The Iowa school finance formula for funding the education of our students is extremely complex and complicated. During the time that I have been an Iowa superintendent, it has grown even more so. Because of the complexity, sometimes elements can be very confusing. The purpose of my article here is to educate our stakeholders more on the elements of Iowa school finance that impact our school district.
For starters, the General Fund (fund 10) is the fund that is used for all instruction, and it is based largely on enrollment. Instruction means all of the curriculum, all salaries, utilities, all general maintenance and all general support. General fund revenue is not based on property value, how much land a district has or how much the houses cost. Those factors all play into various elements of the total budget; yet the general fund is based mainly on enrollment. The state sets an amount called “cost per pupil”. A school’s general fund mainly consists of that cost per pupil multiplied by enrollment. In 2016-17 the cost per pupil at MFL MarMac is $6,701, and we counted 777.4 students (almost a lucky number!). Those two amounts multiplied by each other equal $5,209,357, and that is called our “regular program district cost without adjustment”. This amount comes from a combination of taxes and state aid. District wealth plays no part in the size of the regular program district cost.
District property wealth, however, determines the mix of funding; how much comes from the state and how much from local property owners. The poorer we are when compared to other districts, the more state aid we get. The wealthier we are the less state aid we get. Some people call this the “Robin Hood” effect of the school finance formula. That is probably one of the things that make the system so complicated, but it is also one of the things that continue to keep the Iowa School Finance Formula from being challenged in the courts as unconstitutional.
The total General Fund has other revenues, based primarily on special student and program needs, (and they are strictly required to be spent for those purposes) but enrollment makes up the lion’s share of our “spending authority”. Only the General Fund has spending authority. Spending authority is an amount that we are allowed to spend, which functions as a “ceiling.” We are prohibited from overspending that amount. Because spending authority is directly correlated to enrollment, it is possible to be a very wealthy district, but out of spending authority. At MFL MarMac our spending authority is average, and we have had to work very hard to maintain it at a fiscally sound level. When I came here in 2001, we had 1,121 students, and in FY 17 we were at 777. If we had maintained our enrollment and not lost 344 students, our spending authority would have been $2.3 million higher. Instead we have had to reduce our expenditures to accommodate for the loss of enrollment. We’ve also struggled, as all Iowa schools have, with recent very lean increases in the state cost per pupil from the state. When our growth from the state is very low or at zero, and this is combined with enrollment decline, we then have a constant perfect storm of budget reductions required to live within the spending authority ceiling.
So far we have been able to weather this storm, and we will continue to do so. Our enrollment has dropped again slightly for 2017-18, but I think we are about at the bottom of our enrollment decline. This decline is not due to people leaving our district, but it is due to less births in NE Iowa overall. When you graduate 100 and bring in 60 you create a negative trend, and we did that for several years in a row. The good news is that we are still large enough to sustain our district over the long haul.
In a school budget in Iowa, there are many “funds”. A fund might be described as a silo on a farm. If you put corn in that silo, then there’s no oats or beans. The “General Fund” is like the main silo on the farm. It’s like the heart of an organism or the engine of a car. Because the general fund is driven primarily by enrollment, when enrollment is going up, times are better than when enrollment is going down. This is unrelated to the wealth of the district, the value of property, and the rates of taxation. The other funds (other silos) are not all based on enrollment, and actually can be based “somewhat” on local factors.
Some of the main “other funds” in a school’s budget are: The Physical Plant and Equipment fund (PPEL), sales tax (SAVE), and the Management fund. The PPEL fund and the Sales Tax fund are basically interchangeable, and they can be used for non-salary infrastructure purposes as defined in our revenue purpose statement. At MFL MarMac we have been able to almost completely rebuild the “guts” of the school. We have new roofs, new boilers, our lighting and electrical systems have been updated, and we have remodeled classrooms and instructional areas every year to the point that we are mostly modern in all areas. We have been able to tuck point the bricks in the older buildings, upgrade the athletic facilities, build additions when needed, and recently we added air conditioning – a wing of rooms each year. We have also used these funds to keep our bus and transportation vehicles safe, and we have used them for the technology infrastructure and the 1-1 computing initiative. These additions have greatly improved the quality of our school district as a whole, and our ability to last over the long haul. For our patrons, it may be hard to understand why we can make building improvements or undergo a technology initiative, while at the same time adjusting to our enrollment decline, but that’s the way the funds work under the Iowa Code and the funding formula. On the one hand, we need to look forward and consider how infrastructure and technology improvements may attract long-term enrollment. In the short term, the building projects do not either help or hurt the instructional budget in the General Fund. This is why it is possible to be more constrained in one silo, and not as constrained in another silo.
Our sales tax revenue gives us about $650,000 per year. This revenue comes from the state penny. At one time only counties who had a voted local option tax got this resource for their schools, as our county did in 2002, with the help from many local businesses who supported it. Since 2008, all districts get this revenue source, but it is now also based on enrollment in the district. We have the ability to borrow against this revenue source, and this, in combination with PPEL, is how we have been able to enjoy the building and technology projects that help us better serve our students. We also have a PPEL approved by our voters and this, in combination with the sales tax, has basically saved us and positioned us for the future.
The management fund is the last of the larger non-general funds. The management fund can only be used to fund early retirements and pay insurance on property and vehicles, pay for workers’ compensation costs that all employers have to pay, and pay the costs of any litigation against the district.
I am hopeful that at some point in the future, the legislature will enact more measures that will help smaller school districts have the ability to stay viable. One area would be transportation equalization, as rural schools pay more per pupil and the cost of fuel, bus drives and maintenance comes from the General Fund. Another idea would be to open up some of the other funds more, but there are also pros and cons with that. Lastly, the state penny expires in 2029. Extension of that sales tax will allow us to continue to provide building and technology projects that are vital for our students’ future. If anyone has any questions about school finance please contact me, as I am always glad to talk about it.
At the beginning of the school year Responsibility-Based-Discipline trainer Larry Thompson spoke to our staff. We have implemented a new district-wide program of positive interactions with students, starting in 2016-17; and this program has been helping us. We then had positive mindset speaker Trevor Ragan talk to the staff, students and community. Although we had only about 125 people attend the community session; Ragan said that this was more than he has ever had at a night event, including urban areas. Ragan has been a mindset trainer for the USA Olympic Volleyball Team, professional baseball players, and others. We then had a visit from the Iowa Department of Education.
Most recently we had a visit from Aaron Thomas who is the principal at Aplington-Parkersburg near Waterloo. Mr. Thomas is the son of the late Ed Thomas who was an extremely successful football coach and teacher at AP high school. Ed Thomas was tragically killed by a former student while at weightlifting practice. The school and town also experienced a Category EF5 Tornado that destroyed many homes and the high school. Aaron Thomas spoke to the student body about his strategies and ways of dealing with these tragedies. He spoke about keeping a positive mindset and dealing with tragedy and change. The students were impressed with his message, and he told us that we need to move forward and pick ourselves up after every difficult situation. He said that we all have difficult situations, and those hard times define us more than the easy times.
The Iowa Department of Education Director Dr. Ryan Wise spent part of the morning at MFL MarMac Elementary, Middle School and High School. During this he attended classes, addressed students and met with staff. He arrived on Monday evening and stayed at the Cobblestone In at Marquette. Hotel Manager, and former student Stacy Ellis (Kristofferson) made sure that he had a great room with a good view of the area. I picked him up at 6:45 A.M., headed to Monona and handed him off to High School Principal Larry Meyer. Mr. Meyer gave him a tour of the high school facilities, and then handed off to Director Sheena Bouzek, who showed him the Little Bulldog Daycare Center in action. By 7:20 A.M., which was about the time he was there, the center is full of activity. Then, at 7:45-8:15 he had a "Meet and Greet" session in the Learning Commons. About twenty staff members from all centers, and a representative from Eastern Allamakee, asked questions and discussed issues while enjoying continental breakfast items prepared by our cooks. We discussed our Teacher Leadership Compensation Program, the need for future collaboration, and continued time for professional development, among other things. Dr. Wise was interested in our first year teachers, and what mentoring opportunities we have in place for them. Then school started and Dr. Wise gave about a 20 minute address to the high school students in the auditorium. He explained what the Department of Education does, and how education is important to our future. He ended his session with a question and answer session. After this, he spent another twenty minutes touring the elementary with Elementary Principal Kathy Koether. He was able to see some of our elementary classes in action, and he visited several rooms. During this time he spoke directly with several students, listened to students read, and held conversations with teachers. Dr. Wise was able to get down to the student’s level. Then I drove him to McGregor where we spent about thirty minutes with Middle School Principal Denise Mueller doing the same types of things with teachers and students. At about 10:05 we left for New Albin, where we spent time at Eastern Allamakee doing many of the same things, and then he left for Decorah to spend afternoon time in their district. My time with Director Wise was mostly seat time in my wife's Subaru (I wasn't allowed to drive my truck), and his state car. I found him personable, intelligent, and one who wants to listen to the direct problems that we are dealing with in Iowa's schools. We were able to talk about the declining enrollment in rural areas, the need for small communities to prosper, and transportation equalization. After he left, I felt that he actually came to celebrate Iowa school districts, and to better understand us. He had never driven by Effigy Mounds, he hadn't been to the extreme NE corner before, and he was impressed by the Driftless Area geography and topography.
Throughout the fall and winter there will be various drills. These drills will include fire, tornado, and evacuation. It is of extreme importance to ensure a safe environment at MFL MarMac. We will continue to provide these drills from time to time. If anyone has any questions please feel free to contact myself or one of the principals. As this is being written, it is extremely hot out, but soon it will be much colder and soon there will be snow and ice. Be sure and stay tuned to our notification systems we have in place. I wish all of you to enjoy a great fall season and to stay healthy and safe.
Dr. Dale Crozier, Superintendent