Holiday events can be warm and fuzzy. But they require a financial foundation. Savings first, or credit card debt later.

School visits are the warm and fuzzy rewards School Board members earn for the pain of board meetings. But schools also require a financial foundation.

No district citizen is obliged to participate in the annual school budget debate. But those who do want to advocate a favorite program can be more effective with some basic budget facts.

 “If you think education’s expensive, just wait until you start paying for ignorance,” says the bumper sticker. True. But K-12 public education’s not cheap. Nationally $300 billion; $3 billion in Iowa.

So how much do we have to work with? Where does our district’s money come from? The answers take a couple of columns.

Some highway “speed limits” include a minimum as well as a maximum (40 to 65 mph). A school district’s income is like that.

A lot of money comes from local property taxes. But if they were the only source the budget for a child’s education would depend on the value of the houses in her district – and property taxes would double. Because we Iowans care for all our kids, and want to reduce property taxes, here’s what we do.

Foundation Aid Formula. Bottom line: after collecting some property taxes, every school district gets enough additional money from the state to bring its budget to $3500 multiplied by its number of students.

Details: In 1979 Iowa legislators totaled the money spent on K-12 education by the state’s school districts (now 375). They divided it by the number of students in Iowa (now 500,000). They guaranteed every school district that average dollar figure (now $4030 for us), multiplied by a percentage (now 87.5%), times the number of students (10,500 in our district).

Every year since 1979 the legislature increased that number by “allowable growth” (3% last year).

That makes our 87.5% $3500 per student.

Our increase?  Not 3% of our $60 million budget. Just 3% of that $4030 times 10,500 students – $1.2 million-plus, a 2% increase.

Districts with increasing enrollments get to multiply by more students each year.  Bigger increases.

Our enrollment is stable. But salaries and expenses continue to increase.

Result? Budget crunch.

Review: The State authorizes school districts to tax local property a “uniform levy” of $5.40 per $1000 valuation.

But that never meets districts’ needs.

So the state supplies enough state money (from income and sales taxes) to bring every district up to the Foundation Aid Formula minimum.

That’s the 40 mph. The minimum.

To get to 100% ($4030 per student for us), a district’s property owners have to assess themselves additional property taxes. We’re willing.

How much more can we do? We are legally prohibited from funding our district at more than 110% of the state average per child.

(Since we’re already above 100%, the current proposal to increase the “Aid” percentage from 87.5% to 91.5% would not increase our budget. It would, slightly, reduce property taxes.)

That’s the 65 mph.  The maximum.

We’re lucky. This school district collects property taxes on $3.2 billion worth of property. Our schools’ share is $12.34 per $1000 valuation.

(Homeowners get a 31% “roll back” from that: school taxes of only $725 on a $100,000 home.)

We’d scarcely notice a few extra pennies per $1000 valuation in our property taxes. But the law says we can’t do it (with a couple minor exceptions).

We have to hold our speed between 40 and 65 mph.

That’s what our district’s 20-year financial officer, Jerry Palmer, means when he says, “We can’t print money and we can’t run deficits.”

Of course, it’s a little more complicated.

There are thousands of accounting categories, “weighting” (example: special education), and lots of footnotes. And that $12.34 includes special levies for such things as building upkeep ($1.00) and interest on school bonds ($0.75).

But that’s the big picture.

To get to 110% the State lets us add to “Foundation Aid” something called “Instructional Support” – $500,000 more property tax, the $3 million we pay in a 5% state income tax surtax, and $400,000 from State funds.

If 110% is the maximum, how do we get to $60 million?

Dozens of other bits of income from local, state and federal sources. We’ll explore them next time.
 
Nicholas Johnson is a member of the Iowa City school board.