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School Aid: 1

Legislative Services Agency 2006 Session

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Iowa School Foundation Aid Iowa School Foundation Aid Formula OverviewFormula Overview

Shawn SnyderShawn SnyderDwayne FergusonDwayne Ferguson

Legislative Services Legislative Services AgencyAgency

Fiscal Services DivisionFiscal Services Division

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School Foundation Aid School Foundation Aid FormulaFormula The School Foundation Aid Formula funded 365 The School Foundation Aid Formula funded 365

school districts and 12 area education agencies school districts and 12 area education agencies in FY 2006.in FY 2006.

The goals of the formula include:The goals of the formula include: to equalize educational opportunity,to equalize educational opportunity, to provide a good education for all the to provide a good education for all the

children of Iowa, children of Iowa, to provide property tax relief,to provide property tax relief, to decrease the percentage of school costs to decrease the percentage of school costs

paid from property taxes, andpaid from property taxes, and to provide reasonable control of school to provide reasonable control of school

costs.costs.

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History of School Finance in History of School Finance in IowaIowaIn the 1950s, there were over 4,000 school districts In the 1950s, there were over 4,000 school districts in Iowa, so the General Assembly adopted a in Iowa, so the General Assembly adopted a reorganization plan. The following summarizes the reorganization plan. The following summarizes the changes in the number of school districts beginning changes in the number of school districts beginning with FY 1965:with FY 1965: FY 1965 – 450 school districtsFY 1965 – 450 school districts

FY 1975 – 438 school districtsFY 1975 – 438 school districts









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History of School Finance in History of School Finance in Iowa (Cont.)Iowa (Cont.) The method of fully financing school districts The method of fully financing school districts

through property tax remained in place until through property tax remained in place until the mid-1960s.the mid-1960s.

In 1971, the first state foundation program In 1971, the first state foundation program was adopted and state aid to school districts was adopted and state aid to school districts was substantially increased.was substantially increased.

In 1989, the finance plan was substantially In 1989, the finance plan was substantially modified with the enactment of Chapter 257, modified with the enactment of Chapter 257, Code of IowaCode of Iowa. The new finance plan was . The new finance plan was implemented in FY 1992.implemented in FY 1992.

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In 1992 and 1993, the finance plan was altered.In 1992 and 1993, the finance plan was altered. The enrollment decline cushion and the The enrollment decline cushion and the

advances for increasing enrollments were advances for increasing enrollments were eliminated.eliminated.

The growth in state aid and budgets, known The growth in state aid and budgets, known as allowable growth, was determined by as allowable growth, was determined by legislation and not automatically by a legislation and not automatically by a formula. The eliminated formula for formula. The eliminated formula for allowable growth had used variables of allowable growth had used variables of inflation and revenue growth.inflation and revenue growth.

History of School Finance in History of School Finance in Iowa (Cont.)Iowa (Cont.)

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In the 1995 Legislative Session, General In the 1995 Legislative Session, General Assembly changed the law so that allowable Assembly changed the law so that allowable growth is set two years in advance. The growth is set two years in advance. The General Assembly is also required to set the General Assembly is also required to set the allowable growth rate within 30 days of the allowable growth rate within 30 days of the submission of the Governor’s budget. submission of the Governor’s budget.

Under current law, the General Assembly will Under current law, the General Assembly will set allowable growth in the 2008 Legislative set allowable growth in the 2008 Legislative Session for FY 2010.Session for FY 2010.

History of School Finance in History of School Finance in Iowa (Cont.)Iowa (Cont.)

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The school foundation aid formula first determines The school foundation aid formula first determines how much each district will receive and then how much each district will receive and then determines the State portion and the property tax determines the State portion and the property tax portion.portion.

Funding is basically on a per pupil basis. Additional Funding is basically on a per pupil basis. Additional weightings are added for higher cost students, such weightings are added for higher cost students, such as, special education, English Language Learners, as, special education, English Language Learners, etc.etc.

Iowa creates equity by setting the Iowa creates equity by setting the maximummaximum that that can be spent per pupil. Most states set a minimum. can be spent per pupil. Most states set a minimum. Those states then can encounter equity issues when Those states then can encounter equity issues when the richer school districts spend more. the richer school districts spend more.

The Legislature determines the school districts The Legislature determines the school districts budget by setting the Allowable Growth Rate. This budget by setting the Allowable Growth Rate. This is the percentage increase that is applied to the cost is the percentage increase that is applied to the cost per pupil.per pupil.

In GeneralIn General

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General Concepts:General Concepts: Basic Basic CalculationsCalculations Local school district funding is primarily Local school district funding is primarily

determined by the number of students within determined by the number of students within the district and the district’s cost per pupil.the district and the district’s cost per pupil.

A district’s basic budget is calculated by A district’s basic budget is calculated by multiplying a district cost per pupil amount multiplying a district cost per pupil amount times the weighted enrollment.times the weighted enrollment.

District's = Weighted X DistrictBasic Enrollment Cost per

Budget Pupil

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General Concepts:General Concepts: Weighted EnrollmentWeighted Enrollment

Besides actual enrollment, enrollment is Besides actual enrollment, enrollment is weighted to provide compensation for higher weighted to provide compensation for higher cost pupils or to provide incentives.cost pupils or to provide incentives.

The weighted enrollment is based on the The weighted enrollment is based on the actual enrollment plus a weighting for special actual enrollment plus a weighting for special education and a supplemental weighting for education and a supplemental weighting for sharing teachers, pupils, or administrators, for sharing teachers, pupils, or administrators, for at-risk students, for students in an English as a at-risk students, for students in an English as a Second Language Program, and for school Second Language Program, and for school districts that reorganize and consolidate.districts that reorganize and consolidate.

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General Concepts:General Concepts: Weighted Enrollment (Cont.)Weighted Enrollment (Cont.)

Example: A severely disabled student is Example: A severely disabled student is counted as a 1.00 pupil for the regular program counted as a 1.00 pupil for the regular program and receives an additional weighting of 2.74 and receives an additional weighting of 2.74 pupils in special education. A moderately pupils in special education. A moderately disabled student receives an additional disabled student receives an additional weighting of 1.21 pupils, and the least disabled weighting of 1.21 pupils, and the least disabled receives an additional weighting of 0.72 pupil. receives an additional weighting of 0.72 pupil.

The weighted enrollment for FY 2006 was The weighted enrollment for FY 2006 was 560,259. This included an actual enrollment of 560,259. This included an actual enrollment of 483,335 which was taken in September 2004, 483,335 which was taken in September 2004, plus a special education weighting of 70,150, plus a special education weighting of 70,150, plus a supplemental weighting of 6,774.plus a supplemental weighting of 6,774.

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General Concepts:General Concepts: Something not included - Something not included - TransportationTransportation Transportation costs are paid from the Transportation costs are paid from the

general operating budget.general operating budget.

Statewide 4.9% of the regular program Statewide 4.9% of the regular program budget goes to transportation.budget goes to transportation. 28 school districts use less than 2.0% 28 school districts use less than 2.0%

30 school districts use more than 8.0% 30 school districts use more than 8.0%

School districts less than 250 average School districts less than 250 average 6.3% 6.3%

School districts over 7,500 average 2.4%School districts over 7,500 average 2.4%

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General Concepts:General Concepts:District Cost per PupilDistrict Cost per Pupil

Initially, school districts identified their total Initially, school districts identified their total operating costs. Those operating costs were divided operating costs. Those operating costs were divided by enrollment to get a district cost per pupil.by enrollment to get a district cost per pupil.

The average of all the district’s cost per pupil The average of all the district’s cost per pupil became the State cost per pupil.became the State cost per pupil.

After these calculations, a minimum and maximum After these calculations, a minimum and maximum were set for the district cost per pupil.were set for the district cost per pupil. The minimum was the State cost per pupil.The minimum was the State cost per pupil. The maximum was 110.0% of the State cost per The maximum was 110.0% of the State cost per

pupil. Over time the maximum was reduced to pupil. Over time the maximum was reduced to 105.0%.105.0%.

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General Concepts:General Concepts: State Cost per PupilState Cost per Pupil In FY 2006 the State Cost per Pupil is $4,931.In FY 2006 the State Cost per Pupil is $4,931. The State cost per pupil, which is the basis for The State cost per pupil, which is the basis for

determining the foundation level and State aid, is determining the foundation level and State aid, is increased each year by an allowable growth increased each year by an allowable growth amount or allowable growth per year.amount or allowable growth per year.

The State cost per pupil is also used as follows:The State cost per pupil is also used as follows: To calculate the annual allowable growth To calculate the annual allowable growth

amount.amount. As the minimum district cost per pupil.As the minimum district cost per pupil. To calculate the maximum district cost per pupilTo calculate the maximum district cost per pupil..

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General ConceptsGeneral Concepts: : Allowable GrowthAllowable Growth

The allowable growth rate as set by the General Assembly The allowable growth rate as set by the General Assembly is multiplied by the State cost per pupil to determine the is multiplied by the State cost per pupil to determine the allowable growth amount. allowable growth amount.

The allowable growth amount is added to each district’s The allowable growth amount is added to each district’s per pupil cost.per pupil cost.

FY 2006 FY 2006FY 2005 Cost X Allowable = Allowable Growth

($4,741) Growth Rate Amount(4.0%) ($190)

FY 2005 Allowable FY 2006State Cost + Growth Amount = State Cost($4,741) ($190) ($4,931)

FY 2005 Allowable FY 2006

District + Growth Amount = DistrictCost per Pupil ($190) Cost per Pupil

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General Concepts:General Concepts: Allowable Growth (Cont.)Allowable Growth (Cont.)

Allowable Growth

0.0%

4.0%

8.0%

12.0%

16.0%19

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Fiscal Year

Allo

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Area Education AgenciesArea Education Agencies

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General Concepts: General Concepts: Area Area Education Agencies Costs per Education Agencies Costs per PupilPupil Area Education Agencies (AEA) are also funded on a Area Education Agencies (AEA) are also funded on a

per pupil basis.per pupil basis. The basic funding formula includes separate funding The basic funding formula includes separate funding

on a per pupil basis for each of the three service on a per pupil basis for each of the three service areas.areas. The media services and educational services cost per The media services and educational services cost per

pupil are funded entirely from property taxes. The pupil are funded entirely from property taxes. The enrollment count includes pupils from approved non-enrollment count includes pupils from approved non-public schools.public schools.

Special education support services cost per pupil is Special education support services cost per pupil is included in the State foundation plan to determine included in the State foundation plan to determine the mix of State aid and property taxes. the mix of State aid and property taxes.

Each district includes the AEA cost per pupil when Each district includes the AEA cost per pupil when generating State aid and property taxes. The funds generating State aid and property taxes. The funds generated by each district flow through to the AEA.generated by each district flow through to the AEA.

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General Concepts:General Concepts: Combined District CostCombined District Cost The combined district cost is the total funding a district The combined district cost is the total funding a district

receives from the School Foundation Aid Plan. Combined receives from the School Foundation Aid Plan. Combined district cost funds:district cost funds:

Regular programming.Regular programming.

Special Education.Special Education.

Supplemental weightings (English Language Learners, Supplemental weightings (English Language Learners, Shared students & teachers, At-Risk Program, Shared students & teachers, At-Risk Program, Reorganization Incentives)Reorganization Incentives)

Area Education Agencies cost for special education Area Education Agencies cost for special education support, media services, and educational services.support, media services, and educational services.

Dropout/Dropout Prevention Program (local decision Dropout/Dropout Prevention Program (local decision funded with property taxes).funded with property taxes).

Regular program budget guarantee (supplement for Regular program budget guarantee (supplement for districts with declining enrollments).districts with declining enrollments).

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After the school’s budget is determined, the split After the school’s budget is determined, the split between State Aid and property taxes is between State Aid and property taxes is determined.determined. The Foundation Level The Foundation Level determines at what point State Aid determines at what point State Aid stopsstops and property taxes pay the remainder.and property taxes pay the remainder.

State Aid pays a portion of the costs of:State Aid pays a portion of the costs of: Regular program Regular program Special education (both school and AEA)Special education (both school and AEA) Supplemental weightingsSupplemental weightings

Property taxes pay entirely for:Property taxes pay entirely for: AEA media and educational servicesAEA media and educational services Dropout Prevention ProgramsDropout Prevention Programs Amount the District Cost per Pupil exceeds the Amount the District Cost per Pupil exceeds the

State Cost per PupilState Cost per Pupil Budget GuaranteeBudget Guarantee

General Concepts:General Concepts: Foundation LevelFoundation Level

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General Concepts:General Concepts: Foundation Level (Cont.)Foundation Level (Cont.)The foundation level is 87.5% of the State cost per pupil for The foundation level is 87.5% of the State cost per pupil for the regular program and special education, and 79.0% AEA the regular program and special education, and 79.0% AEA special education support. The specific State cost per pupil special education support. The specific State cost per pupil is applied to the weighted enrollment for that particular is applied to the weighted enrollment for that particular service. service.

FY 2006 Regular Program Regular Program StateState Cost Per Pupil X Foundation Level = Foundation Cost per

( $4,931 ) ( 87.5% ) Pupil ( $4,315 )

FY 2006 Special Education Special EducationState Cost Per Pupil X Foundation Level = Foundation Cost per

( $4,931 ) ( 87.5% ) Pupil ( $4,315 )

FY 2006 AEA Special Special Education Special EducationEducation Support X Support = Support State

Cost ( $216 ) Foundation Level Foundation Cost per( 79.0% ) Pupil ( $171 )

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State Aid and Property TaxesState Aid and Property Taxes

Uniform LevyUniform Levy - First - First component in component in building the budget.building the budget.

The uniform levy is The uniform levy is $5.40 per $1,000 of $5.40 per $1,000 of taxable valuation, taxable valuation, and it is levied and it is levied against the taxable against the taxable property in the property in the State.State.

0%

25%

50%

75%

100%

S ch o o l B u d get

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State AidState Aid – Second – Second component in component in building the building the budget.budget.

State Aid pays the State Aid pays the difference between difference between the amount from the amount from the Uniform Levy the Uniform Levy and the Foundation and the Foundation Level.Level.

0%

25%

50%

75%

100%


Foundation Level

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Additional LevyAdditional Levy – – Third component in Third component in building the budget.building the budget.

The Additional Levy The Additional Levy pays the remainder. pays the remainder. The Additional Levy The Additional Levy Rate is set at what Rate is set at what ever percentage is ever percentage is needed to collect the needed to collect the revenues and varies revenues and varies by school district.by school district.

0%

25%

50%

75%

100%


Foundation Level

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State Aid and Property TaxesState Aid and Property Taxes School districts with a high taxable valuations School districts with a high taxable valuations

per pupil (Property Rich) receive more money per pupil (Property Rich) receive more money from the Uniform Levy than school districts with from the Uniform Levy than school districts with a lower taxable valuation (Property Poor). a lower taxable valuation (Property Poor).

0%

25%

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75%

100%


0%

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75%

100%


HighLow

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State Aid and Property TaxesState Aid and Property Taxes Districts with low taxable valuations per pupil will require Districts with low taxable valuations per pupil will require

higher Additional Levy rates to raise the same amount of higher Additional Levy rates to raise the same amount of revenue as a school district with high per pupil valuations.revenue as a school district with high per pupil valuations.

Variance in school foundation property tax rates between Variance in school foundation property tax rates between districts is due, for the most part, to the additional levy.districts is due, for the most part, to the additional levy.

0%

25%

50%

75%

100%


0%

25%

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75%

100%


High RateLow Rate

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Note:.

The Uniform Levy includes adjustments for the Utility Replacement tax. Utility companies pay a tax on energy delivered in lieu of property taxes on their facilities.

F Y 2 0 0 6 C o m b i n e d D i s t r i c t C o s t ( D o l l a r s i n M i l l i o n s )

$ 5 4 3 .7

$ 1 ,9 6 3 .9

$ 5 0 5 .9

0 %

2 0 %

4 0 %

6 0 %

8 0 %

1 0 0 %

F o u n d a t i o n L e v e l

A d d i t i o n a l L e v y

S ta te A i d

U n i fo r m L e v y

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General Concepts: ExampleGeneral Concepts: Example

Example #1 Example #2(Property Rich District) (Property Poor District)

State Cost Per Pupil: $4,931 State Cost Per Pupil: $4,931District Cost per Pupil: $4,931 District Cost per Pupil: $4,931Weighted Enrollment: 500 Weighted Enrollment: 500

Taxable Valuations: $100,000,000 Taxable Valuations: $50,000,000

Uniform Levy at $5.40 per $1,000 (Current Law) Uniform Levy at $5.40 per $1,000 (Current Law)

Dollar Percent Levy Dollar Percent LevyAmount of Total Rate Amount of Total Rate

Foundation Level Additional Levy $308,188 12.5% $3.08 Foundation Level Additional Levy $308,188 12.5% $6.16( $4,931 * 87.5% * 500) State Aid $1,617,313 65.6% ( $4,931 * 87.5% * 500) State Aid $1,887,313 76.5%

($2,157,313) Uniform Levy $540,000 21.9% $5.40 ($2,157,313) Uniform Levy $270,000 11.0% $5.40

Total $2,465,500 $8.48 Total $2,465,500 $11.56

Note: This is a simplified example. Regular and Special Education must be calculated separately due to different foundation levels.

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General Concepts:General Concepts:Spending AuthoritySpending Authority Iowa is unique in that maximum spending Iowa is unique in that maximum spending

authority is controlled in each district through authority is controlled in each district through the foundation plan.the foundation plan.

The maximum spending authority or controlled The maximum spending authority or controlled budget includes the State aid and property taxes budget includes the State aid and property taxes as calculated by the foundation formula, plus as calculated by the foundation formula, plus unspent balances from the prior year, plus unspent balances from the prior year, plus actual miscellaneous income.actual miscellaneous income.

Once spending authority has been granted, it is Once spending authority has been granted, it is not removed even if the authorized state aid or not removed even if the authorized state aid or property taxes are not actually received.property taxes are not actually received.

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Issues: Kinds of questions that Issues: Kinds of questions that confront legislators.confront legislators.

What situation are we facing – demographics, What situation are we facing – demographics, economic, political, social?economic, political, social?

What do we need to accomplish? (Often what What do we need to accomplish? (Often what do we need to fix?)do we need to fix?)

How much will we pay for it?How much will we pay for it? Where will the funding come from?Where will the funding come from? Who will it help? Who will it hurt? Are there Who will it help? Who will it hurt? Are there

winners and losers?winners and losers? How will the people back home see this? How will the people back home see this?

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Issues: Issues: EnrollmentEnrollmentEnrollments have declined over the past three decades by Enrollments have declined over the past three decades by 163,614 students (25.3%).163,614 students (25.3%).

E n r o l l m e n t a n d N u m b e r o f S c h o o l D i s t r i c t s

0

1 0 0

2 0 0

3 0 0

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5 0 0

6 0 0

7 0 0

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F i s c a l Y e a r

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0

1 0 0 ,0 0 0

2 0 0 ,0 0 0

3 0 0 ,0 0 0

4 0 0 ,0 0 0

5 0 0 ,0 0 0

6 0 0 ,0 0 0

7 0 0 ,0 0 0

En

roll

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S c h o o l D i s t r i c t s E n r o l l m e n t

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Issues: Issues: EnrollmentEnrollmentF Y 2 0 0 6 S c h o o l D i s t r i c t S i z e

1 0 1

1 3 9

3 71 0

6 9

1 41 9

3

0

2 0

4 0

6 0

8 0

1 0 0

1 2 0

1 4 0

1 6 0

< 1 0 0 1 0 0 - 1 9 9 2 0 0 - 4 9 9 5 0 0 - 9 9 9 1 ,0 0 0 -1 ,9 9 9

2 ,0 0 0 -3 ,9 9 9

4 ,0 0 0 -5 ,9 9 9

6 ,0 0 0 -9 ,9 9 9

> 1 0 ,0 0 0

B u d g e t E n r o l lm e n t

Nu

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Sc

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Issues: Issues: EnrollmentEnrollmentN u m b e r o f S c h o o l D is t r ic t s b y A n n u a l E n r o l lm e n t C h a n g e R a t e s

F Y 2 0 0 0 t o F Y 2 0 0 7

7

3 2

26

8 6

5 4

1 5 8

2 0

0

2 0

4 0

6 0

8 0

1 0 0

1 2 0

1 4 0

1 6 0

1 8 0

Less than-5.00%

-4.99% to

-3.00%

-2.99% to

-1.00%

-1.01% to

0.00%

0.01% to

1.00%

1.01% to

3.00%

3.01% to

5.00%

More than5.00%

A n n u a l C h a n g e R a t e

No

. of

Sch

oo

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Decreasing(305)

Growing(60)

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Issues: Issues: EnrollmentEnrollment

Annual Enrollment Change Rate by School SizeFY 2000 to FY 2007

-3.00%

-2.50%

-2.00%

-1.50%

-1.00%

-0.50%

0.00%

0.50%

1.00%

1.50%

LessThan 250

250-499 500-749 750-999 1,000-2,499

2,500-7,499

MoreThan7,500Enrollment

Ch

an

ge

Ra

te

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Issues: Issues: Are all school districts equal?Are all school districts equal? Course Offerings Course Offerings Teaching AssignmentsTeaching Assignments Teacher SalariesTeacher Salaries

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Mathematics – Mathematics – State requirement is 6 unitsState requirement is 6 units

Math Curriculum Offered and Taught

0

3

6

9

12

15

18

<250 250-399 400-599 600-999 1,000-2,499

2,500-7,499

7500+ StateAverage

2001-2002 2002-2003 2003-2004 2004-2005 2005-2006

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Science – State requirement is 5 Science – State requirement is 5 unitsunits

Science Curriculum Offered and Taught

0

3

6

9

12

15

<250 250-399 400-599 600-999 1,000-2,499

2,500-7,499

7500+ StateAverage

2001-2002 2002-2003 2003-2004 2004-2005 2005-2006

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Foreign Language – Foreign Language – State requirement is 4 unitsState requirement is 4 units

Foreign Language Curriculum Offered and Taught

0

4

8

12

16

20

<250 250-399 400-599 600-999 1,000-2,499

2,500-7,499

7500+ StateAverage

2001-2002 2002-2003 2003-2004 2004-2005 2005-2006

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Teaching Assignments – Teaching Assignments – Number of unique courses taught per Number of unique courses taught per teacher.teacher.

High School Teaching Assignments by Enrollment Category

0.00.51.01.52.02.53.03.54.04.55.0

<250 250-399 400-599 600-999 1,000-2,499

2,500-7,499

7500+ StateAverage

1985-1986 2005-2006

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Average teacher salaries have increased Average teacher salaries have increased substantially, but still lag in smaller substantially, but still lag in smaller districts.districts.

Average Teacher Salary by Enrollment Category

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

<250 250-399 400-599 600-999 1,000-2,499

2,500-7,499

7500+ StateAverage

2004-2005 2005-2006 2006-2007

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What is the impact?What is the impact?

One Measure – College One Measure – College ReadinessReadiness

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ACT Core Scores By Enrollment Category

18

20

22

24

<250 250-399 400-599 600-999 1,000-2,499

2,500-7,499

7500+ StateAverage

2003 2004 2005 2006

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ACT Math Scores By Enrollment Category

18

20

22

24

<250 250-399 400-599 600-999 1,000-2,499

2,500-7,499

7500+ StateAverage

2003 2004 2005 2006

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How do we pay for “it”?How do we pay for “it”?

Taxes:Taxes: PropertyProperty Income (Individual & Corporate)Income (Individual & Corporate) Sales and UseSales and Use Specialty (Fuel, Cigarette &Tobacco, Specialty (Fuel, Cigarette &Tobacco,

Beer & Liquor, Gambling, Insurance Beer & Liquor, Gambling, Insurance Premium)Premium)

SurtaxesSurtaxes FeesFees

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FY 2006 Property TaxesFY 2006 Property Taxes

F Y 2 0 0 6 P r o p e r t y T a x e s b y T a x i n g A u t h o r i t y

C o m m u n it y C o lle g e s

2 %

S c h o o ls4 3 %

C it ie s2 9 %

C o u n t ie s2 2 %

O t h e r4 %

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Issues: Issues: Variation in Foundation Property Tax Variation in Foundation Property Tax RatesRates

F Y 2 0 0 7 F o u n d a t i o n P r o p e r t y T a x R a t e s

1 2

8 1

1 5 1

9 0

3 1

0

2 0

4 0

6 0

8 0

1 0 0

1 2 0

1 4 0

1 6 0

Less

tha

n$8

.25

$8.2

6 to

$9.5

0

$9.5

1 to

$10.

75

$10.

76 t

o$1

2.00

Mor

e th

an$1

2.00

Nu

mb

er o

f S

cho

ol

Dis

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Minimum = $6.85 Maximum = $15.22

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How can the disparity in foundation property tax How can the disparity in foundation property tax rates be reduced?rates be reduced?

0%

25%

50%

75%

100%


0%

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50%

75%

100%


High RateLow Rate

$5.40 / $1,000

$5.40 / $1,000

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State Aid and Property TaxesState Aid and Property Taxes Raise the Foundation Level to 100.0% so the foundation property Raise the Foundation Level to 100.0% so the foundation property

tax rate is $5.40 plus a small amount more for AEA’s, budget tax rate is $5.40 plus a small amount more for AEA’s, budget guarantee, and difference between State Cost per Pupil and guarantee, and difference between State Cost per Pupil and District cost per Pupil.District cost per Pupil.

Cost to the State General Fund = $402.0 million in FY 2007.Cost to the State General Fund = $402.0 million in FY 2007.

0%

25%

50%

75%

100%


0%

25%

50%

75%

100%


100% FL100% FL

$5.40 / $1,000

$5.40 / $1,000

School Aid: 48


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State Aid and Property TaxesState Aid and Property Taxes Where would the $402.0 million come from?Where would the $402.0 million come from?

F Y 2 0 0 6 G e n e r a l F u n d A p p r o p r i a t i o n s$ 5 . 0 2 7 B i l l i o n T o t a l A p p r o p r i a t i o n

P r o p e r t y T a x R e p la c e m e n t , 2 . 5 %

J u d ic ia l B r a n c h & P u b lic D e f e n d e r , 3 . 4 %

D e p a r t m e n t o f C o r r e c t io n s , 5 . 9 %

M e d ic a l S e r v ic e s , 1 3 . 7 % H ig h e r E d u c a t io n ,

1 5 . 9 %

A ll O t h e r S t a t e P r o g r a m s , 1 5 . 7 %

S t a t e A id t o S c h o o ls , 4 2 . 8 %

8.0% of total budget

14% of other budgets

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Raise both the Foundation Level and the Uniform Levy.Raise both the Foundation Level and the Uniform Levy.

This creates winners and losers. Property Rich districts will have This creates winners and losers. Property Rich districts will have taxes increase while Property Poor districts have property tax taxes increase while Property Poor districts have property tax decreases.decreases.

0%

25%

50%

75%

100%


$5.40 / $1,000

0%

25%

50%

75%

100%


$3.80 / $1,000

$9.10 / $1,000

Small Additional Levy

School Aid: 51


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Another approach to Another approach to property tax relief –property tax relief –

School Infrastructure School Infrastructure Local Option (SILO) Local Option (SILO)

Sales Tax Sales Tax

School Aid: 52


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School Infrastructure Local School Infrastructure Local Option (SILO) Sales TaxOption (SILO) Sales Tax

Sales Tax Review:Sales Tax Review: State sales tax = 5.0% (5 cents on a dollar)State sales tax = 5.0% (5 cents on a dollar) SILO – one local option sales tax designated for SILO – one local option sales tax designated for

school infrastructure or school district property school infrastructure or school district property tax relief = up to 1.0% (approved at the county tax relief = up to 1.0% (approved at the county level)level)

Local Option Sales Tax (LOST) – voted on at the Local Option Sales Tax (LOST) – voted on at the county level and approved by each jurisdiction. county level and approved by each jurisdiction. Used for Local Govt. projects = up to 1.0% Used for Local Govt. projects = up to 1.0%

School Aid: 53


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SILO Sales TaxSILO Sales Tax As of July 1, 2007 all counties (and school districts) As of July 1, 2007 all counties (and school districts)

have implemented (Johnson and Linn counties have implemented (Johnson and Linn counties approved in Feb.).approved in Feb.).

Currently – certain counties keep their SILO dollars Currently – certain counties keep their SILO dollars while others put into “SAVE Fund” for distribution to while others put into “SAVE Fund” for distribution to other counties.other counties.

Eventually – all counties will put into SAVE Fund for a Eventually – all counties will put into SAVE Fund for a state-wide per pupil distribution of $575.state-wide per pupil distribution of $575.

Issue – under current law, SILO implementation is Issue – under current law, SILO implementation is determined at the county level. If counties don’t determined at the county level. If counties don’t reauthorize SILO, that money won’t be available for reauthorize SILO, that money won’t be available for state-wide distribution (Polk County). state-wide distribution (Polk County).

School Aid: 54


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SILO Sales Tax – FY 2006SILO Sales Tax – FY 2006

Louisa County – Lowest in state at $231 Louisa County – Lowest in state at $231 per pupil SILO within the countyper pupil SILO within the county

SAVE Fund - $580,000 to bring Louisa to SAVE Fund - $580,000 to bring Louisa to $469 (53 other counties at $469)$469 (53 other counties at $469)

Dickinson = $1,116 in SILO Per Pupil (15 Dickinson = $1,116 in SILO Per Pupil (15 Other Counties over $575 – Other Counties over $575 – “Grandfathered in”)“Grandfathered in”)

97 Counties implemented97 Counties implemented

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SILO Sales Tax – Upcoming SILO Sales Tax – Upcoming Legislative SessionLegislative Session

$575 per pupil amount – may change to $575 per pupil amount – may change to a rolling average.a rolling average.

Implement state-wide: eliminates Implement state-wide: eliminates extension at county level (Polk county). extension at county level (Polk county).

Use tax: Additional funding above the Use tax: Additional funding above the current SILO amount.current SILO amount.

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Questions?Questions?

School Aid: 57


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FY 2006 Budget Detail($ in millions)

Percent of Number of Budget Components Total Total Districts Source of Funds

Combined District CostRegular Program 2,395.2$ 57.3% 365 State Aid & Property TaxBudget Guarantee Amount 19.5 0.5% 174 Property TaxSupplementary Weights 33.6 0.8% 365 State Aid & Property TaxSpecial Education 347.8 8.3% 365 State Aid & Property TaxAEA Media 21.0 0.5% 365 Property TaxAEA Educational Services 23.2 0.6% 365 Property TaxAEA Special Education 120.9 2.9% 365 State Aid & Property TaxDropout - SBRC 72.1 1.7% 281 Property TaxAEA Pro Rata Adjustment -19.3 -0.5% NA State AidEnrollment Adjustment -0.2 0.0% 55 State Aid & Property Tax

Total Combined District Cost 3,013.6$ 72.1%

Other Taxes and Miscellaneous IncomeInstructional Support 151.3 3.6% 328 State Aid, Prop. Tax & Income SurtaxEducational Improvement 0.5 0.0% 4 Property Tax & Income SurtaxPhys. Plant and Equip. - Reg. & Voter Appr. 108.4 2.6% 335 Property Tax & Income SurtaxSchool House Levy 0.0 0.0% 0 Property TaxManagement Levy 95.8 2.3% 375 Property TaxEd. and Rec. Levy (Playground) 1.8 0.0% 18 Property TaxBonds/Debt Service Levy 98.0 2.3% 230 Property Tax

Miscellaneous - Estimated* 712.1 17.0% 367 Property Tax, State Aid, & Federal AidTotal Other Taxes 1,167.9$ 27.9%

Total Budget 4,181.5$ 100.0%

* Source: Iowa Department of Management

School Aid: 59


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Other School Finance Issues Other School Finance Issues (Cont.)(Cont.)

School Budget Review Committee (SBRC) has broad School Budget Review Committee (SBRC) has broad authority relating specifically to local school district authority relating specifically to local school district budgets to deal with unique and unusual circumstances budgets to deal with unique and unusual circumstances which cannot be handled easily or timely through which cannot be handled easily or timely through legislation. The SBRC:legislation. The SBRC: Has budget and tax oversight responsibilities for Has budget and tax oversight responsibilities for

school districts through administering the basic school districts through administering the basic funding plan. funding plan.

Can grant additional property taxes (also known as Can grant additional property taxes (also known as additional allowable growth) to districts with unique additional allowable growth) to districts with unique and unusual circumstances. The most frequent and unusual circumstances. The most frequent requests include:requests include:

New or ongoing unique educational programs.New or ongoing unique educational programs. Special education deficits.Special education deficits. Enrollment changes due to open enrollment.Enrollment changes due to open enrollment. Extraordinary enrollment increases.Extraordinary enrollment increases. Nonpublic enrollments impact.Nonpublic enrollments impact.

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Funding Funding ComponentsComponents

School Districts’ budgets consist of 20 funding School Districts’ budgets consist of 20 funding components plus debt service retirement and the components plus debt service retirement and the cash reserve levy.cash reserve levy.

The basic funding for schools is the “combined The basic funding for schools is the “combined district cost” as calculated by the school foundation district cost” as calculated by the school foundation formula. The FY 2006 combined district cost was formula. The FY 2006 combined district cost was $3.013 billion with $1.964 billion from State aid and $3.013 billion with $1.964 billion from State aid and $1.049 billion from property taxes.$1.049 billion from property taxes.

In addition, districts may elect to seek additional In addition, districts may elect to seek additional funds through a combination of other taxes and funds through a combination of other taxes and miscellaneous income. These are optional programs miscellaneous income. These are optional programs and levies that provide flexibility at the local level.and levies that provide flexibility at the local level.

The next slide summarizes the funding components.The next slide summarizes the funding components.

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Funding Components:Funding Components: Regular ProgramRegular ProgramFY 2006 FundingFY 2006 Funding:: $2.395 billion$2.395 billionSource of FundingSource of Funding:: State Aid and Property TaxState Aid and Property Tax

Regular program district cost is district cost per Regular program district cost is district cost per pupil times budget enrollments.pupil times budget enrollments.

For FY 2006, budget enrollments include the For FY 2006, budget enrollments include the actual number of pupils in September 2004 plus actual number of pupils in September 2004 plus an adjustment for home-schooled students.an adjustment for home-schooled students.

Regular Program Cost

=District

Cost per Pupil

X Pupils

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Funding Components:Funding Components:Regular Program Budget Regular Program Budget GuaranteeGuaranteeFY 2006 FundingFY 2006 Funding:: $19.5 million$19.5 million

Source of FundingSource of Funding:: Property TaxesProperty Taxes

Number of DistrictsNumber of Districts:: 176176

Eligible school districts are required to have Eligible school districts are required to have school board approval to levy for the budget school board approval to levy for the budget guarantee. For FY 2006, 178 school districts that guarantee. For FY 2006, 178 school districts that were eligible to receive the regular program were eligible to receive the regular program budget guarantee. Of these, 176 approved the budget guarantee. Of these, 176 approved the 100.0% budget guarantee, and two school districts 100.0% budget guarantee, and two school districts did not request it. In previous years, some school did not request it. In previous years, some school boards had levied for a portion of the budget boards had levied for a portion of the budget guarantee.guarantee.

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Funding Components: Funding Components: Supplementary WeightingsSupplementary WeightingsFY 2006 FundingFY 2006 Funding:: $33.6 million$33.6 million

Source of FundingSource of Funding:: State Aid and Property State Aid and Property TaxesTaxes

Number of districtsNumber of districts:: 367367 Supplemental funding is provided to districts involved in Supplemental funding is provided to districts involved in

certain activities.certain activities. Funding is provided by adding additional pupils to the Funding is provided by adding additional pupils to the

actual enrollment. This is called weighted enrollment.actual enrollment. This is called weighted enrollment. Below is the number of pupils added to the total Below is the number of pupils added to the total

weighted enrollment for each supplemental activity.weighted enrollment for each supplemental activity.FY 2006 Supplementary Weighting

At-Risk Students 2,084Sharing Teachers and Students 2,424English as a Second Language Program 2,206Reorganization Incentives 59Total 6,773

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Funding Components:Funding Components:Special EducationSpecial EducationFY 2006 FundingFY 2006 Funding:: $347.8 million$347.8 million

Source of FundingSource of Funding:: State Aid and Property State Aid and Property TaxesTaxes

Special education students are assigned a weight of 0.72, 1.21, Special education students are assigned a weight of 0.72, 1.21, or 2.74 in addition to the actual count of 1.0.or 2.74 in addition to the actual count of 1.0.

These weights are calculated to cover the excess cost of These weights are calculated to cover the excess cost of special education.special education.

Below is the number of pupils added for each special education Below is the number of pupils added for each special education weighting for all districts.weighting for all districts.FY 2006 Special Education Weightings

0.72 Weighting 30,6111.21 Weighting 15,9002.74 Weighting 23,639

Total 70,150

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Funding Components: Funding Components: Area Education Agencies - Media, Area Education Agencies - Media, Educational Services and Special Educational Services and Special EducationEducationFY 2006 FundingFY 2006 Funding:: $145.7 million$145.7 million

Source of FundingSource of Funding:: State Aid and Property TaxesState Aid and Property Taxes Area Education Agencies (AEA) serve as intermediate Area Education Agencies (AEA) serve as intermediate

service units to provide:service units to provide: Special Education Support Services.Special Education Support Services. Media Services.Media Services. Educational Services.Educational Services.

The basic funding formula includes separate funding on a The basic funding formula includes separate funding on a per pupil basis for each of the three service areas. The per pupil basis for each of the three service areas. The funding is generated by each school district and passed funding is generated by each school district and passed on to the AEA.on to the AEA.

The media and education services program areas are The media and education services program areas are funded entirely from property taxes.funded entirely from property taxes.

State Foundation Aid for special education support State Foundation Aid for special education support services was reduced by $19.3 million for FY 2006.services was reduced by $19.3 million for FY 2006.

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Funding Components:Funding Components:Drop-out Programs - SBRCDrop-out Programs - SBRCFY 2006 FundingFY 2006 Funding:: $72.1 million$72.1 millionSource of FundingSource of Funding:: Property TaxesProperty TaxesNumber of DistrictsNumber of Districts:: 281281

The School Budget Review Committee (SBRC) may grant The School Budget Review Committee (SBRC) may grant additional property taxes (also called additional allowable additional property taxes (also called additional allowable growth) for drop-out and drop-out prevention programs.growth) for drop-out and drop-out prevention programs.

Each program and budget is approved by the Department Each program and budget is approved by the Department of Education.of Education.

Up to 75.0% of the budget may come from the additional Up to 75.0% of the budget may come from the additional property taxes. The remainder must be supported from property taxes. The remainder must be supported from the general operating fund of the district.the general operating fund of the district.

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Funding Components:Funding Components:Enrollment AdjustmentEnrollment Adjustment

FY 2006 FundingFY 2006 Funding: : $ -0.2 million$ -0.2 million

Source of FundingSource of Funding:: State Aid & Property State Aid & Property TaxesTaxes

Number of DistrictsNumber of Districts::5555

School audits are required to include an audit of School audits are required to include an audit of the certified enrollment. the certified enrollment.

If the enrollment is changed by the audit, the If the enrollment is changed by the audit, the State aid and property tax portions are adjusted. State aid and property tax portions are adjusted.

School Aid: 68


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Funding Components:Funding Components:Instructional Support LevyInstructional Support LevyFY 2006 FundingFY 2006 Funding: : $151.3 million$151.3 millionSource of FundingSource of Funding:: State Aid, Property Taxes, and State Aid, Property Taxes, and

Income SurtaxesIncome SurtaxesNumber of DistrictsNumber of Districts:: 328328

Districts have the option to increase their budgets by up to Districts have the option to increase their budgets by up to 10.0% of the regular program cost.10.0% of the regular program cost.

The money generated may be used for any general fund purpose.The money generated may be used for any general fund purpose. The levy is available for a five-year period with District School The levy is available for a five-year period with District School

Board action and ten years with a vote of the electorate.Board action and ten years with a vote of the electorate. The Board determines the mix of income surtaxes and property The Board determines the mix of income surtaxes and property

taxes. taxes. State aid is provided to equalize the property taxes. The State State aid is provided to equalize the property taxes. The State

aid amount was intended to be 25.0% of the amount generated. aid amount was intended to be 25.0% of the amount generated. However, State aid has been frozen at the FY 1993 level ($14.8 However, State aid has been frozen at the FY 1993 level ($14.8 million). In FY 2006, an additional $34.2 million would be needed million). In FY 2006, an additional $34.2 million would be needed to fully fund the Instructional Support Program.to fully fund the Instructional Support Program.

School Aid: 69


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Funding Components:Funding Components:Educational Improvement LevyEducational Improvement Levy

FY 2006 FundingFY 2006 Funding: : $0.5 million$0.5 millionSource of FundingSource of Funding:: Property Taxes and Income Property Taxes and Income

SurtaxesSurtaxesNumber of DistrictsNumber of Districts:: 44

Maximum district cost per pupil was established at 110.0% Maximum district cost per pupil was established at 110.0% of the State cost in FY 1992 and gradually reduced to of the State cost in FY 1992 and gradually reduced to 105.0% of the State cost. 105.0% of the State cost.

Any district which was above 110.0% was allowed to Any district which was above 110.0% was allowed to establish an educational improvement levy to replace all, establish an educational improvement levy to replace all, part, or generate more than they previously were receiving.part, or generate more than they previously were receiving.

The levy will remain in place until the board or a The levy will remain in place until the board or a referendum removes the levy.referendum removes the levy.

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Funding Components:Funding Components:Physical Plant and Equipment Levy Physical Plant and Equipment Levy (PPEL)(PPEL)FY 2006 FundingFY 2006 Funding: : $108.4 million$108.4 millionSource of FundingSource of Funding:: Property Taxes and Income Property Taxes and Income

SurtaxSurtaxNumber of DistrictsNumber of Districts:: 335335

Board Approved:Board Approved: Up to $0.33 per $1,000 taxable valuation may be levied for physical Up to $0.33 per $1,000 taxable valuation may be levied for physical

plant and equipment by the School Board.plant and equipment by the School Board. Revenue cannot be used for any other purpose not expressly Revenue cannot be used for any other purpose not expressly

authorized.authorized. Some of the uses of the levy include:Some of the uses of the levy include:

Purchase and improvement of grounds.Purchase and improvement of grounds. Improvement of sites or major building repair.Improvement of sites or major building repair. Construction and purchase of schoolhouses or buildings.Construction and purchase of schoolhouses or buildings. Single unit of equipment or technology exceeding $1,500.Single unit of equipment or technology exceeding $1,500. Energy conservation.Energy conservation. Transportation equipment.Transportation equipment. Equipment purchases for recreational purposes.Equipment purchases for recreational purposes.

School Aid: 71


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Funding Components:Funding Components:Physical Plant and Equipment Levy Physical Plant and Equipment Levy (Cont.)(Cont.)Voter Approved:Voter Approved: Up to $1.34 per $1,000 taxable valuation may be levied for Up to $1.34 per $1,000 taxable valuation may be levied for

physical plant and equipment with approval by a simple physical plant and equipment with approval by a simple majority of voters. The voter-approved PPEL may be funded majority of voters. The voter-approved PPEL may be funded by a combination of property tax and income surtax of up to by a combination of property tax and income surtax of up to 20.0%.20.0%.

The voter approved portion may be requested for up to ten The voter approved portion may be requested for up to ten years.years.

Voter-approved physical plant and equipment levy existing Voter-approved physical plant and equipment levy existing before FY 1998 had a maximum levy of $0.67 per $1,000 before FY 1998 had a maximum levy of $0.67 per $1,000 taxable valuation. They may increase the existing levy by a taxable valuation. They may increase the existing levy by a maximum of an additional $0.67 per $1,000 taxable maximum of an additional $0.67 per $1,000 taxable valuation. This does not alter the initial levy’s timeline.valuation. This does not alter the initial levy’s timeline.

Uses of the levy are the same as the Board-approved levy.Uses of the levy are the same as the Board-approved levy.

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Funding Components: Funding Components: Management LevyManagement LevyFY 2006 FundingFY 2006 Funding: : $95.8 million$95.8 million



The management levy is a combination of what previously was The management levy is a combination of what previously was defined as the insurance levy, unemployment levy, and early defined as the insurance levy, unemployment levy, and early retirement levy.retirement levy.

Districts may levy to pay the cost of the following:Districts may levy to pay the cost of the following: Liability insurance premiums.Liability insurance premiums. Tort judgments against the district.Tort judgments against the district. Self insurance Program.Self insurance Program. Loss of Property. Loss of Property. Early Retirement incentives.Early Retirement incentives. Continuation of health or medical insurance coverage.Continuation of health or medical insurance coverage.

School Aid: 73


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Funding Components:Funding Components:Educational and Recreational Tax Educational and Recreational Tax (Playground)(Playground)FY 2006 FundingFY 2006 Funding: : $1.8 million$1.8 million



With voter approval the board may levy up to 13.5 cents With voter approval the board may levy up to 13.5 cents per $1,000 taxable valuation for the purchase of per $1,000 taxable valuation for the purchase of recreation places and playgrounds at public school recreation places and playgrounds at public school buildings and grounds of the district.buildings and grounds of the district.

The School Board may authorize the use of the funds for The School Board may authorize the use of the funds for recreational programs and community education recreational programs and community education programs.programs.

Once enacted, the levy remains in place until rescinded by Once enacted, the levy remains in place until rescinded by the Board or voters.the Board or voters.

School Aid: 74


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Funding Components: Funding Components: Bonds/Debt Service RetirementBonds/Debt Service Retirement

FY 2006 FundingFY 2006 Funding: : $98.0 million$98.0 millionSource of FundingSource of Funding: : Property taxesProperty taxesNumber of DistrictsNumber of Districts:: 230230

A local School Board may only issue bonds if A local School Board may only issue bonds if 60.0% of the electorate approves.60.0% of the electorate approves.

The maximum bonded indebtedness is 5.0% of The maximum bonded indebtedness is 5.0% of the district’s assessed valuation. the district’s assessed valuation.

The maximum length of any bond is 20 years. The maximum length of any bond is 20 years.

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Funding Components:Funding Components:Miscellaneous IncomeMiscellaneous Income Miscellaneous income is estimated to include Miscellaneous income is estimated to include

$189.4 million from State categorical funding, $189.4 million from State categorical funding, $281.3 million from Federal, and $241.4 million $281.3 million from Federal, and $241.4 million of other miscellaneous income.of other miscellaneous income.

Phases I and II of the Educational Excellence Phases I and II of the Educational Excellence Program and the Student Achievement/Teacher Program and the Student Achievement/Teacher Quality appropriations account for the majority Quality appropriations account for the majority of the State categorical funding.of the State categorical funding.

Other miscellaneous income includes Other miscellaneous income includes miscellaneous tax, local revenue, miscellaneous tax, local revenue, tuition/transportation, and investment income.tuition/transportation, and investment income.

School Aid: 76


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Funding Components: Funding Components: Cash Reserve LevyCash Reserve LevyFY 2006 FundingFY 2006 Funding: : $97.9 million$97.9 millionSource of FundingSource of Funding: : Property taxesProperty taxes

Cash Reserve is not included on the FY 2006 Cash Reserve is not included on the FY 2006 Budget Detail.Budget Detail.

Districts may levy cash reserve property taxes Districts may levy cash reserve property taxes to enable them to manage their cash flow.to enable them to manage their cash flow.

The Cash Reserve Levy does not increase The Cash Reserve Levy does not increase spending authority or budget.spending authority or budget.

Cash reserve can be used if State aid is Cash reserve can be used if State aid is reduced or property taxes are not collected.reduced or property taxes are not collected.

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