As enrollment drops, most Iowa schools on ‘budget guarantee’

CEDAR RAPIDS — The Cedar Rapids schools’ upcoming property tax levy could increase for the first time in more than a decade, but the increase could have been worse had the state not tossed it — and the majority of school districts in Iowa — a slight reprieve.

The Cedar Rapids Community School District is one of about 200 districts in the state expected to be on a “budget guarantee” next fiscal year. The state guarantees school districts they will see a 1 percent increase in funding every year. If a district falls short, the difference is made up with additional property taxes.

However, Senate File 2201 will have the state budget — not local taxpayers — take on those costs this time. There are 328 public school districts in Iowa.

The budget guarantee provision in the Iowa School Finance Formula is available when school districts see state funding, in years of declining enrollment, lag over the previous year — in other words, increases in per-pupil state aid are not enough to overcome drops in enrollment. The provision ensures districts experiencing a shortfall in funding can make up the deficit through a budget adjustment.

SF 2201 — signed into law Thursday by Gov. Kim Reynolds — increased general state funding for the coming fiscal year by 2 percent. This is lower than the 5 percent in state aid the Cedar Rapids school board and education leaders around the state lobbied for.

The bill calls for the state to spend nearly $4 billion on K-12 education, with about $42.2 million of that to take on costs of the budget guarantees, according to the nonpartisan Legislative Services Agency.

The College Community School District in Cedar Rapids — which also will be on a budget guarantee for the upcoming year — required a 2.75 percent increase in state aid in order to not be on the guarantee, said Emily Collins-Bronson, a district spokeswoman.

The Cedar Rapids district’s proposed property tax levy for fiscal 2027 — which begins July 1 — is $13.99 per $1,000 of taxable valuation. This is a 34 cent increase from the current fiscal year. But the proposed rate is below the tax rate in fiscal 2024, which was $14.67 per $1,000 of taxable valuation.

The Cedar Rapids school board will hold public hearings on the proposed tax rate at 5:30 p.m. March 30 and April 13 at the Educational Leadership and Support Center, 2500 Edgewood Rd. NW in Cedar Rapids. The board is expected to adopt a budget for fiscal on April 27.

Most Iowa schools to be on guarantee

Open enrollment into neighboring public school districts, Education Savings Accounts — state-funded tuition assistance for families attending non-public schools — and a growing number of charter schools in the state has have all led to more school choice in Iowa than ever before, said Margaret Buckton, executive director of Iowa School Finance Information Services, a consulting firm specializing in assisting public school districts in Iowa.

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“You’ve got to be hypervigilant about keeping kids in the district, encouraging people to be here and making sure your staff echoes that,” Buckton told the Cedar Rapids school board at a meeting last week.

This combined with falling birth rates has led to an “unprecedented” number of schools on the budget guarantee, Buckton said.

Buckton said inflation has outpaced the percent increase of per-pupil state funding for Iowa schools for years. “Right now, your purchasing power in fiscal year 2026 is actually $600 lower than it was in 2017 per student,” she said.

Of Iowa’s 24 largest school districts, 19 will be on the budget guarantee, including the Cedar Rapids, Iowa City and College Community districts. About half of Eastern Iowa school districts will be on the budget guarantee.

James Bieschke, superintendent of the Benton Community School District, which will be on the budget guarantee, said he’s in a “no-win situation.”

“The budget guarantee — it’s a safety net for schools — means I’m going to have the same budget amount as this year, plus 1 percent,” he said.

Still, Bieschke said state funding isn’t enough for fiscal 2027 to “get through (salary) negotiations with all our employee group.” The district will have to use its unspent authorized budget — the amount of unused district funds left over at the end of a fiscal year that is carried over into the next fiscal year — to make ends meet, he said.

The Benton district also will have to be “more conservative” in negotiations with employee groups, Bieschke said.

Bieschke said using the unspent funds can help the district “weather the storm” for a year or two. But if enrollment continues to decline and state aid falls short of inflation again, the district might have to find long-term solutions, including reducing expenses.

Why is C.R. schools cutting spending?

The Cedar Rapids district is reducing its spending after more than a decade of declining enrollment — exacerbated by a sudden and unexpected enrollment drop of 622 students this year — and few budget reductions made in that time.

The district is aiming to cut up to $19 million in annual expenses. The Cedar Rapids school board last month unanimously approved a resolution authorizing the administration to implement $12.9 million in cost savings for the 2026-27 school year.

The district still is exploring how to cut an additional $6 million from its annual budget by closing and consolidating schools. Earlier this month, the school board advanced two school models to be studied for viability before a final decision is made in April.

“Almost all school districts are faced with budget cuts at this moment, and you’re not in a unique position, especially among Iowa’s urban districts,” Buckton told Cedar Rapids school board members.

Since 2020, the district has used federal pandemic relief dollars to supplement revenue and it expected an uptick in enrollment based on demographic studies. But year after year, competition for students between public, non-public and charter schools has increased as birth rates across the state decline.

Buckton said “thank goodness” the district spent federal pandemic relief dollars on salaries and investing in its preschool program.

“You were charged by the government to close learning gaps that accumulated when students during the pandemic did not have access to quality instruction. You were supposed to invest it in literacy, for example, and it’s kind of hard to do that (without) clean air. A lot of districts spent their money on HVAC systems, so maybe they’re not cutting (their budget) as deeply at this point,” Buckton said.

C.R. schools to continue to enrollment decline

Karla Hogan, chief financial officer for the Cedar Rapids district, said school leaders project to decline by another 150 students next year because of open enrollment out of the district and lower birth rates. This projection does not include the number of students who could choose charter schools, Hogan said.

Hogan said since school funding runs a year behind, the district won’t be paying for those charter school students until fiscal 2028, which begins July 1, 2027.

“I don’t want to be holding on to that extra money that the district isn’t going to owe until the next year when I can be using that on fiscal year 2027 programming and student instruction,” Hogan said.

There are 13,534 students attending the Cedar Rapids district. There are 2,344 students open-enrolled out of the district into a neighboring public school and 2,300 students using Education Savings Accounts to attend a non-public school. Almost 400 students are open-enrolled into the Cedar Rapids district from another public school district.

Buckton said the Cedar Rapids district spent $16 million in fiscal 2025 paying tuition to other public school districts where resident students were open-enrolled.

Hogan said she has “no idea” when enrollment could stabilize in the district. School leaders are working with RSP & Associates for a better understanding of trends.

Hogan said while there are more charter schools opening in Cedar Rapids, there also are housing developments under construction, which she hopes could mean more families moving into the community and choosing Cedar Rapids schools.

“We need to continue to do what we’re doing and hope families will move into those houses and we can stabilize our enrollment through programming and unique offerings, which a lot of districts across the state are trying to do at the same time,” Hogan said.

More charter schools opening

Four charter schools are anticipated to be operating this fall in Cedar Rapids.

Two already in operation are Empowering Excellence Charter School — a credit recovery school for high school students behind academically — and Cedar Rapids Prep, a sixth through eighth grade middle school that will grow to serve ninth-graders next year.

This fall, CIVICA Career and Collegiate Academy plans to enroll 125 students in grades K-2, and Horizon Science Academy is expected to open with a projected enrollment of 140 students in grades kindergarten through fifth grade.

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