DOC

School Finance Articles for Local Newspapers

By Dolores Dunn,2014-08-08 08:59
6 views 0
School Finance Articles for Local Newspapers

Dear Remsen-Union Community School District Stakeholder,

     The following articles have been developed to help demystify the often mysterious world of Iowa school finance. I ask that you read each article and, I believe in the end, you will have a deeper understanding of how Iowa school finance works and how R-U fits into all!

Ken Howard, Superintendent

    Remsen-Union Community School District

    General Introduction and “How the number of children in each district determines

    district revenues”

Every year, public schools in Iowa spend billions of dollars to educate the state’s children,

    sparking taxpayers to so often ask school board members, administrators and lawmakers, “Where does that money go?” That’s why part of the Remsen-Union Community School

    District's mission is to help taxpayers understand how districts are spending that money, in an attempt to dispel the mystery surrounding school funding.

    Here is an overall idea of the total funding public K-12 schools in Iowa receives to educate nearly 500,000 children in Iowa: Total state General Fund appropriations for school aid in FY 2007 amounts to $2 billion. About $1.1 billion comes from local property taxes that are earmarked to fund school programs, with another approximately $400 million funding facilities and other district expenses. Where it goes from there is a bit more complicated but just as important to understand.

    Larry Sigel, school finance director for the Iowa Association of School Boards explained, Knowing how this funding builds up from each individual district and child is important in understanding the roles and pressures facing local school districts, and taxpayers deserve to understand.

    While the area of school finance is a complex one, there are some basic principles that make it understandable to the average taxpayer, including:

    1. The number of children in each district determines district revenues.

    2. The General Assembly “equalizes” funding state-wide to make the “cost per

    student” roughly equal in every school, so that every student has access to the

    quality education.

    3. The General Assembly controls the annual increase in the “cost per student,”

    called allowable growth, to determine how much each district receives from the

    state.

    4. Property taxes matter. They determine how much money each district receives in

    state aid.

     1

    5. Funds are restricted: we can only use funds on what the legislature tells us we

    can.

    6. Schools are budget limited - most other entities are property tax rate limited , and

    this difference is monumental

    This article is the first of six that will address each of the principles affecting school funding, in effort to explain where those tax dollars are going and why. First, Iowa’s school funding formula is a child-based formula, meaning that the allowable spending for a school district is based upon the number of children in that district on October 1 of each year. The number of students counted on that day is used to establish the district’s budget for the following year. That means our revenues are always a year behind the actual number of children we are serving in our classrooms. For the Remsen-

    Union Community School District, our October 1 enrollment is 417.4 he current

    year. Chart 1 below shows a history of the Remsen-Union Community School District’s

    enrollment.

    REMSEN-UNION

    600

    500

    400

    300

    200

    100

    -September 1996 September 1997 September 1998 September 1999 September 2000 September 2001 September 2002 September 2003 September 2004 September 2005 EnrollmentEnrollmentEnrollmentEnrollmentEnrollmentEnrollmentEnrollmentEnrollmentEnrollmentEnrollment 495 485 519 515 502 496.3437.3432.9424.6427.7REMSEN-UNION

    Because the formula is based on the number of children in the district, as we gain children, we gain revenues to serve those children. As we lose children, we also lose revenue from each of those students,” Sigel said.

    Because the enrollment for our district has been declining over the past several years, this has created significant budget pressures for our district. As each child is worth slightly

    over $5,000 per year in General Fund revenue, losing 10 children from one year to the next reduces a district’s revenue by $50,000. However, this won’t reduce our costs because we still must have the same number of teachers whether there are 15 or 28 students in a class.

    So, once district revenues are established, how is that money spent? It depends on state lawmakers, and will be discussed in the next article in this series.

     2

The General Assembly “equalizes” funding state-wide, so that the “cost per student”

    is roughly equal in every school, so that every student has access to quality

    education.

    Taxpayers often ask, and rightfully so, how Iowa spends the nearly $4 billion that is earmarked for the state’s public education system. Last week, the Des Moines Register

    and other area newspapers dedicated articles to helping taxpayers, ultimately the patrons of the state’s public school system, understand how those dollars are being spent on educating nearly 500,000 students throughout the state. Today we’ll discuss how those dollars are divided.

When it comes to school funding, the state legislature tries to ensure all children receive a

    quality education, based on roughly the same amount of funding throughout the state. That’s where the school finance formula comes in, a formula that relies on a combination

    of state aid and property taxes to fund education. The amount of state aid each district receives depends upon how much they bring in through local property taxes. If the state relied solely on property taxes to fund schools, some districts would be able to raise a lot of money with a very small property tax rate, while others would only raise a smaller amount of money on a much larger property tax rate. This was almost exactly the situation that Iowa found itself in over 35 years ago. Before the early 70s, districts relied solely upon property taxes for school funding, but due to the wide range of property tax rates funding schools and concern over the disparity in funding per child, lawmakers instituted a formula to address both of these issues, setting a maximum and equal cost

    per student.” Districts would bring in a minimum amount determined by the

    $5.40 Uniform Levy and then the state would fund an additional amount up to a certain

    level. Beyond that level, local property taxes have to fund the remainder of the difference.

    Iowa Association of School Board’s school finance director, Larry Sigel compared school funding to a three-layer cake. “The first layer is local property taxes determined by the

    levy, the middle layer is state aid and the top layer is additional local property taxes. The mix of all three of these is set by formula over which the local district has little control.”

The following chart provides the comparison of Remsen-Union Community School

    District and what we'll call area schools. The state average is $212,000 per pupil. As you can see, we have a "property valuation per pupil that is above the state average. This means our Uniform Levy of $5.40 generates more dollars and we get less state aid as a result. However, our Additional Property Tax Levy rate is lower than average, so that our additional levy rate can be lower and generate the same dollars as other districts."

     3

400,000.00379,095.73377,503.82

    334,530.89350,000.00

    300,000.00259,544.78253,197.00248,273.68231,884.43230,792.59250,000.00225,447.06

    187,784.49200,000.00

    150,000.00

    100,000.00

    50,000.00

    -MARCUS-COON HARTLEY-REMSEN-MOC-FLOYD GLIDDEN-MISSOURI HARRIS-ODEBOLT-MERIDEN-RAPIDS-MELVIN-A-H-S-TUNION VALLEYRALSTON VALLEY LAKE PARK ARTHUR CLEGHORNBAYARD SANBORN

     379,095.73 334,530.89 259,544.78 231,884.43 230,792.59 253,197.00 225,447.06 187,784.49 377,503.82 248,273.68 Series1

    While the state partially equalizes tax rates through the school finance formula, there are still significant deviations affecting how much each district receives from the state. The lowest combined tax rate for a school district is $8.39 for the current fiscal year and the

    highest is $18.79, making that a difference of $10.40 per thousand.

    Regardless of the situation of the local school district, a large portion of the district's tax rate is set by formula and there is little the local School Board or Administration can do about it. However, Iowa law does make allowances for growth and inflation from year to year. We’ll discuss the concept of “allowable growth” in the third article in our series explaining school finance.

    The General Assembly controls the annual increase in the “cost per student,” called

    allowable growth, to determine how much each district receives from

     the state each year.

    Iowa law guarantees that every child in the state receives an equal amount of money to fund their education. A district’s budget is the number of children in the state times that cost per child. However, economic factors change from year to year, and it is up to state lawmakers to decide just how much to increase the cost per child to reflect that change, called “allowable growth.” This is the topic of the third article in our series on

    understanding school finance.

    Larry Sigel, school finance director for the Iowa Association of School Boards, uses a credit card to explain the principle. The state gives each child the equivalent of a credit

    card, setting the credit limit each year. Under the basic finance formula, each child’s

    “limit” is $5,128 for the current fiscal year. The total amount the district gets to spend is that limit times the number of children. A district can spend less than the maximum, but cannot spend more,” Sigel said.

     4

    Allowable growth is intended to further provide equity in school districts throughout the state, because, as we discussed last week, the legislature set a principle that each child is worth the same amount, no matter where they live. The district's credit card "balance" is