessed February 24, 2014
  10. 10.0 10.1 National Association of State Budget Officers, "State Expenditures Report, 2010-2012," accessed February 24, 2014
  11. National Association of State Budget Officers, "State Expenditure Report, 2009," accessed February 24, 2014
  12. National Association of State Budget Officers, "State Expenditure Report, 2008," accessed February 24, 2014
  13. United States Census Bureau, "Vintage 2009: Annual Population Estimates," accessed February 26, 2014
  14. 14.0 14.1 National Association of State Budget Officers, "Summaries of Fiscal Year 2015 Proposed and Enacted Budgets," July 11, 2014
  15. Sioux City Journal, "Iowa lawmakers, governor settle on $6.483 billion overall fiscal 2014 budget number," May 14, 2013
  16. Iowa.gov, "Gov. Branstad signs nine bills into law," accessed April 23, 2014
  17. State Budget Solutions, "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
  18. Washington Examiner, "EXography: Unfunded public employee pensions drive state debts skyward," January 21, 2014
  19. State Budget Solutions "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
  20. Pew Center on the States, "Widening Gap Update: Iowa," June 18, 2012
  21. Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2012," July 13, 2012
  22. Bankrate, "The 6 states with the worst credit ratings," September 27, 2012
  23. Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2014," June 9, 2014
  24. 24.0 24.1 United States Census Bureau, "State Government Finances: 2012," accessed February 24, 2014
  25. Recovery, "Stimulus Spending by State"
  26. Institute of Government and Public Affairs at University of Illinois, "Home page," accessed February 21, 2014
  27. 27.0 27.1 27.2 Institute of Government and Public Affairs at University of Illinois, "Budget Transparency Profiles - All 50 States," September 2011
  28. 28.0 28.1 U.S. Public Interest Research Group, "Following the Money 2014 Report," accessed April 15, 2014
  29. Iowa State Auditor Website, "Mary Mosiman, CPA," accessed April 23, 2014
  30. Iowa State Auditor Website, "Reports," accessed April 23, 2014