Formerly First in the Nation: Part 1 – History has a surprise in store for you

Schools 3By Bob Eschliman


Iowa used to be first-in-the-nation is more than just its quadrennial presidential caucuses. It used to be the best in the nation, and the envy of the world, in education.

Regardless of where you fall on the political spectrum, and whether you’re siding with Republicans or Democrats in the latest education funding squabble in the Iowa General Assembly, that is one fact everyone can agree upon. And while it’s easy to get caught up in the rhetoric of one side or the other, as the old saying goes, “Those who fail to learn from history are doomed to repeat it.”

In the case of Iowa education, the history of funding tells a story you likely won’t get from any legislator in Des Moines.

For this history lesson, let’s start in 1950, when there were more than 4,600 local school districts in the state – nearly 48 for each county in the state – and they were all 100-percent funded by property taxes. No taxpayer money from the state’s General Fund, no sales taxes, and no fighting over winners and losers.

Just 15 short years later, after Reorganization took place, there were less than 1,100 local school districts. Still, they were all funded locally by property taxes, and benefitted from the economy of scale – but they came at a price: the loss of the one-room country school.

But as the Three R’s gave way to modern education, continued consolidation became the new buzzword. And property taxes alone were no longer enough to fund the needs of local school districts.

During the late-1960s, the federal government began providing small amounts of assistance to some school districts. And in 1971, the General Assembly launched the School Foundation Assistance Program, the forerunner to today’s funding formula found in Iowa Code 257.

The School Foundation Assistance Program provided enrollment-based funding, as well as a substantial increase in direct state aid to local school districts. Iowa Code 257, enacted in 1989 and going into effect in 1992, took the enrollment-based funding mechanisms and added new features meant to provide the majority of state funding to the schools that needed it most.

Over the years that followed came new terms used in Iowa politicalspeak, such as “allowable growth,” “foundation level,” and “buy downs.” Then, as the demographics of Iowa’s classrooms changed – more immigrant and special education students and less agricultural and vocational students – the need to account for the specific needs of each student arose.

Now, “enrollment-based funding” no longer means a simple head count of the student body of each local school district, but an analysis of the special needs of each student and how they should be weighted to provide the funding necessary to tend to those needs. And, as a result, Iowa’s education funding mechanism has became much more complicated.

Today, there are only 346 local school districts, fewer than four per county. Meanwhile, education spending has grown – as have the number of sources of funding – to the tune of nearly $6 billion a year. That’s more than $12,500 per registered student in Iowa.

Education spending now accounts for more than 40 percent of the state’s General Fund expenditures each year. With more bureaucracy, more spending, and much of Iowa’s future at stake, it’s natural for political liberals and political conservatives to disagree on the best course for funding education.

Click to enlarge. (Source: LSA)

Click to enlarge. (Source: LSA)

Since 1992, the increase in funding for education, called “allowable growth,” and today known as the “state percentage of growth,” was set by the General Assembly each year for the successive school year. Beginning in 1995, however, the Iowa Code required the legislature to set the allowable growth rate for the next two school years.

In the 20 years since then, the allowable growth rate – or state percentage of growth – has never exceeded 4 percent a year. And, really, the allowable growth was usually a byproduct of revenue estimates for the coming year.

In 1997, the General Assembly amended Iowa Code 257 to increase the “regular program foundation level” – often referred to as simply “the foundation level” – from 83 percent of the minimum cost per student to 87.5 percent. Many of these terms will be the topic of upcoming installments of this series, but in general, increasing the foundation level meant local school districts received more funding from the state while local property tax payers were supposed to see their tax rates fall.

That hasn’t necessarily been the case, which has been the cause of numerous disagreements between liberals and conservatives over the past 15 years. But most of those were over policy and funding sources – such as the 100-percent budget guarantee and the Secure an Advanced Vision for Education sales and use tax – not over allowable growth rates.

The economic downturn of the 2007-08 should get most of the blame there. As state revenues backtracked and then-Gov. Chet Culver implemented across-the-board spending cuts, allowable growth/state percentage of growth became the new battlefield in education.

In 2011, the allowable growth for Fiscal Year 2012 defaulted to 0 percent because the General Assembly did not establish an amount. The legislature did establish 2-percent growth for FY 2013, but in the minds of many “educrats,” Iowa has been playing catch-up – and falling farther behind – ever since.

Allowable growth took a hit again in FY 2014. Initially set at 0 percent in the 2012 session, it was increased to 2 percent in the 2013 session. The current school year – FY 2015 – saw state percentage of growth increase back to 4 percent.

In the meantime, new funding streams created by the General Assembly have resulted in Republicans’ calls for belt-tightening. GOP legislators are calling for a 1.25-percent state percentage of growth, while Democrats initially asked for 4 percent.

The stalemate and failure to come to an agreement on an appropriate level of state funding for education has put local school districts – and their taxpayers – in a bind. Local school districts must approve their FY 2016 budgets by today, but still don’t know what level of growth will be authorized.


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In the installments to follow, we will explore the means by which school budgets and state funding are determined. We will also explore the other funding streams available to local school districts and how those funds may be used.