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Cedar Rapids, Iowa 52401
Iowa schools ‘flying blind’ as they struggle to meet new budget deadline
Lawmakers missed their own target for approving state school aid
Mar. 3, 2024 5:30 am, Updated: Mar. 4, 2024 9:21 am
Iowa schools are preparing to publish the first draft of their budgets for next school year in time to meet a March 15 deadline, but lawmakers already have missed their target for setting state funding for schools by nearly two weeks — and multiple other school funding considerations are still being debated.
Linn-Mar school board member Brittania Morey said school districts are “flying blind” attempting to create spending plans for fiscal 2025 — which begins July 1 — without knowing how much they will receive in Supplemental State Aid, the money the state allocates to school districts.
“We don’t know our main revenue source yet,” she said last week at a board meeting.
Like many school districts, Linn-Mar is creating its budget and property tax rate around the assumption that the state aid will be set at a 2.5 percent increase, as proposed in January by Gov. Kim Reynolds.
Lawmakers have a self-imposed deadline to pass the appropriation for the upcoming fiscal year within 30 days of the governor releasing her proposed version of the state’s overall budget — a date that passed Feb 9.
Iowa House Republicans passed a bill last month, House File 2613, that sets the growth rate for the state aid at 3 percent. That would increase funding for K-12 schools by $147 million, bringing the total K-12 spending from the state’s general fund to about $3.8 billion.
But Iowa Senate lawmakers have not yet settled on their number for the increase.
A new law — House File 718, approved last year — requires school districts to turn in a first draft of their budgets to their county auditor by March 15, and set the maximum levy rate property owners in the district would pay for schools.
County auditors, under the law, will mail postcards to every resident who owns property in the county that includes the proposed property tax rate, the impact the tax rate will have on owners of a $100,000 property, and public hearing dates.
This potentially puts school districts in a position of publishing an initial property tax levy higher than what they would end up needing, said Adam Kurth, chief finance officer for the Iowa City Community School District.
“For a long time, I’ve been proud of the way we fund schools in Iowa and the equity-driven formula we use,” Kurth said. “The biggest liability of that formula is the fact it’s not tied to inflation or any metric other than a political process that establishes what that number should be.”
The Iowa City school district, facing budget constraints and a declining enrollment, is planning to cut at least $7.5 million in expected expenses from its budget in the next two years. Kurth said in the district, every half a percent of state supplemental aid represents about $800,000 in spending authority.
Last week, the Iowa City school board was presented with several recommendations to reduce the district’s spending, including closing Hills Elementary School, which would save the district about $1.66 million annually.
“Ultimately with that SSA uncertainty still lingering, we can’t say for certain whether what we’ve shared goes far enough or whether it goes too far,” Kurth said. “When we present budget reduction plans that involve making modifications to things like class sizes, a half a percent of SSA can have a huge impact. That could be the difference between offering something and not offering it.”
School districts that could be considering reducing staff to meet their budget goals don’t know how many educators could be reduced next year without knowing the state number, Kurth said.
“It seems like the next school year’s a long ways off, but from the standpoint of a large organization working to mobilize thousands of staff members, that’s not really the case. It puts stress on people each week that SSA number isn’t established,” Kurth said.
Iowa City school leaders have said any reduction to their staff would be through early retirements and attrition of people leaving for other opportunities.
Leisa Breitfelder, superintendent of Central City and North Linn school districts — which have a combined student body of about 1,000 — said the district has held off on salary negotiations because the state figure has not yet been set. Salary negotiations typically begin in February, she said.
Breitfelder worries that if the lawmakers can’t come to an agreement, state school aid would not increase at all. The school districts have created budget versions based on a 0 percent increase, 2.5 percent increase and 3 percent increase.
“My hope is we don’t have to put before our taxpayers the worst-case scenario,” Breitfelder said.
Davis Eidahl, superintendent of the Solon Community School District, agrees the delay is making it hard to get contracts in the hands of teachers and staff.
“It does put us in a situation where at our first hearing, we’re going to have a higher tax rate (proposed) than what we may need,” Eidahl said. “Once you publish your rate, you can’t go higher than that, but you can certainly drop it.”
Cedar Rapids school board President Cindy Garlock said it’s “unfortunate” the Iowa Legislature isn’t meeting its own deadlines.
“The Legislature imposed these rules that they’re asking us to follow, but they seem unable to follow the rule that SSA needs to be set within 30 days,” Garlock said. “In order to move forward with our budget, we have to trust we’ll be getting at least the 2.5 percent. Anything we get above that will be a pleasant surprise.”
Not knowing how much state funding it will receive is making it hard to predict any spending adjustments the Cedar Rapids Community School District might have to make, she said.
“SSA historically over the last 10 years has been very low. Last year, we got a 3 percent increase, but I think for 10 years before that it was always under 3 percent. The rate of inflation is way higher than that,” Garlock said. “We just can’t keep up.”
House Speaker Pat Grassley, R-New Hartford, said the Legislature could push the budget submission deadline back if it looks like lawmakers won't set SSA in time.
Grassley said House Republicans felt 3 percent aligned with cost adjustments and increases included in collective bargaining agreements between unions and school districts.
"So we felt that that was a reasonable number that would accommodate any of those adjustments that may happen through negotiations," Grassley said. "And I think that, you know, we understand the timeline. We need to continue to make that move (to approve SSA). That's why we took action on that bill."
Unknown costs
Further stressing school district’s spending plans are unknown costs.
The Iowa House passed a bill Thursday that reorganizes the funding and oversight of Iowa’s area education agencies.
The bill keeps Iowa’s AEAs as the sole provider of special education support in the state. State funding for special education services would go to the school districts but they would be required to use that funding with the AEAs.
However, school districts would receive an allocation for media services and other education services that has been provided by the AEAs. Under the bill, the districts would be able to choose whether to use that money with the AEAs or with another party instead, once the measure is fully phased in for the 2026-27 school year.
Over in the other chamber, Senate File 2386 has moved out of committee but has not reached a floor vote. The bill differs significantly from the House proposal. It would allow schools to seek special education services outside the AEAs.
The chambers will need to agree on a single bill in order to send it to Reynolds to be signed into law.
In addition, multiple proposals to increase the pay of Iowa’s teachers and educational support staff are moving through the Iowa Capitol.
A proposal from majority Republicans in the Iowa House, for one, would increase the starting salary for all Iowa teachers over two years to $50,000, set a $15 minimum wage for educational support staff like teacher aides and devote $22 million in additional funding to increase salaries for veteran teachers.
More students also this academic year will be eligible for education savings accounts — public financial assistance to attend a private K-12 school. The accounts allow students to receive a taxpayer-funded scholarship equal to the state’s per-pupil education funding to put toward private tuition and other costs.
Beginning with the third year of the program — the 2025-2026 school year — all Iowa K-12 students will be eligible for the program.
Public school districts receive roughly $1,200 in state funding for each scholarship recipient who lives in the district as a means to help offset a loss of state funding from a student leaving the district. But that is not new funding; it will be allocated from existing supplemental funding programs.
Iowa schools also are reducing their budgets as federal relief dollars they received during the height of the COVID-19 pandemic expire in September.
Lawmakers react
Sen. Pam Jochum, the leader of the minority-party Democrats in the Iowa Senate from Dubuque, criticized Republicans for not passing K-12 public education funding sooner this session. Jochum said that delay has put schools in a pinch.
“Clearly the House, Senate and the governor, the Republicans are in absolute disarray,” Jochum said Thursday at the Iowa Capitol. “This is just plain and simply politics, playing politics with our children. It’s got to end and it’s got to end soon, because the people who are suffering from all of this are our children.”
Sen. Ken Rozenboom, a Republican from Pella who chairs the Senate’s Education Committee, countered by noting many public education advocates and statehouse Democrats have urged Republicans to slow down the process as they consider the different legislative proposals for area education agencies.
Rozenboom said general school funding, the AEA bills and proposals to increase salaries are intertwined, and that is what’s holding up the school funding bills.
“This year is a little unlike most years because we do have the AEA matter, we have the teacher pay matter, and we have SSA. And they’re all wrapped together — practically (speaking), they’re all wrapped together,” Rozenboom said. “And that complicates the issue in terms of us getting to meet our deadline.”
Noting there are decisions yet to be made on many funding pieces tied to education, Grassley said House lawmakers are "not slowing down the process because we're trying to slow down the level of certainty.
"We're trying to make sure that we can fund all of the things we want to look at, like a teacher pay bill that we're going to continue to work on and, hopefully, pass off the floor when it's available," he said. "All those things tie together from the budget standpoint. So it isn't an unwillingness to move forward. It's making sure that we can actually fully fund what we agree to do."
Rozenboom said because Reynolds proposed a 2.5 percent increase in K-12 general school funding and House Republicans proposed a 3 percent increase, schools can budget for a number in that range.
“My sense is that most (schools) understand we’re going to be one of those two numbers or somewhere in between. … I think everybody recognizes that,” Rozenboom said. “The questions I’ve (received), I’ve simply told them two and a half to three (percent increase), you can figure your budget on two and a half, and if it happens to be more than that, then that’s to your benefit.”
Rozenboom also said he believes Republican legislative leaders will soon reach agreements on all three funding pieces.
Senate and House Republicans’ proposals on general school funding and teacher compensation are close; their respective proposals on AEAs, on the other hand, are dramatically different. All of those differences must be negotiated until Republican House and Senate leaders reach an agreement that can pass both chambers and also earn Reynolds’ signature.
“We are doing this on our legislative timetable, and I guess I’m saying this is going to happen sooner rather than later,” he said. “In my judgment, the AEA thing (gets done), and then that opens the door to making the other final decisions. …
“Once we pull the plug on this and start moving forward, I think it’ll come together pretty quickly.”
Comments: (319) 398-8411; grace.king@thegazette.com
Tom Barton of The Gazette Des Moines Bureau contributed to this report.
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