Taxpayers often ask, and
rightfully so, how Iowa spends the nearly $4 billion earmarked for the state’s
public education system. Earlier, we ran the first in a series of articles dedicated
to helping taxpayers understand how those dollars are being spent to educate
nearly 474,000 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 per
pupil funding throughout the state. That’s where the school finance formula
comes in. This formula relies on a combination of state aid and property taxes
to fund education. The amount of state aid each district receives depends on
how much it brings 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 raise a smaller
amount of money on a much larger property tax rate.
This was almost exactly the
situation Iowa found itself in over 35 years ago. Before the early 70s
districts relied primarily on property taxes for school funding. However due to the wide range of property tax
rates funding districts 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. All districts are required to levy a
uniform levy of $5.40 and then the state funds an additional amount up to a
certain level (called
the foundation level). Beyond that foundation level, local property
taxes are levied to fund the remainder of the difference.
The Iowa Association of School
Board’s education finance co-director, Patti Schroeder, explained that school
funding is basically made up of three layers. “The first layer is local
property taxes determined by the Uniform Levy,” Schroeder said. “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 a formula over which the local district has
little control.”
Our two districts 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 the average, so
our additional levy rate can be lower and generate the same dollars as other
districts because of our higher property valuation."
While the state partially
equalizes tax rates through the school finance formula, significant deviations
still affect how much each district receives from the state. The lowest
combined tax rate for a school district is $7.48
for the current fiscal year and the highest is $21.66, making that a difference of $14.18 per thousand.
The Alta Community School
District combined tax rate is currently $11.98.
The Aurelia Community School District combined tax rate is currently
$9.95. Both well below the state average.
Regardless of the financial 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 members or administrators
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 a future article in our series explaining
school finance.
