In her three months on the job, Iowa State Auditor Mary Mosiman has found Iowa to be in pretty good financial shape.
“Overall, we’re on the right path,” said Mosiman, who was appointed by Gov. Terry Branstad to replace Auditor David Vaudt, who resigned in May.
Much of that stems from the split control legislature holding spending increases to 2.9 percent since Branstad, a Republican, took office while revenue growth has averaged 8.8 percent a year.
However, as auditors are wont to do, Mosiman has a few concerns or cautions for state lawmakers as they put together future budgets.
On the plus side of the ledger, she told The Gazette Editorial Board Aug. 21, the state has reduced its use of one-time funds to pay for ongoing expenditures. Those shifts have dropped from almost $700 million in fiscal 2011 – the last budget under Democratic Gov. Chet Culver — to $36 million in the fiscal 2014 budget. The state is budgeting $1 in spending for $1 in revenue, not including reserve accounts. That’s down from $1.14 in spending for every $1 of revenue.
“That’s to be commended,” Mosiman said.
Also, the state’s cash reserve fund and economic emergency fund, 2.5 percent and 7.5 percent of the general fund, respectively, have been filled.
However, Mosiman is encouraging lawmakers to pay attention to the delayed impact of education reform and tax relief legislation approved this year. The cost to the state of the property tax relief package lawmakers passed will grow from $135 million in fiscal 2015 to $383 million in fiscal 2024.
The education reform plan’s Teach Iowa Scholar Program cost will grow from $1.5 million in fiscal 2016 to $40 million in fiscal 2022, she added.
She’s not arguing against tax relief or education reform, but said the cost of those initiatives “needs the attention of future lawmakers when they put together future budgets.”
Another concern is the funding levels of state public employee retirement programs. IPERS (Iowa Public Employee Retirement System), the largest, is 80 percent funded.
“The liability has been growing steadily over the past couple of decades,” Mosiman said. In 2000, it was 98 percent funded. The peace officer retirement system is 61 percent funded and the judicial retirement program is 69 percent funded.
“Compared to other states, especially those that are nearly bankrupt, we’re good,” she said, but those funds need to be addressed “if we want our systems to be at a more robust level.”
Overall, Mosiman concluded, “the state’s financial health is pretty solid.”
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