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HSB 781

A bill for an act permitting an increase in the cash reserve levy for certain school districts and including effective date provisions.

2025-2026 Regular Session

Allows eligible Iowa districts facing a $100M+ 2025 tax revenue drop from a single property value correction to temporarily exceed cash reserve levy limits if they offset with equa

Committee report approving bill, renumbered as HF 2791.
#schooldistricts #schoolfinance #taxlevies
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Bill Summary · HSB 781

Summary of HSB 781 (Session 2025-2026) — Iowa

Purpose and intent

HSB 781 proposes to allow certain Iowa school districts to increase their cash reserve levy beyond existing limits under Code section 298.10 for the 2025-2026 budget year, but only under a specific condition related to a large correction to taxable value. The bill is intended to provide districts with additional funding flexibility to offset unusually large reductions in assessed property tax revenues caused by a single property tax value correction.

Key point: The bill is triggered only when a school district’s property tax funding for the 2025 budget year would be reduced by $100 million or more due to a correction to the taxable value of a single property within the district.

Key provisions and changes

  • Eligibility trigger:
    • If the school district’s calculated property taxes for the 2025 budget year are reduced by $100 million or more due to a correction to the taxable value of a single property, the district may increase its proposed cash reserve levy beyond the current statutory limit in Code section 298.10.
  • Levy adjustment mechanism:
    • The district may increase the cash reserve levy to an amount that exceeds the current levy limits, but only if the district reduces one or more other property tax levies (including the district’s management levy under Code section 298.4) by an amount equal to or greater than the increase in the cash reserve levy.
    • The net effect must leave the district compliant with its total proposed property tax dollars as calculated under Code section 24.2A.
  • Administrative process:
    • Districts that wish to adjust their levy rates under the bill must notify the Iowa Department of Management in a manner prescribed by the department.
    • The Department of Management is empowered to adjust the district’s property tax levy rates as necessary to implement the bill.
  • Effective date:
    • The bill takes effect upon enactment.

Who or what is affected

  • Affected entity: Iowa school districts whose 2025 budget-year property tax revenue would be reduced by at least $100 million due to a correction to the taxable value of a single property within the district.
  • Direct financial impact: Allows eligible districts to temporarily exceed the usual cash reserve levy limits if they implement corresponding reductions in other levies so that total property tax dollars remain within statutory constraints.
  • Administrative impact: Requires notification to and action by the Department of Management to adjust levy rates as needed.

Procedural and timeline aspects

  • Introduction and referral: Introduced and referred to Ways and Means (April 23, 2026).
  • Subcommittee review: Assigned to a subcommittee (Young, Gustoff, Judge) on April 23, 2026.
  • Effective date: Immediate upon enactment.

Practical implications

  • The bill provides a targeted fiscal tool for districts facing a large, abnormal reduction in property tax revenue due to a single corrected value. It offers a way to preserve cash reserves for ongoing needs while ensuring total levy dollars remain within statutory limits, through coordinated reductions in other levies.
  • The design relies on departmental administration to oversee the adjustments and ensure compliance with total levy constraints.

Note: This summary focuses on the substantive provisions and does not reflect potential fiscal impact estimates or broader policy debates that may accompany future analyses or amendments.

Compiled from official sources — confirm details with the bill’s official record.

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