How Iowa funds schools -- and how we're falling short

How Iowa funds schools -- and how we're falling short

Published on 16 September 2022

A state that values advancing opportunity for all its children is one that invests — in word, deed and dollars — in public education. Iowa has fallen short on this priority for more than a decade. We walk through policies to boost public schools — PK thro

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Transcript
00:07
How Iowa funds its public schools — and how we're falling short
00:08
Excerpt from Policy Wise in Iowa: Recommitting to public education September 14, 2022
00:13
When we talk about reinvesting in education, that implies one thing. We haven't been investing in it properly.
00:13
Common Good Iowa Deputy Director
00:13
Mike Owen
00:19
We haven't been investing in education the way we have historically expected — what has been the tradition in Iowa.
00:35
So don't be fooled.
00:38
You will hear politicians using very big numbers. This is inevitable in something that is over half of an $8 billion budget — education.
00:52
They'll talk about record spending levels.
00:55
Well, of course, if you spend just a dollar more, it's a new record, but that doesn't mean it's actually paying the bills.
01:04
It doesn't mean that you're keeping up with the costs that you face in putting a school budget together.
01:11
There is a shell game
01:13
of state versus local dollars when legislators sometimes talk about this issue.
01:18
They'll talk about increases in state funding. But what they're not talking about is
01:24
a lot of times those increases in state funding come with reductions in local funding.
01:29
And so
01:30
these are not necessarily things that actually give school districts more resources to work with.
01:39
It's just a shift in how those dollars are provided.
01:46
That's why when we talk about this, we don't deal a lot with those big
01:51
millions of dollar numbers because the key element is something called Supplemental State Aid,
01:58
Supplemental State Aid
01:59
which for many years, we knew as something called allowable growth.
01:60
aka "SSA"
02:03
fka "allowable growth"
02:04
And as we're going to illustrate here, it's a 
02:09
percentage that has an impact on the per pupil, the basic building block of a state budget — or of a school budget.
02:16
The growth rate applied to the state cost per pupil
02:22
The budget is built from a per-pupil cost, and that is permitted to increase by a certain amount every year.
02:31
That is Supplemental State Aid, and that's what the legislature sets, and that governs both local and state funding.
02:32
Supplemental State Aid
02:34
Set by the Legislature
02:37
Governs local & state funding
02:40
Now, another piece of that is
02:42
the budget is based on enrollment.
02:42
A school district budget is also based on enrollment
02:45
So if you're in a declining enrollment school district, you may not be getting the kinds of —
02:50
you're not gonna get the kinds of increases — that districts that are increasing
02:60
in enrollment, they're gonna get
03:02
a larger percentage
03:05
adjustment in their budget. And what's more is it's gonna carry state dollars.
03:11
If you're in a declining school district, you can keep up for a year with a little bit, with a little bump.
03:18
But even that little bump is caused by property tax increases. That's also something that legislators don't like to talk about very much.
03:25
So let's talk about how, very briefly, how Supplemental State Aid works.
03:32
So, you start with this per-pupil cost. And last year it was $7,227 per pupil. The legislature set SSA percentage at 2.5%.
03:44
That raised the per-pupil cost to $7,413 per pupil. So all state school districts
03:52
— all local school districts — in the state
03:56
are subject to that limitation on their regular budget setting.
04:05
And there are adjustments that are made to that. But again, this is the key feature of school budgets.
04:13
So you get that cost. And the formula that is in place, then sets the amount that will come from local property tax and the state general fund.
04:21
And this is how that works. So you see that box that represents the per-pupil cost,
04:27
You set a, what's called the foundation level. You determine what is
04:34
that percentage. It's about 88% now
04:37
of the budget. And this is part of, this is how the formula works. So you figure out where that line is.
04:44
And then the first thing you do is you levy property tax.
04:50
And that's $5.40. And so that will generate a different amount depending on the property values in your school district.
04:50
per $1,000 of assessed value
05:01
So if you're in a higher property-value school district that $5.40 is gonna raise a larger sum, or a larger share, of that 88% foundation
05:14
of your per-pupil cost.
05:16
That is then augmented by state aid.
05:22
So those are the state dollars that come in to fill to take you up to that 88% mark.
05:31
Then you levy more property tax.
05:35
And on top of that
05:37
SSA
05:37
is another little sliver for state aid. And that represents the increase that's caused by the Supplemental State Aid increase for that year.
05:47
So that 2.5 for this year, for example, would be that
05:50
that little slender line across the top.
05:55
That is the basic building block of a local school budget. So what's been happening with that through the years?
06:04
It's been very shaky over the last over a decade.
06:09
You can see that from about 2006 through 2010
06:18
It was up around 4%. And then it's been up and down since then. The Great Recession came
06:26
a little over a decade ago, that affected school budget setting.
06:31
But the main
06:34
thrust of all this, the main point of this graph, is shown really in this very simple
06:41
two bars
06:44
From 2002 through 11,
06:47
the average growth — the average Supplemental State Aid number — was over 3%.
06:55
For the last 12 years, it's been under 2%.
07:00
Now, when you go over that amount of time, you can see that that kind of an average increase is not going to let you keep up with costs.
07:11
Because costs have been higher than that. Certainly in the last year, they've been even more so.
07:17
But we set this year at 2.5%, and as you know, the inflation has run 7 or 8% over this last year.
07:30
Find the full presentation at
07:30
www.commongoodiowa.org