State: The Second Funnel Deadline
With the second funnel deadline tomorrow, March 20, the legislature worked furiously to get policy bills passed out of committee in the opposite chamber. This meant a resurgence of subcommittee and committee action in both chambers.
While the funnel deadline does not apply to bills in Ways and Means and Appropriations, we’ve seen an increase in activity from these committees; which we can expect to continue for the remainder of session.
To see the full list of what we’re tracking that’s still active, check out the online bill tracker! Make sure you’re signed up for Quorum to get a full update on this week’s activity and for weekly legislative updates.
Revenue Estimating Conference
The Revenue Estimating Committee (REC) met last Thursday, March 12. The REC determines revenue estimates and is responsible for evaluating the fiscal and policy impacts of program and budget proposals. This information helps the legislature in drafting their budget proposals and making decisions about policy bills with substantive fiscal impacts. You can access the REC Projections here.
Importantly, the REC estimates FY27 revenue at $8.47 billion - a slight decrease to the December 2025 estimate. The Governor's proposed budget would spend $9.67 billion creating a $1.2 billion gap requiring the use of the Taxpayer Relief Fund and budget surplus to bring the budget into balance.
State revenues for FY26 are now estimated to decrease by an additional $47 million compared to December 2025 estimates, or a 9.3% decrease from FY25 to FY26. The chair of the REC and director of Iowa Department of Management, Kraig Paulsen, attributes these changes to "a nationwide trend of lower corporate tax receipts" primarily coming from provision enacted through the federal "One Big Beautiful Bill" Act on issues like bonus and special depreciations. You can read more about what was discussed in the meeting here.
Federal Update
Workforce Pell Regulations
Last Friday, the American Association of Community Colleges (AACC) released its analysis on the U.S. Department of Education’s proposed regulations for the new Workforce Pell program.
The proposed rules closely follow the language agreed upon by the negotiators during December’s rulemaking session. Importantly, the released rules include several questions for the communities input, as well as the opportunity for stakeholders to raise other questions for clarification or to speak in favor or opposition to the ED’s interpretation of the statute. Starting March 9, the public has 30 to provide comments. Although it is unlikely that the rules will get substantially changed.
Projected Pell Shortfall
The FAFSA Simplification Act – signed into law as part of the Consolidated Appropriations Act, 2021 – expanded eligibility and increased the number of students eligible for the maximum award amount. The new, simplified FAFSA has also led to more students successfully filing, further increasing participation in the program. This has led to a projected shortfall of $17 billion by next year unless Congress acts again to ensure adequate funding for the program.
While Congress infused $10.5B to shore up the Pell Grant program as part of July’s One Big Beautiful Bill Act, that funding has not been sufficient to put the program back on safe financial footing. As Congress begins the FY 27 budget and appropriations process, we’re encouraging our congressional offices to sign onto group letters supporting the program and advocate for this critical program for our students.