Tuesday, February 9, 2016

Timeliness v. Adequacy

We are once again in the midst of the General Assembly of Iowa, [and] as has become the 'new normal' there remains no end in sight to the perpetual debate of how much funding should be allocated for supplemental state aid. Unfortunately I write a column like this that is very similar in substance and rhetoric every single year. You probably think this is becoming a broken record. To be honest, I feel like a broken record. Yet the fact is this problem continues to persist year after year. The deadline for setting supplemental state aid for the fiscal year that begins on July 1st, 2017 is February 12. However, supplemental state aid for the fiscal year that begins on July 1, 2016, (which is now less than six months away) is still unknown, and we are well over a year past that benchmark in time. To remind everyone, this deadline isn't a suggestion or considered 'best practice'. It's the law, outlined in the first paragraph of the Code of Iowa 257.8. Year after year, this law is violated. And there is no legislative penalty for violation of this law. We simply get a shrug of the shoulders and some finger pointing. 

School districts don't enjoy the same luxury. At the same time the status of school aid is stalled in our legislature, we are in the very middle of planning our budgets for the next fiscal year. All without knowing what the resource side of the ledger is going to look like. Our budgets for the new fiscal year must be certified to the county auditor and Iowa Department of Management by April 15th. We have to follow a very regimented, succinct, and unforgiving timeline. That is in the law too. The difference is there are ramifications if a school district misses the deadline. People could lose jobs. State aid could be withheld. Property tax authority could become compromised. These are real consequences. In order to meet these deadlines school districts are forced to run multiple scenarios based on an unknown quantity. At our next board meeting, I will ask the board to consider five different supplemental state aid guesses and give direction about which scenario they would like to have published. If we guess wrong it could cost us, meaning we could leave resources on the table. To combat this, we have to hedge a bit, which means we set a budget that will consider the most advantageous revenue stream. On the expenditure side we do the same, which involves constricting and suppressing how we invest in the students of Hudson schools. 

Some have suggested the alternative is to simply set supplemental state aid within the timeline, irregardless of the number so districts at least can plan accordingly. This would be sacrificing adequacy for timeliness, to which I say not so fast. The amount that state aid has grown over the last several years has been woefully inadequate, forcing many school districts to cut programs, lay off teachers, and delay the purchase of curriculum material. It means districts offer 'fractional' positions to fill some teaching vacancies because the funding is not there to offer a full time position. Teachers aren't getting rich here, and if they can't even be offered a full time job, why would they bother? Indeed we are not immune to some of these quandaries here at Hudson.

The narrative that is often spun is lawmakers want to provide a predictable and sustainable funding stream. So they set the bar unreasonably low so they can 'promise' those funds will be there. An example that is often used to point out this danger is the 10% across the board cut ordered during the 2010 fiscal year. Yes, this was a real loss in funding, to the tune of $315,884 for Hudson schools. But the difference was a loss in cash--not spending authority. And the distinction is huge. We can always get the cash back. It may take a few years, even several years, but you can get it back. Spending authority, or the legal limit that a district is permitted to expend on behalf of their students is not something that can be recovered.

Let's make no mistake though. There is another reason for this new normal that has led to the practice of suppressed state aid. And that, my friends was when we decided the change from an annual budget growth factor referred to as allowable growth to the concept of supplemental state aid. Stay tuned, we'll cover that next week!

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